The startup ecosystem is constantly changing, and in recent years, the landscape has shifted due to global events as well as emerging technology.
Throughout the MENA region, confidence seems high as seed funding, as well as debt funding, grows, and over $1 billion was invested in FinTech businesses in this region alone in 2022.
Businesses around the world struggle to find angel investment or lending to scale their startup. Valuing startup businesses can be famously difficult, as can proving profitability and the viability of the business. Plus, a lot of startup businesses are run by people who don’t have connections to venture capital.
With significant challenges comes opportunity, too. There are potential funding options that you may not have even considered ten years ago.
Crowdfunding is not the shiny new concept it was a few years ago, but it has proven to be a great method for many businesses and is still on an upward growth curve. The CAGR of the crowdfunding industry is predicted to grow by 16% by 2027.
There are four main types of crowdfunding, offering rewards, donation, debt and equity in return for financing. Businesses need to generate a lot of interest from their audience to generate enough funding in this way, but often those investing don’t expect a return, reducing some of the stress on the startup.
Venture Capital and Angel Investments
Angel investors usually take a chance on businesses that are starting out, whereas venture capitalists will look for companies that have already proven their concept and shown a level of growth.
Angel investments tend to take place further down the line, and can involve corporate restructure and may require entrepreneurs to give up some control of their business.
Trends revolve largely around the way technology can link angel investors with startups. There are direct networks and directories where startups can pitch their ideas to potential investors. These may come in the form of "super angels" who are investors that consider their eye for startup businesses one of their main skills, and often make a lot of money in the process.
With the easier connection between startups and potential investors, there is also a lot of competition for entrepreneurs. A startup needs to stand out if it is going to find investment.
There is often government help available. It is in a government’s interests to support business and entrepreneurship, and there are examples of support programs and even funding you can access.
In certain areas such as sustainability and social care there may be specific funds. For instance, the Deloitte Accelerator for Social Innovation (DASI) is a Deloitte Middle East Corporate Responsibility and Sustainability program which has a focus on social startups and growing their companies.
This is where it can help to network and seek out support, as startups may be eligible for funding and even grants they aren’t aware of.
Startup funding comes in all sorts of shapes and sizes, and this is relatively freeing for some entrepreneurs, who may find they have more runway and opportunity to grow before they have to try to find venture capital funding.