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Who Are the Innovators in the Middle East?
Who Are the Innovators in the Middle East?
Dubai. Image credit: Christoph Schulz/Unsplash
Associated Company
EqualOcean EqualOcean

Partly by oil, partly by war, the Middle East had long been a focus of global attention. But things have changed for quite a while – now one of the richest regions in the world is going to impress us with its innovative entrepreneurship.

Previously, EqualOcean published the 1H19 Middle East Investment Report addressing the VC investment trends in the region in the first half of 2019. In this article, we shift the spotlight on the best tech innovators in this region.

Enterprise services

Enterprise services appears to be the most active sector in the Middle East recently. As our 1H19 VC Middle East Investment Report showed, the total deal value of enterprise services in the first half of 2019 amounted to USD 777.2 million, with a year-over-year growth rate of nearly 40 percent.

In this industry, Israel aces out the other countries in the region. 49 out of 72 to B service companies which got invested in the first half of 2019 are headquartered in Israel.

Among the 49 recently-funded Israeli to B startups, Aqua Security, Logz.io and Bizzabo are the three representative innovators. Aqua Security and Logz.io provide both security services across many cloud-native platforms, partnering with global tech behemoths like Microsoft and Amazon. Bizzabo helps event organizers with registration, ticketing, event marketing and so on.

Aside from these Israeli companies, Saudi Arabia also possesses a noteworthy startup - the Riyadh-based Foodics, which provides cloud-based restaurant management solutions.

The dominance of Israel in enterprise services is natural, given its high-level education and talent backup. Also, the lack of natural resources and geopolitical tensions without cease force the country to seek for technological chances in order to develop. According to the Israeli government, the country’s R&D investment as percent of GDP in 2017 ranked second worldwide, and the country has the third-largest number of companies listed on the Nasdaq exchange globally, following the U.S. and China.

Another factor that cannot be overseen is support from the other side of the globe. Bunches of American tech giants including Google, Intel, Apple have subsidiaries or R&D centers in Tel Aviv, the “Silicon Wadi” of Israel.

Auto & Mobility

The Middle East automotive market is currently in a state of flux, impacted by diverse challenges on a regional level and by the swiftly changing nature of car production globally.

Megatrends, such as shared mobility, electrification, connectivity and autonomous driving, are soon expected to impact the ME automotive & aftermarket industry.

The shared mobility market in the ME is expected to grow at 21% CAGR until 2023, though valued at around USD 900 million in 2018.

About 35,500 electric vehicles were sold in the region in 2018, which is lower than the number of developed economies. However, original equipment manufacturers such as Toyota and Nissan have been promoting hybrid cars in the region, which has triggered a recognizable shift in consumer preference for this technology, so the number is expected to increase in the region

Connectivity penetration rate in the ME reached around 17% in 2018 and is expected to rise at a CAGR of 22% until 2023.

Autonomous driving industry in the ME still has a long way to go, although the UAE ranks 7th on the global preparedness index according to a recent study by KPMG.

In the ME, Israel predominates in automotive technology innovation, if looking at financing events that occurred in the region.

Innoviz Technology is an Israel based high tech company that manufactures high-performance, solid-state LiDAR sensors and perception software that enable the mass-production of autonomous vehicles. The company just closed an extended Series C round of funding this year raising tens of millions of US dollars.

The Egypt-based company Swvl is a premium mass transit system that allows customers to book fixed rate rides on buses and vans. So far, it has closed 4 rounds of funding and raised over USD 80.5 million.

In the UAE, UDrive is the first pay-per-minute car sharing provider in Dubai which offers car rental through mobile access anywhere around the city. It is a super startup located in the Gulf Cooperation Council area.

Health care

The landscape of the health care industry in the Middle East is as uneven as that of enterprise services. Advanced med-tech companies and platforms redistributing regional medical resources pole apart geographically.

Israeli companies are dominating the relatively nascent med-tech market, spanning medicine-makers, AI-aided diagnosis and so on. EarlySense is one of the representative Israeli med-tech startups, with its product EarlyOn, a contact-free disease detection system.

According to the Middle East Medical Devices and Diagnostics Trade Association, the annual value of the medical technology market in the region will reach as much as USD 11 billion by 2021.

Vezeeta, an Egyptian digital healthcare platform, stands for another kind of health care entrepreneurship. These online platforms are dedicated to connecting patients and medical services providers, making medical services more accessible.

E-Commerce

E-Commerce is one of the maturest industries in the Middle East. From pure marketplaces to e-retailers, the Middle East has a complete spectrum of e-commerce startups.

One of the fastest-growing e-commerce platforms is the Luxury Closet, where people can buy, sell and consign second-hand luxury goods. Another significant e-commerce player is Souq, a marketplace & e-retailer which was acquired by Amazon in 2017. (The two startups are both Dubai-based.)

The sector flourishes amid decreasing consumer confidence. Middle East consumers are switching from brick-and-mortar stores to online purchases because of the latter’s convenience and discounts, according to McKinsey. Online retail sales in the region are projected to grow at least by 20 percent annually, while the CAGR of brick-and-mortar sales is only 3 to 5 percent.

As a recently published report by Bain & Company estimated, the e-commerce market in MENA (the Middle East & North Africa) standing at USD 8.3 billion today could grow by 3.5 times to reach USD 28.5 billion by 2022.

Besides, the thriving of e-commerce in the Middle East cannot be separated from the development of last-mile delivery and logistics. Companies like the Dubai-based Fetchr have made online retail more convenient, thus more attractive for consumers.

Fintech

Fintech startups in the Middle East usher in the best of time, owing to the burgeoning e-commerce and the nearly untapped huge fintech market - the mobile penetration rate in the United Arab Emirates is as much as 173% percent, the highest number worldwide, while 70 to 75% of the country’s transactions are still cash-based, for instance. As the millennials become more influential, online payment and other fintech sectors are bound to thrive.

The UAE is surely the fintech leader in the Middle East. According to the latest Global Financial Centres Index published in March, Dubai ranked 12th globally and was the only Middle Eastern city listed. Among hundreds of financial companies headquartered in the city, Network International, Sarwa.co and Bayzat are three representatives, focusing respectively on online payment solutions, personal investment assistance, and insurance.

Israeli startup Pagaya Investments is also a noteworthy game changer. The Tel Aviv-based fintech company uses artificial intelligence and machine learning to manage investments.

Another top player is Fawry, an Egyptian digital payment platform. It enables consumers without bank accounts to transfer money via multiple channels, including mobile wallet, ATMs, brick-and-mortar retail stores.

Notes:

The “Middle East” in this article includes Bahrain, Cyprus, Egypt, Iran, Iraq, Israel, Jordan, Lebanon, Oman, Palestine, Qatar, Kuwait, Saudi Arabia, Syria, Turkey, United Arab Emirates (UAE), and Yemen.

*Contributor: Qiu Yuxian

Enterprise Information

EqualOcean is a leading industry tech media and an investment research company.
CATEGORIES: AI, Research
Last Funding Type
Series C
Number of Employees
200
Number of Funding Rounds
6
Total Funding Amount
26.79M

Enterprise Information

EqualOcean
EqualOcean is a leading industry tech media and an investment research company.
CATEGORIES: AI, Research
Last Funding Type
Series C
Number of Employees
200
Number of Funding Rounds
6
Total Funding Amount
26.79M

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EqualOcean is a leading industrial tech media and investment research company that focuses on technological and industrial innovation in China.

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