Startup incubator market in the Middle East and North Africa (MENA) region

Globally, the number of incubators and accelerators are growing at an average of 18.68% annually, from about 560 companies in 2009 to about 2,616 in 2018. Reports stated that this global trend likely resemble the Arab region industry, as for example, the Kingdom of Saudi Arabia (KSA) is seeing a surge in the number of organizations to support entrepreneurs- with an opportunity to learn from international models as well as customize them for the greater good of the up-and-coming regional ecosystem.

First, we define this market as per follows: “Business incubation programs are often sponsored by private companies or municipal entities and public institutions, such as colleges and universities. Their goal is to help create and grow young businesses by providing them with necessary support and financial and technical services.”

We have provided our summary in graphs and charts form as below and the detailed findings, calculations, estimations, assumptions, and statistics used to derive these figures can be found in the “Findings” section of this report.

FINDINGS

Market size, growth and trend

Globally, the number of incubators and accelerators are growing at an average of 18.68% annually, from about 560 companies in 2009 to about 2,616 in 2018. Reports stated that this global trend likely resemble the Arab region industry, as for example, the Kingdom of Saudi Arabia (KSA) is seeing a surge in the number of organizations to support entrepreneurs– with an opportunity to learn from international models as well as customize them for the greater good of the up-and-coming regional ecosystem. 

“A report by Wamda Research Lab (WRL) in 2017 noted that the number of entrepreneurship support organizations in Saudi Arabia, including incubators, accelerators, co-working spaces and funds, nearly tripled, growing from 13 between 2006 and 2010, to 36 between 2011 and 2015” or that translates to about 22.59% annually. In the whole ARAB region, the number is about 86. As per the latest list by Wamda, the number of incubators in the MENA region is about 15 in 2015, which is about 18% of the overall incubators, accelerators, and co-working space companies. Assuming that the trend continues on in the next decade, then we can roughly project that the number of incubators annually is as per below:

[Estimated and projected number of incubators in the MENA region]

• 2015: 15
• 2018: 15 * 1.2259 * 1.2259 * 1.2259 = 28
• 2021: 28 * 1.2259 * 1.2259 * 1.2259 = 51
• 2022: 51 * 1.2259 = 63
• 2023: 63 * 1.2259 = 77
• 2024: 77 * 1.2259 = 94
• 2025: 94 * 1.2259 = 115

In terms of the total investment raised, one MENA incubator can raise an average of Euro 750,000 (US$836,000), or which equates to an average 17 companies per incubator that are ready for investment (or graduates) while one incubator can support 65 SMEs on average. The average number of new jobs created by one MENA incubator is 100. 

Using the above number of incubators annually and the average investment value per incubator, then we can determine rough estimates of how much money will be invested by these incubators yearly;

[Estimated total investments raised by MENA incubators]

• 2015: 15 * $836,000 = $12.54 million
• 2018: 28 * $836,000 = $23.41 million
• 2021: 51 * $836,000 = $42.64 million
• 2022: 63 * $836,000 = $52.67 million
• 2023: 77 * $836,000 = $64.37 million
• 2024: 94 * $836,000 = $78.58 million
• 2025: 115 * $836,000 = $96.14 million

[Estimated number of businesses that are ready for investment (or graduates) through MENA incubators]

• 2015: 15 incubators * 17 companies = 255 businesses
• 2018: 28 incubators * 17 companies = 476 businesses
• 2021: 51 incubators * 17 companies = 867 businesses
• 2022: 63 incubators * 17 companies = 1,071 businesses
• 2023: 77 incubators * 17 companies = 1,309 businesses
• 2024: 94 incubators * 17 companies = 1,598 businesses
• 2025: 115 incubators * 17 companies = 1,955 businesses

[Estimated number of SMEs that are supported by MENA incubators]

• 2015: 15 incubators * 65 SMEs = 975 SMEs
• 2018: 28 incubators * 65 SMEs = 1,820 SMEs
• 2021: 51 incubators * 65 SMEs = 3,315 SMEs
• 2022: 63 incubators * 65 SMEs = 4,095 SMEs
• 2023: 77 incubators * 65 SMEs = 5,005 SMEs
• 2024: 94 incubators * 65 SMEs = 6,110 SMEs
• 2025: 115 incubators * 65 SMEs = 7,475 SMEs

[Estimated number of new jobs created by MENA incubators]

• 2015: 15 incubators * 100 new jobs = 1,500 jobs
• 2018: 28 incubators * 100 new jobs = 2,800 jobs
• 2021: 51 incubators * 100 new jobs = 5,100 jobs
• 2022: 63 incubators * 100 new jobs = 6,300 jobs
• 2023: 77 incubators * 100 new jobs = 7,700 jobs
• 2024: 94 incubators * 100 new jobs = 9,400 jobs
• 2025: 115 incubators * 100 new jobs = 11,500 jobs

In terms of sector, below is the market shares of clients that will be served by the MENA incubators.

• ICT = 65%
• Energy and Environment = 12%
• Business Services = 10%
• Life Sciences = 7%
• Other industries = 6%

Total Addressable Market (TAM)

According to a report released by McKinsey, MENA region sees brighter future in terms of entrepreneurial growth, quoted: “Undergoing a period of great social, political, and economic transformation, the Middle East and North Africa (MENA) region is becoming a burgeoning hub of commercial innovation and entrepreneurship. Home to a population of more than 430 million people across its constituents and with a GDP of USD $2.8 trillion,9 the states across the region are experiencing a new wave of economic activity, and their digital future looks even brighter. MENA is projected to exhibit real GDP growth in the coming years, reaching $3.4 trillion in GDP value by 2020; however, the region has in fact realized only 8.4 percent of its digital potential.”

To determine the total addressable market of Qewam, we look at the total number of companies that could benefit from the services it offers–the SMEs and the startups in the region.

Number of SMEs in MENA region

Approximately 90% of the total businesses in MENA region are considered SMEs (small-to-medium enterprises), or that’s about 23 million SMEs in total. However, reports stated that only 8% of SMEs have online presence and nearly 63 percent of the MSMEs do not have access to finance. 

• Estimated number of SMEs in MENA = 23 million
• Estimated number of SMEs with financial access = 37% * 23 million = 8.51 million
• Estimated number of SMEs without financial access = 63% * 23 million = 14.49 million
• Estimated number of SMEs in MENA with online presence = 8% * 23 million = 1.84 million

Number of startups in MENA region

There are over 3,000 startups in the MENA region and 42% of these are located in the UAE and about 12% of these are in Egypt. 

In terms of the total funding, the UAE took in the most funding (60%), while Egypt accounted for the maximum number of deals in the region (25%). Startups in the UAE benefited from government support, corporate venture interest, and growing investor appetite for startups. The total funding in the MENA region was $704 million in 2019, a 13% increase from 2018.

Top competitors

Below are the notable 15 MENA incubators. The business model provided in this report was quoted or based on Wamda provided analysis. 

1. ANPT incubators

This startup incubator was launched in 2009 by the ANPT and its geographic focus is in Algiers, Oran, Annaba and Ouargala, Algeria.

Business model: “The ANPT (National Agency for the Promotion and Development of Technological Parks) features offices in Algiers, Oran, Annaba, and Ouargala Technoparks, for a minimum of 24 months, at a monthly rate of 5850 DZD (around $73 USD). Startups that work here receive a large array of services, including coaching, training, press relations management, assistance, and management of patent registration, and industrial and intellectual property protection. Project holders at the idea stage can benefit from free incubation until their company starts generating revenue.”

2. TIEC 

This company is based in Cairo and Assiut, Egypt and was launched in September 2010, on a governmental initiative from ITIDA (Information Technology Industry Development Agency).

Business model: “TIEC Incubation offers entrepreneurs with an ICT-related prototype a one-year incubation program consisting of up to 120,000 EGP (around $16,700 USD) of in-kind services such as consultancy services, software, hardware, and marketing, access to technical, subject-matter advice, business consulting, mentoring, as well as a working space in either Cairo’s Smart Village or in Assiut. Since it is a semi-governmental entity, TIEC does not take any equity in startups and does not charge startups to participate.”

3. AUC Venture Lab

Based: Cairo, Egypt

Launched: July 2013, by The American University of Cairo

Business model: “AUC Venture Lab offers eight months of incubation to the startups that have graduated from its acceleration program. Startups get access to the same network of investors, training, project management, and assistance as before.”

4. iPark

Based: Amman, Jordan

Launched: March 2003

Business model: “iPARK offers a fully equipped physical space to work from, with 45 independent office units which vary in size from three to eight+ person offices, as well as business services ranging from management team support, development, mentoring, and guidance to marketing and public relations, talent acquisition and recruitment, accounting services, and legal services.”

5. Berytech

Based: Beirut, Lebanon

Launched: June 2001

Business model: “The Berytech team assigns entrepreneurs a mentor to accompany them during their incubation period, follow up on management and budget, and periodically audit their process. Startups have access to either of their three sites in Beirut, with fees starting from $250 USD per month for a desk. Eligible startups can benefit from grants up to $15,000 USD and from up to six months free of hosting/services. They can also apply for VC money through the Berytech fund.”

6. AltCity

Based: Beirut, Lebanon

Launched: July 2011

Business model: “AltCity is a coworking space-turned-café and incubator. Entrepreneurs who work there get access to regular support meetings with the AltCity team, legal assistance, and contacts with banks, lawyers, investors, and potential team members. More services are to come in the future. Entrepreneurs at AltCity can also participate in the many startup-related events organized by the AltCity team.”

7. PICTI

Based: Ramallah, and Gaza, Palestine

Launched: 2004

Business model: “The Palestine Information and Communications Technology Incubator (PICTI) has offices in the West Bank and Gaza. In addition to the space and seed funding, PICTI offers full incubation services such as networking, and legal and financial coaching through PICTI business advisors, its Network of Mentors (PNM), as well as international networks such as Mowgli, Youth Employment Network (YEN), and BiD NETWORK. PICTI is a not-for-profit organization with a minimal equity shares recovery model.”

8. Business and Technology Incubator (BTI) 

Based: Gaza, Palestine

Launched: 2006

Business model: “This incubator offers a workspace and services, sets up training programs, and organizes events to match experts and investors with technology entrepreneurs. BTI offers its services for free, thanks to partnerships and funding from the World Bank, the UK’s Quality Improvement Fund (QIF), BiD Network, and many others.”

9. PalInnO

Based: Nablus, Palestine

Launched: June 2013 

Business model: “PalInnO is an organization that aims at creating bridges between Palestine’s most innovative hi-tech entrepreneurs and the global market. They invest in and incubate Palestinians startups, offering office space, as well as professional consulting and mentoring from Silicon Valley experts. Among their programs is the Palestine to Silicon Valley program (P2SV), which takes startups through three phases: 1) two-month incubation at their space in Palestine; 2) market validation in Europe; and 3) investor pitching in Silicon Valley, as explained in Wamda’s profile on PalInnO. The incubator takes shares in the companies it incubates in exchange for seed funding of up to $50,000 USD, office space, mentorship, and IT equipment.”

10. Badir Incubator for Information and Communication Technology

Based: Riyadh, Saudi Arabia 

Launched: 2008, by Badir Program for Technology Incubators affiliated to the King Abdul Aziz City for Science and Technology

Business model: “The Badir incubator offers a place to work to Saudi Arabian technology entrepreneurs at the idea stage, as well as workshops, and various services such as business plans, and legal, administrative, commercial, and marketing assistance.”

11. Afkar

Based: Riyadh, KSA, and Dubai, UAE

Launched: September 2013, by digital media company Intigral 

Business model: “Akfar.me supports startups that will build products and services tailored to the needs of Intigral’s existing clients. The incubator offers selected startups room in Intigral’s offices in either Dubai or Riyadh for three months, $20,000 USD in seed investment, in exchange for 5% to 20% of ownership in the product, access to their clients in Africa, Asia, and the MENA markets (with a focus on KSA), and mentoring. The incubator has brought on board mentors from MEVP, MBC Ventures, STC Ventures, AstroLabs, Arabnet, Wamda, and more.”

12. Wikistartup

Based: Tunis, Tunisia

Launched: October 2011

Business model: “The private – read: not free – incubator has two main activities: individual coaching to help startups set business plans, raise funds, and develop their businesses, and two training sessions for investors and innovation entrepreneurs, as well as a seminar on alternative funding and a session they market as the Business Angel Academy.”

13. Impact

Based: Tunis, Tunisia

Launched: December 2013, by LAB’ESS

Business model: “IMPACT offers social entrepreneurship companies a yearlong incubation program, including a workspace in the innovation hub Maison des Associations, strategic and individual coaching on-site, collective trainings, and coaching sessions with IHEC Business schools professors and mentors from the Groupe SOS, and access to associations support organization BAC and IMPACT’s extensive networks.”

14. in5

Based: Dubai, UAE

Launched: May 2013, by Dubai Internet City

Business model: “In5 is an innovation hub hosted by Dubai Internet City (DIC). in5 assists entrepreneurs with establishing their business within the TECOM Freezone, gives them access to a pool of mentors and investors, offers access to seminars and workshops with industry experts and specialists, and gets them in to a range of SME networking events. in5 doesn’t fund startups, but offers discounts on registration, licensing, and visa fees, and offers fancy affordable offices (1,000 AED, or $272 USD, per month) for up to three months.”

15. Silicon Oasis Founders (SOF) 

Based: Dubai, UAE

Launched: September 2013, by Dubai Silicon Oasis Authority (DSOA)

Business model: “Silicon Oasis Founders works with local entrepreneurs in the technology sector. While any entrepreneur can rent a seat or an office, starting from less than 12,000 AED (around $3,200 USD) per year (including the license), only selected entrepreneurs get access to the services, offered by the incubator, an entity entirely owned by the government of Dubai, in exchange for equity. Among those services are a mentoring program, HR advice, strategy, investment and pitching support, accounting services, company setup and creation, visas, as well as access to a pool of partners.”

business incubation programs, co-working spaces, market size growth and trend, MENA region, Middle East and North America, startup accelerator, Startup incubator, startup industry, startup investment, target audience, market research, market trends, industry statistics, market size, total addressable market, top companies

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