An article by Olena Petrosyuk, the co-founders of Waveup, an advisory firm for startups

For a long time, MENA startups were underdogs in the global venture capital arena. Just five years ago, our network funds from Europe and the US showed no interest in financing the MENA region.

Now, the tables have turned: Western investors are increasingly drawn to the local startup scene. The global tech community is shifting its focus to the Middle East, exemplified by the Websummit—one of the world's largest technology conferences—being held in Doha, Qatar.

This growing interest is evident across sectors but particularly pronounced in fintech. Unlike the global fintech sector, which has experienced halved funding, oversaturation, diminished returns, and disappearing unicorns, the MENA fintech scene seems to be moving in the opposite direction. In 2023, fintech startups from Saudi Arabia, Egypt, the United Arab Emirates, and Turkey collectively raised almost $2 billion in funding. In 2023 alone, five companies surpassed the $1 billion mark. Within just two years, Pakistan’s financial startup Abhi saw its valuation grow to $90 million and expanded operations beyond Pakistan—a feat that many Western counterparts can only aspire to. And we are not just witnessing more deals; valuations have also skyrocketed. 

Just a few years back, MENA startups secured funding at valuations 30–40% lower than their western counterparts. Now, both industry data and Waveup’s experience with local clients show that the valuations in the region are holding steady or increasing, even as foreign fintechs face devaluations. As of 2023, an average EV/revenue multiple for SME lending fintechs in MENA stood at a staggering 29.19x, compared to an average of 8.88x for peers in other locations.

This success story is unfolding right before our eyes. This wave will only grow bigger in the following years, and it's crucial that local startups and investors ride it.

How can local fintech startups capitalise on the VC surge in 2024?

MENA’s rapid rise as one of the global fintech hubs is no coincidence. Strong economic performance, a growing population, a booming banking sector, and the rising popularity of e-commerce have all laid the groundwork for a highly lucrative and largely untapped market. However, many companies we work with in the region struggle with attracting VC investment, even despite the great underlying business fundamentals.

The key reason is simply not being able to tell their story well enough. Understanding the factors that attract foreign investors to regional companies is key to leveraging this knowledge in your pitches to draw in outside capital.

Demonstrate a bold vision for the entire MENA region

One of the top two reasons VC investors pass on an investment is that the market opportunity is not large enough. For a VC to generate a strong fund-level return, they typically need to invest in at least one company that will achieve unicorn status. 

To achieve that, VCs are looking for investment opportunities in massive addressable markets that are typically at $1 billion+ in market value. Startups operating out of smaller markets like Qatar or Bahrain typically have issues showing large enough market sizes to attract VC capital. A simple solution is thinking globally from the start; by building the product and strategy in a way that can later appeal to audiences outside your country and to a wider MENA market, you are effectively positioning yourself as a future market leader. 

If your beachhead market is small, show investors that you plan to expand across the entire region. Even if you start with one country for now, prepare and present a roadmap for broader market expansion right away. Conduct market opportunity analysis for different countries, create localised value propositions, and present a GTM strategy and timeline. Show that you have big ambitions for the region; this will immediately score points with investors.

Lead with a powerful story

As discussed at length in my previous article, Middle Eastern businesses historically have been exceptionally bad at selling their story to foreign investors. The concept of a powerful story, the way Western VCs see it, seems hard to crack for local businesses as they lack experience in telling them.

Meanwhile, your story is everything. You can have impressive fundamentals and a fantastic idea, but you won’t be able to sell those without a compelling narrative that ties it all together. In fact, you won’t even be able to keep investors interested for more than thirty seconds. Plus, investors know that if you struggle to sell your vision to them, you’ll struggle to sell it to your potential customers and partners as well.

There are several strategies to help you build an attractive business story:

• Capture the essence of your brand and vision: Reflect on what inspired you to start your company and why it matters. This core inspiration should be the foundation of your narrative.
• Have a strong opening slide: your introduction sets the tone for the rest of your pitch and determines how attentively VCs will read the rest of it. Be bold and creative to grab attention and set the stage for more.
• Connect your slides with a red thread: you can’t present investors with scattered data and expect them to make sense of it. It’s your job to weave connections and make it easy for investors to follow.
• Make each slide heading tell a story: Your headings must act as catchy, standalone messages that drive the story forward and compel investors to read till the end.

Focus on numbers, not descriptions

Local companies tend to use loads of slides describing their product and value proposition yet barely mention numbers—even if they are great. Many companies in the region grow at lightning speed since competition is not as pronounced or well-financed yet. Most are also extremely capital efficient and can successfully operate with a leaner budget— a skill investors specifically look for nowadays. 

One of our fintech clients in Saudi Arabia reached $1M in revenue in a few mere months since starting operating, all while being extremely profitable. This rapid growth combined with profitability is remarkably rare in the startup world. So if your numbers are strong, make sure to highlight them and lead with that in your pitch; it will sell better than any fancy product descriptions.

The beginning of a golden era for MENA fintech startups

We are witnessing unprecedented times for local fintech companies. The influx of overseas capital will continue to grow as foreign investors recognise all the untapped potential in the fintech scene across the region. It's a rich market that's still in its early days, offering plenty of room for quick, capital-efficient growth and making a big impact. If local financial companies play their cards right and leverage the unique advantages they have, we can expect to see more high-profile deals and booming valuations than ever before.