Most MENA Startups Have Less Than Six Months Of Runway Left, According To Report By Wamda And Arabnet Hardly a half of 247 surveyed MENA startups expect to remain solvent in the next six months, according to research by Wamda and Arabnet.

By Aalia Mehreen Ahmed Edited by Tamara Pupic

Opinions expressed by Entrepreneur contributors are their own.

You're reading Entrepreneur Middle East, an international franchise of Entrepreneur Media.

Shutterstock

The global COVID-19 pandemic has had an adverse impact on 71% of startups in the MENA region, with 22% having had to suspend their operations, while 21% have witnessed a high decrease in demand resulting in significant losses.

The findings are revealed within a research on the impact of the COVID-19 pandemic on the MENA entrepreneurship sector by Wamda, an enabler for the MENA startup ecosystem, and Arabnet, an event, insights, and innovation program organizer in the region focused on tech, business, and innovation.

Impact of the COVID-19 pandemic on MENA startups. Source: Wamda and Arabnet Report

Close to a quarter of respondents (24.7%) are based in the UAE, followed by Lebanon, Saudi Arabia and Egypt. Software as a Service (SaaS), e-commerce, and financial technology (fintech) were the most represented sectors in the research. E-grocery or foodtech, education technology (edtech), health technology (healthtech), and on-demand services also made up a significant percentage of the sectors represented in the research– which is a reflection of a diversified ecosystem.

Out of 247 startup founders from the MENA region who were included in the research, only those in e-grocery, edtech, and some fintech startups have seen an increase in demand. 67.46% of UAE-based startups reported an overall negative impact. Concerningly, 16.4% reported that they have suspended operations, 23% have witnessed significant losses, and 28% have faced moderate losses.

Financial support required to help MENA startups survive the pandemic impacts. Source: Wamda and Arabnet Report

Almost half of the startups surveyed showed that they will remain solvent for less than six months. Out of the e-commerce startups, 54.2% have a cash runway of less than six months. One-third of logistics startups have between one and two months of runway left. In healthtech, 43.8% of startups have less than two months of solvency; however, the funding environment has improved for them. Only 12% of startups have a runway of more than 12 months. Half of the region's startups have also witnessed an impact to their latest funding round owing to the current economic uncertainty and drop in oil price which has resulted in a sense of caution among the investment community.

Supply chain disruption, travel restrictions, and payment collection hurdles are among the plethora of business areas that have been impacted by the outbreak. Two thirds of the region's startups are currently working remotely, with salary cuts and reduced working hours. For over half of the startups in the MENA region, survival in the coming months depends on financial help in the form of investment, loans or bill waivers.

"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. To that end, we've developed robust research to help shed light on where the most support is needed and how policymakers can support the sustainability of their startup communities," said Omar Christidis, founder and CEO, Arabnet.

Related: Four Dubai Startups Providing Solutions Catered To Tackling The Coronavirus Pandemic

Aalia Mehreen Ahmed

Features Editor, Entrepreneur Middle East

Aalia Mehreen Ahmed is the Features Editor at Entrepreneur Middle East.

She is an MBA (Finance) graduate with past experience in the corporate sector. Ahmed is particularly keen on writing stories about people-centric leadership, female-owned startups, and entrepreneurs who've beaten significant odds to realize their goals.

In her role as Features Editor, she has interviewed the likes of Dr. Jane Goodall, KL Rahul, Sania Mirza, and Najwa Zebian.

Business Ideas

70 Small Business Ideas to Start in 2025

We put together a list of the best, most profitable small business ideas for entrepreneurs to pursue in 2025.

Technology

"We Got Funded!" Abu Dhabi-Based Alma Health Secures US$10 Million In A Series A Funding Round

Alma Health is a fully-verticalized digital healthcare provider dedicated to transforming the lives of individuals living with chronic conditions

Science & Technology

3 AI Tools to Help You Start a Profitable Solo Business in 2025

Ready to automate your business and scale without a team? This video is your step-by-step guide.

Innovation

She Created the Tinder for Clothing. Then a $30 Million Competitor Came Along

How Madison Semarjian, who created her app Mada in college, is working to out-innovate a giant.

Business News

Barbara Corcoran Finds a Buyer in One Day for Her $12 Million 'Palace in the Sky' Penthouse

Corcoran bought the duplex co-op for $10 million in 2015 and spent $2 million renovating it.

Leadership

Whether at a Startup or on a Nuclear Submarine, Earn Your Leadership

Barking orders at the people under you may get things done, but will ultimately lead to failure.