The impact of the COVID-19 outbreak on the entrepreneurial ecosystem

The report aims to identify the extent of the impact of Covid-19 on the region’s entrepreneurship sector and the measures that can be taken to alleviate the financial stress on startups.
by Maysaa Ajjan

22 May 2020 | 15:25

Source: by Annahar

  • by Maysaa Ajjan
  • Source: Annahar
  • Last update: 22 May 2020 | 15:25

Screenshot of the webinar that took place hosted by Wamda and Arabnet. (Annahar)

BEIRUT: More than 70% of startups based in the Middle East and North Africa have witnessed a negative impact on their business as a result of the Covid-19 pandemic, while 50 per cent have had their latest funding round disrupted, Wamda reported.

The findings are part of a report jointly published by Wamda and Arabnet based on data collected from 247 startup founders from across the Mena region. The report aims to identify the extent of the impact of Covid-19 on the region’s entrepreneurship sector and the measures that can be taken to alleviate the financial stress on startups.

From supply chain disruption to travel restrictions and payment collection hurdles, multiple areas of business have been impacted by the outbreak and the restrictions put in place to combat its spread. The majority of startups in the region have either pivoted or scaled back their operations in order to navigate the disruption caused by the pandemic.

The report was launched in a webinar session that hosted key stakeholders from the region’s entrepreneurship sector including the startups Matic, Eon Dental and Seez as well as the Bahrain Economic Development Board and Saudi Arabia’s director of innovation and entrepreneurship at the Ministry of Investment. The session was hosted by Omar Christidis, founder and CEO of Arabnet and Triska Hamid, editorial director at Wamda.

“In Bahrain, there are clearly some winners who are really struggling; however, there are some sectors that have tremendous potential. What we are seeing in Bahrain is an acceleration of the digitisation process and acceleration of diversification of oil and gas.

Whether it's edutech healthtech e-commerce, these sectors are really doing quite well at the moment,” said Simon Galbin, managing director at Bahrain Economic Development Board.

“This is a very strange situation but I think we are getting a bit of a sense of it right now,” said Mazin Al Zaidi, director of innovation and entrepreneurship sector at Saudi Arabia’s Ministry of Investment of Saudi Arabia. “Everybody understands what is happening but nobody can predict what is going to happen over the upcoming period. So startups have to play a role in managing how they are going to manage their startups and what they are going to do like large businesses and governments.”

As for Christidis, he commented that “with the increasing importance of startups to the future economy of MENA, it’s critical for government leaders, ecosystem stakeholders, and investors to support startups through these difficult times.”

Key takeaways

Close to 50% of startups that responded to the survey reported that they have a cash runway of less than months. Also, 54.2% of the e-commerce startups surveyed stated that they have a runway of less than six months, while a third of logistics startups have between one and two months of runway left.

The report indicates that half of the region's startups have witnessed an impact to their latest funding round.

Also, only 12% of the startups surveyed have a runway of more than 12 months. Meanwhile in healthtech, 43.8% of startups surveyed have less than two months of cash runway, with the sector’s startups reporting the funding environment has improved for them.

Show Comments

An-Nahar is not responsible for the comments that users post below. We kindly ask you to keep this space a clean and respectful forum for discussion.