Majority of startups in MENA see negative impact from COVID-19

      Published on Sunday, 24 May , 2020      1145      
Majority of startups in MENA see negative impact from COVID-19

  • Business

The coronavirus pandemic has had a negative impact on the startup ecosystem across the Middle East and North Africa, a recent research report showed.




The report showed that the pandemic has negatively impacted 71 percent of startups in the region with 50 percent of the respondents confirming they have a cash runway of less than six months.

The survey was conducted by Wamda, the regional ecosystem enabler, and Arabnet, the event, insights, and innovation program organizer. Findings are based on data collected from 247 startup founders, with the UAE representing the largest share (24.7 percent) followed by Lebanon, Saudi Arabia and Egypt.

For e-commerce startups, 54.2 percent reported having a cash runway of less than six months, while a third of logistics startups said they have between one and two months of runway left. For healthtech startups, 43.8 percent of respondents said they have less than two months of runways.

Just 12 percent of startups reported having a runway of more than 12 months.

According to the report, founders have started putting aside talks of growth and expansion in favor of prioritising product development and adjusting business models to sustain operations while the pandemic persists.

Two thirds are now working remotely, while 8.6 percent said they introduced salary cuts of 50 percent or more and 15.9 percent said they reduced their number of employees.

“The survival factor for over half of the startups in the region is getting new investment or grants. Financial aid whether in the form of investment, loans or bill waiver are necessary to support the region’s startup ecosystem,” the report said.

As for funding rounds, 49.6 percent said that their funding round has been affected by the pandemic, while 29.5 percent said that they are not looking to fundraise, 11 percent said they will still receive funding as planned and 9.8 percent reported that their funding environment has improved.

Writing by Gerard Aoun

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Category Business, Gulf News | 2020/05/24 latest update at 9:00 PM
Source : Zawya | Photocredit : Google
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