Kuwait’s Struggle to Keep Pace with Dynamic Neighbors

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KUWAIT CITY, Nov 27: Prior to the “Corona” pandemic, Kuwait stood at the forefront of establishing startups and small projects, attracting global investors. However, in 2022, Kuwaiti “Startups” faced a decline in attracting investment capital across all sectors, with its share amounting to only $25.7 million out of the three billion dollars raised by startups in the Middle East and North Africa region. This marked a significant decrease of $16 million, or 38.3%, compared to the $41.7 million raised in 2021.

A report from the Wamda platform, specializing in emerging business incubators in the Middle East, revealed that Qatar and Bahrain surpassed Kuwait in fundraising during the year. Qatar secured $36.7 million, and Bahrain raised $124.7 million, while Kuwaiti startups only managed to raise $5 million. This decline contrasts with the past when Kuwait was seen as a leading incubator for emerging companies in the Gulf, producing strong regional companies like the food delivery platform Talabat, acquired by Delivery Hero for $170 million. However, recent years have seen Kuwait lag behind its more active neighbors due to a less supportive environment.

The report highlighted the transformation of the startup scene in the Middle East and North Africa after the Covid-19 pandemic in 2020, emphasizing the need for Kuwait to diversify its economy and reduce reliance on oil. The previous government aimed to achieve this through initiatives like the National Fund for Small and Medium Enterprises Development and Care, along with the Industrial Bank of Kuwait, as the sole government entity to finance emerging companies. Hassan Zainal, the founder and managing partner of Arzan Venture Capital, identified three main sources of financing in Kuwait: private equity, the public market, and venture capital. He noted that individual investors in Kuwait prefer investing in public markets, perceiving it as a safer option. Zainal added that the majority of investment capital in the country is concentrated in the real estate sector, given the consistent rise in land value, providing an attractive and less risky return for investors.

By Mahmoud Shendi
Al-Seyassah/Arab Times Staff

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