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IFC is ramping up support for tech startups in the Middle East and North Africa with a $10 million investment in a new venture capital fund.
Managed by Dubai-based Wamda Capital, the vehicle will provide seed funding to up-and-coming IT firms in several countries, including Egypt, Lebanon, and Jordan.
That support is considered vital because tech startups, like most small businesses in the Middle East and North Africa (MENA), often struggle to access financing.
"In MENA, the IT sector is a potentially bountiful source of innovation and well-paying jobs,” says Deepak C Khanna, IFC’s country head of the United Arab Emirates. “But for tech startups to reach their potential, they need more support than they’re getting now.”
The project is the latest partnership between IFC and Wamda, one of MENA’s leading technology incubators. The firm, which has offices across the region, provides advice and financing to startups with the potential to grow quickly.
The company is led by Fadi Ghandour, the founder of logistics company Aramex and one of the region’s most prominent investors. Ghandour was in on the ground floor of the website Maktoob, which was sold to Yahoo! in 2009 for $165 million. That remains one of MENA’s biggest-ever tech deals.
“We believe MENA could produce the next Silicon Valley if entrepreneurs are given the right support to help them grow and expand," says Ghandour.
The fund has already raised $60 million and invested in four companies. It’s aiming to raise up to $75 million and plans to support five to seven companies a year.
During the last decade, pockets of technological innovation have sprung up across MENA, giving birth to everything from smartphone apps, to video games, to websites. But firms still face a host of challenges, including securing loans, finding talent, and protecting their intellectual property.
To overcome these hurdles, regional governments and the business community need to come together to increase access to finance, support technical education programs, and modernize regulatory regimes, says Khanna.
"There’s no doubt the tech sector is trending upwards. With a little more support, we can help the industry flourish."