The Middle East is a large and very diverse region,
comprising more than a dozen countries with unique characteristics regarding
politics, culture, language and religion.
The MENA area - the Middle East and some North African countries - has an
estimated population of more than 444 million people as of 2017, according to the World
And it’s a population that is relatively young, educated and technologically
World Competitiveness Report 2018” from the World Economic Forum states
that, in 2015, nearly one in five people in the region were between the ages of
15 and 24. And a World Economic Forum report
says one-third of the population was below the age of 15 in 2017.
These young people have a voracious appetite for online content and social
According to Global Media Insight, active internet usage in the United Arab
Emirates is more than 99%, users spend an average of nearly eight
hours online each day and 61% of the internet usage is on mobile. In Saudi Arabia, Global
Media Insight says internet usage is 91%, and 71% of the country actively uses
YouTube. According to Google,
mobile watch time of YouTube in the MENA region is one of the fastest growing
in the world, rising by 90% year-on-year from 2014 to 2015.
This mix of a young, socially engaged population in the Middle East bodes well
for travel brands and destinations as it fosters an awareness of - and desire
to explore - other parts of the world.
According to Phocuswright’s
Middle East Online Travel Overview, Third Edition, “Middle East
travelers are ... traveling frequently - some four to five trips annually, on
And as interest in travel grows, so does innovation.
In a region where the majority of search and booking activity
still takes place offline, there are substantial opportunities for
modernization – in back-end systems, payment platforms, mobile booking
interfaces and personalized travel, across every sector from air and accommodations to transportation and tours and activities.
Entrepreneurs and investors are taking notice. According to
MAGNiTT, an online community for startups across the MENA region, startups in
that area raised $893 million across 366 deals in 2018 - a 31% increase in
funding from 2017.
For part two in our series on the Middle East, we survey the
startup ecosystem, with a look at some of the founders, investors and support mechanisms
that are driving innovation in the region.
A big deal
According to Phocuswright, there are more than 60 travel
startups with headquarters in the Middle East.
One of the best known is Careem – thanks to Uber’s eye-popping
acquisition of the Dubai-based ride-hailing company for $3.1 billion in late
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“It’s good that these headline transactions bring a lot more
attention – both from the local governments in terms of how they view the
opportunity ... but it also opens the eyes of lots of investors to the potential
within the region. And I think for a long period of time that’s been absent,”
says Stuart Crighton, founder and CEO of Cleartrip. Originally founded as an
Indian online travel agency in 2006, Cleartrip expanded into the Middle East in
2012 and acquired Saudi Arabia’s largest online travel agency, FlyIn, in June
Muhammad Chbib, founder and former CEO of Tajawal, says the
Uber-Careem deal spurs a sort of domino effect for the region – proving to early
stage investors that successful exits are possible, thereby attracting both
more foreign investors and more innovative and investment-worthy entrepreneurs.
“I think the tech investment scene is where Europe was 15
years ago and the United States 20 years ago. We are still very much in the
basics,” he says.
“Here startups still need to fight for funding whereas in Silicon
Valley, investors actually compete for the startups. But it is changing as we
speak. And a lot of governments have realized they will be in trouble unless
they invest in entrepreneurs that will build jobs for the future and build technology
and innovation other than oil and gas.”
A step ahead
The region’s outlier to these characterizations is Israel, home
to a diverse, thriving tech startup scene and half of the 60 travel startups in
One of those is Tel Aviv-based FairFly. Founded in 2014, the
company has raised $7 million from a mix of investors from Israel, the U.S.,
Europe, Hong Kong and Australia to develop its system that tracks air ticket
pricing to help corporate clients know when to re-book and also provides
insights into managing travel spending.
Co-founder and CEO Aviel Siman-Tov says global investors are
interested in Israeli startups because the country has an abundance of engineering
and development talent, a supportive startup ecosystem and a desire by
entrepreneurs to solve big problems.
“Every company that is being built in Israel, from the first
day it’s crystal clear to everyone that the company should solve a global
problem with a global footprint,” he says. “That’s why from day minus-one we built
FairFly to be a global solution that is GDS-agnostic and supports every flight
group on every GDS.”
It’s been nearly 10 years since the launch of Middle East
Venture Partners (MEVP).
In that time this Middle East-focused venture capital firm,
which invests in early and growth stage companies, has grown from $10 million
to about $400 million across multiple funds.
People are finally understanding how big and important it is. And everyone is freaked out about missing out on the opportunity online.
Walid Mansour - Middle East Venture Partners
“Our thesis is we know how to navigate this part of the
world, and we invest in companies that are able to get market share across
these markets,” says Walid Mansour, partner and chief investment officer at
One company MEVP has invested in is online travel
marketplace Wego. Mansour says MEVP has worked closely with the Wego team since
the 2017 funding to help them grow their operations in the region, which now
accounts for half of Wego’s total bookings of more than $1 billion.
Looking ahead, Mansour says “opportunities are still massive”
in travel in the Middle East, as everything from payments to packages continues
to shift online.
And it’s happening fast.
Both the recent Uber-Careem deal and Amazon’s 2017 acquisition of its Middle East rival e-commerce
platform Souq.com for $580 million have created a sense of urgency across all
industries to invest in online development.
“People are finally understanding how big and important it
is. And everyone is freaked out about missing out on the opportunity online,” Mansour
As startup and investment activity picks up pace in the
Middle East, the support ecosystem is also growing.
In March, Al Tayyar Travel Group announced the second
edition of its Jadarah Talent Accelerator Programme. The five-month program is
powered by the travel company’s online travel agencies, Tajawal and Almosafer,
in partnership with Google, Twitter, Amadeus and Udacity.
And the inaugural “Future of Tourism Challenge” pitch
competition took place in October 2018 at GITEX Future Stars, one of the region’s
largest startup conferences.
Sponsored by Dubai Tourism, Emaar Hospitality Group and
Atlantis Hotel, the competition selected 20 applicants to pitch their ideas for
“technologies that will help transform the tourism experience in Dubai.”
One of the world’s largest and best known innovation platforms,
Plug and Play, set up operations in the Middle East in October 2017. Located in
Abu Dhabi and initially focused on the financial sector, Plug and Play expanded
the operation in February with the addition of a travel and hospitality accelerator
Created in partnership with Etihad Airways and Abu Dhabi’s
Department of Culture and Tourism, the program will welcome its first class,
consisting of five to 10 startups, in September.
Between now and then, the Plug and Play team is working to
secure more corporate partners, including hotel groups and online travel
agencies. They are also working with their partners to identify travel problems
that need solving and finding startups that can potentially create those
“Our brand as Plug and Play is a
global organization so we will be tracking global talent,” says Ashlene Ramadan,
Plug and Play’s senior program manager in the Middle East. “But it’s our
mandate as well to focus on the region and locally. So we will be sourcing
startups locally however if we find that they don’t meet the criteria, then we
look abroad as well.”
And in order to position the Middle East as attractive to
entrepreneurs, Ramadan says a significant amount of Plug and Play’s early work
is focused on educating corporate and government entities on the value of
“Unlike other developing countries or in the U.S. or Europe,
they are a lot more behind here when it comes to understanding the importance
of innovating and engaging with the startups,” Ramadan says.
“When it comes to attracting startups – especially a world-renowned
pool of talented entrepreneurs from aboard – you really need to have the government
and the private entities willing to innovate. So that’s one of our primary
focuses as well - educating these corporate on why it is important to innovate,
why it is important to work with startups, trying to enhance the entrepreneurial