Two Arab ecosystems, three industries to watch
The M.E Exchange
10X Industry

Two Arab ecosystems, three industries to watch

These GCC cities have been declared the fastest-growing startup ecosystems where founders can leverage local strengths to lead to sizable exits. We explore the sectors that benefit.

DUBAI | Keith J Fernandez

Sharjah and Bahrain offer the best ecosystems in the Middle East for startups in the areas of financial technology, education technology and digital media, according to Startup Genome, a policy advisory and research organisation. The two cities ranked in the top five fastest-growing activation phase startup ecosystems globally, meaning that founders can “build on local economic strengths and develop focused programmes to accelerate ecosystem growth and develop pockets of success leading to sizable exits.”

The Global Startup Ecosystem Report - which tracked more than 1.27 million companies from over 250 ecosystems - recognised the support for startups offered by these two ecosystems in the wake of the coronavirus; both Bahrain and Sharjah launched stimulus programmes for SMEs, either by way of equity-free grants or by way of exemptions on a number of fees.


Thanks to its standards on crowdfunding and open banking, Bahrain leads the MENA region as a fintech ecosystem. The regulatory sandbox operated by the Central Bank of Bahrain (CBB) allows players to test new concepts before they go public – perhaps an indicator of why the island is host to 90 active and diverse startups.

As Ebrahim Janahi, chief executive of labour fund Tamkeen says: “Bahrain has established itself as an innovative fintech hub, home to regulations designed to enable and encourage entrepreneurship.”

A recent success is Fasset, a CBB sandbox company that offers global investors digital tokens for fractional investment in sustainable infrastructure. Currently in beta-stage trials, its Fasset Exchange (FEX) aims to handle tokens – essentially digital coins – that are backed by virtual currencies such as bitcoin and Ethereum, as well as real world assets such as gold.

“To date, accessing digital assets – whether cryptocurrencies or real asset-backed tokens – in the MENASA region has been an onerous process,” Mohammad Raafi Hossain, Fasset CEO said in a press statement. “FEX brings to the GCC the accessibility, variety, and ease of use which increasingly characterises digital asset markets elsewhere in the world. It is our belief that every investor should have a healthy, risk-assessed allocation in digital assets.”

The move follows the launch of Rain, the Gulf’s first cryptocurrency exchange.

The startups are capitalising on a global virtual currency market forecast to reach $1.48 billion by 2025, growing at an annual rate of 6% over the next five years.


One of the most visibly affected sectors of recent times has been media, where traditional business models have been badly affected.

Against this backdrop, several startups have established themselves to serve niche audiences, such as The Tempest, defined as a “next-generation women’s media company”. Founded in 2016, the startup was admitted to an accelerator program run by Sheraa, a Sharjah-based incubator.

“The best part about the programme was the mentoring aspect and the opportunities you get as a startup once you're part of Sheraa’s ecosystem,” explains co-founder Mashal Waqar. “They created such a supportive and encouraging environment that allowed us to work through the business and revenue side of things, and finetune our sales process.”

Startup Genome identifies Sharjah as a centre for digital media startups, with two dedicated free zones. Sheraa, meanwhile, has run programmes dedicated to book and digital content ventures. Overall, the digital content market is expected to expand by 18.7% in 2020, growing by $519.83 billion over the five-years to 2024, Technavio forecasts.


Whether catering to school students or adult learners seeking to upskill, education technology companies have seen an increased demand for their services since the COVID-19 outbreak. Worldwide, edtech startups have attracted $4.8 billion in 2020, or more venture capital investment in the first nine months of the year than in 2019, according to data from market intelligence firm CBInsight. The sector is on track to set a new record this year.

Overall, the edtech and smart classroom market will more than double over the next five years, growing 16% per year from an estimated $85.8 billion in 2020 to $181.3 billion in 2025.

Bahrain-based Lumofy is among the regional players making it to the head of the startup class in recent months. The provider of e-learning focused solutions has helped accelerate digital transformation for corporates and institutions in the Kingdom since the coronavirus outbreak, beginning with a free two-month subscription to its gateway products.

“The Covid-19 situation has allowed us to witness a major change in the way we view technology’s relationship with education,” says co-founder and CEO, Ahmed Faraj. “The shift to the digital world has been accelerated, and we as innovators have the adaptability to allow corporates, institutions and governmental entities to pivot quickly, with our suite of tools.”