Position your BIZ in Alignment with Funding Trends
- Amir
- Apr 5, 2024
- 4 min read
Updated: Feb 15
When positioning your startup for funding, you need to demonstrate the returns the investor will get from betting on you.
Why are some raising funds and others not?
In recent years, funding trends in the Middle East and North Africa (MENA) region have shown a significant shift towards technology-driven startups, with venture capital investment increasing notably, as they bet on the sectors' ability to deliver unicorns.
Governments in the region are also playing a crucial role by establishing innovation hubs and providing incentives for startups. Are you positioning you business in alignment with these funding trends and government initiatives?
In this blog, we focus on positioning your company correctly for startup funding as the first and very essential step. We also shed light on the MENA funding ecosystem, reflecting both regional specificities and global trends.
Follow the Money
By understanding which product type, sector, geography is receiving the most investment, you understand directionally where the echo system is seeing demand for products.
These are invaluable data points that can, not only, increase your chances of funding but also direct you to the niche needing players.
According to Wamda Digital Digest Mena startups raise $254 million in March 2024 and $429 million in Q1-2024. The majority of funding went to Entrepreneurs who use software as a service (SaaS) as providers, with nine transactions raising $131 million. Fintechs, Social Network and E-commerce startups landed $40 million, $23 million and $18 million respectively, during the same period.
In addition, there has been a shift of focus to the B2B sector in the same quarter, which accounted for 74% of overall investments. This strategic move reflects an increasing need for enterprise-focused solutions, particularly within the SaaS sectors.
Understanding whether your startup aligns with funding trends is crucial for attracting investors and ensuring sustainable growth. Here is a quick checklist to consider:
Economic Climate
Consider the current economic conditions and how they impact investor sentiment.
Stay informed about macroeconomic trends that could affect funding availability.
Industry Focus
Identify if your startup operates in a trending industry, such as technology, or technology enabled businesses.
Highlight any innovative technologies, AI use or unique approaches you employ. Investors often seek startups that leverage cutting-edge technology.
Competitive Landscape
Analyze your competitors and their funding successes.
Identify what investors find attractive in similar startups.
Market Demand
Evaluate if there is a growing demand for your product or service.
Explore which funding sources are most active for that particular product or service.
Look for consumer behavior trends that indicate a shift in preferences.
Focus on Traction and Metrics
Demonstrate traction through user growth, revenue, partnerships, or other key performance indicators.
Provide data-backed evidence of market demand and potential for scalability.
Prepare for Due Diligence
Data room readiness is key to ensures that all essential documents and information are organized and accessible for potential investors, partners, or acquirers. This process involves compiling key materials such as financial statements, business plans, intellectual property documentation, and legal agreements into a secure virtual data room.
By maintaining a well-structured and comprehensive data room, entrepreneurs can streamline due diligence processes, enhance transparency, and build trust with stakeholders, ultimately facilitating smoother negotiations and increasing the likelihood of successful funding or acquisition outcomes.
Be transparent about challenges and how the startup plans to overcome them.
Gender Bias
Gender bias in funding refers to the unequal distribution of financial resources based on gender, often disadvantaging women. This bias can manifest in venture capital, angel funding, grants, and other funding opportunities, where male-led projects receive a disproportionate amount of support.
Female-led startups continue to lag internationally and even more so within the MENA region.
Funding for female founders continues to be at around 1% of the total
MENA funding distributed.
If you fall in this category, be sure to be well prepared and know that 1- the scrutiny will be bigger and 2- the chances of success potentially lower.
Getting rejected is part of the entrepreneur journey, even more so if you are a female entrepreneur. If you are a female founder, get ready to be told "No" over and over. The good news is that it can only make you stronger. The more you pitch, the more you learn, the more comfortable you get, the greater your chances are at the next round.
By evaluating these factors, you can better understand if your startup is aligned with current funding trends and make necessary adjustments to enhance your attractiveness to potential investors. While, this can be tricky and requires a lot of work, if you play your cards right, you can set your business up for success.
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