How Diversity Can Catalyze Innovation In The MENA Region

The Middle East and North Africa (MENA) region is quickly establishing itself as a global entrepreneurial powerhouse. Startups in the region attracted US$727 million in investment in the third quarter of this year, marking a 192 percent increase compared to last year.  

But beyond these exceptional numbers, it’s the rapid economic development activity coupled with the diverse entrepreneurial landscape – spanning nationalities, genders, and sectors – that’s fueling this explosive growth. This rich array of participation is not only creating more resilient businesses but also positioning the MENA as a region to watch for innovative solutions to address global challenges. 

Diverse Perspectives As A Catalyst For Groundbreaking Innovations

At the core of this entrepreneurial surge is the region’s ability to harness a rich mix of perspectives and experiences. Entrepreneurs from varied ethnic, socioeconomic, and professional backgrounds are not only generating fresh ideas but also approaching challenges from unique angles.  

This diversity enhances problem-solving, allowing businesses to cater to a broader range of market demands, adapt to shifts in consumer behavior, and create solutions that are both innovative and resilient. As a result, the MENA is seeing growth across multiple sectors, from fintech and healthtech to clean energy and creative industries, while the region experiences new emerging sectors such as spacetech and agritech. 

Increasing inclusivity is also playing a critical role. We are seeing an upsurge in number of women and youth entrepreneurs. According to a recent survey, 42 percent of Arab youth want to launch their businesses instead of working regular jobs. In addition to this, efforts to support female entrepreneurs are helping to close the gender gap, signaling a shift toward a more inclusive business environment. 

The London Business School’s MENA Startup Competition – which I am proud to lead in 2024 – is a clear example of this. This year, the application process saw double the number of applications compared to the previous year, and it attracted a highly diverse pool of participants, with 47 percent of the total applicants being female founders and co-founders.  

The diversity of this year’s applicants is truly impressive, spanning the entire region as well as industries like healthtech, foodtech, fashiontech, e-commerce, and clean startups. This surge in growth is largely driven by key market players, particularly KSA, UAE, and Egypt. To harness this momentum, we have partnered with Saudi Arabia’s Small and Medium Enterprises General Authority to launch a special Riyadh edition, leveraging one of the region's most dynamic venture ecosystems to unlock new investment opportunities, accelerate growth, and streamline market entry. 

Additionally, since sustainability-focused startups have grown from 13 percent to 24 percent over the past year, we introduced a new sustainability focus this year to empower startups committed to innovative solutions that drive progress toward a more sustainable future. This wide range strengthens my confidence in the region’s innovation potential and its future readiness.  

This annual competition is not just about providing funding though – it empowers participants through comprehensive education, specialized training, and mentorship from industry leaders, venture capitalists, and ecosystem players such as STV and Impact46. By offering these resources, we aim to equip startups with the skills and knowledge they need to succeed in a competitive market.  

Plus, winning startups gain the chance to pitch their ideas to local and regional venture capitalists, opening doors to further investment, strategic partnerships, and accelerated growth. This integrated and holistic approach ensures that participants are not only provided with financial backing and incentives but also receive the tailored guidance and opportunities necessary to make a long-lasting impact in their industries. 

A Diverse Entrepreneurial Ecosystem For The MENA’s Economic Growth

A diverse startup landscape is not just about representation; it also brings real economic benefits. The mix of different backgrounds and industries represented by MENA entrepreneurs strengthens the region’s economic resilience. Businesses with diverse ideas are better equipped to handle challenges like climate action, global pandemics, or oil price fluctuations. This flexibility is especially important in a region where boosting youth entrepreneurship and employment is high on the government’s economic agenda.  

For example, in KSA, while funds and programs like the Misk Foundation and the Small and Medium Enterprise Bank support young entrepreneurs, initiatives like the Digital Future Readiness and the Youth Development Strategy are creating a future-ready workforce. These economic benefits also include job creation and reduced inequality by encouraging greater participation from underrepresented groups, such as women, and individuals from diverse socioeconomic backgrounds.  

When entrepreneurs come from diverse backgrounds, they bring a broader range of socioeconomic activity. They understand the needs and preferences of different customer groups, allowing them to tap into new markets, and create inclusive products and services for a wider audience. Both in the UAE and Saudi Arabia, diverse entrepreneurs have successfully launched services catering to locals and expats, helping businesses grow both within the country and internationally. 

Beyond economic benefits, the MENA region’s entrepreneurs are pushing for broader social change. They break down barriers, advocate for regulatory reforms, and promote better governance and transparency. This type of inclusive growth leads to more stable economies while also helping mitigate the risk of political unrest, encouraging long-term sustainable development across the region. 

A Promising Hope For Exceptional Growth

The MENA region is well-positioned to remain a leader in global innovation and entrepreneurship, and having a diverse group of entrepreneurs will be essential to maintaining this momentum. The diversity in MENA’s entrepreneurial scene not only helps it stay competitive on a global stage but also enables it to create solutions for a wide range of challenges and markets. Platforms like the LBS MENA Startup Competition will be key in pushing these efforts forward and building a future where innovation thrives. 

To fully realize this potential, policymakers and investors must continue to step up. Supporting and investing in diverse entrepreneurial initiatives is key to driving the MENA's long-term economic growth and sustainability-focused innovation. By encouraging this diversity, the region can continue to be a major force for innovation and economic development in the years ahead. 

Author Bio

Hamad Alshehab is the former head of strategy, finance, and governance of Aramco’s innovation and product development center, LAB7, and he is presently pursuing a master’s degree in finance at London Business School (LBS). He is also leading the 2024 LBS MENA Startup Competition.