Kuwait's Struggle To Keep Up With Dynamic Neighbors

Before the "Corona" pandemic, Kuwait established startups and small projects that attracted global investors. Kuwaiti "Startups" faced a decline in attracting investment capital across all sectors in 2022, with their share amounted to only $25.7 million of the three billion raised by startups in the Middle East and North Africa. As compared to the $41.7 million raised in 2021, this marked a significant decrease of $16 million, or 38.3%.

In a report from the Wamda platform, which focuses on emerging business incubators in the Middle East, Qatar and Bahrain surpassed Kuwait in fundraising. 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. Kuwait, however, has lagged behind its more active neighbors due to a less supportive environment in recent years.

After the Covid-19 pandemic in 2020, the startup scene in the Middle East and North Africa transformed, emphasizing Kuwait's need to diversify its economy and reduce its oil dependence. In addition to the National Fund for Small and Medium Enterprises Development and Care, the Industrial Bank of Kuwait was the sole government entity to finance emerging companies under the previous government. Founder and managing partner of Arzan Venture Capital, Hassan Zainal, identified three main sources of financing in Kuwait: private equity, the public market, and venture capital. In Kuwait, individual investors prefer investing in public markets, perceiving them as safer. As a result of rising land values, the majority of investment capital in the country is concentrated in the real estate sector, providing an attractive but less risky return for investors.

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