Deloitte: Middle East scale-up ecosystem continues growth path amid challenges
On a mission to innovate and disrupt, Middle Eastern scale-ups are thriving as the ecosystem matures rapidly. While there are many success stories – especially in fintech and ecommerce – challenges remain for the broader market to reach its next level of maturity.
Against a landscape of worsening geopolitical tensions, funding uncertainty, ongoing conflicts and supply chain complexity, scale-ups report being positive and confident in their growth prospects. That is according to a survey of scale-ups from around the world conducted by Deloitte.
Scale-ups are those companies that have moved beyond the startup phase, demonstrating rapid and sustained growth in revenue or employees over a period of several years. They typically have a proven business model and are focused on expanding their market reach and operational capacity.
The scale-up ecosystem in the Middle East
The Middle East (and Saudi Arabia in particular) has seen a sharp rise in entrepreneurial activity over recent years. The ecosystem for scale-ups is maturing quickly, but companies continue to face several critical challenges as they scale.
Scale-ups in the Middle East continue to struggle with finding specialized tech talent. While demand for technical roles is growing rapidly, the domestic talent pool in Saudi Arabia is quite limited relative to market demand.
Though part of the challenge with attracting talent has been a generational shift in values and aspirations, another piece of the puzzle is demographic: Regional powerhouses like the UAE and Saudi Arabia rely on huge numbers of skilled foreign workers. Attracting the right talent means offering the right benefits – and the competition is fierce among companies and between cities.
Future planning
Looking ahead, a key focus for Middle East scale-ups will be product diversification and development, with 68% noting this as a priority. In contrast, the most common area of focus for global scale-ups (from all countries surveyed) is on new customer acquisition, an area many admit their organizations struggle with.
The survey also found that the majority of Middle East scale-ups have an exit strategy in place already. That percentage is higher than in most other countries, including most of Europe.
This is actually quite forward-thinking on the part of these Middle East organizations and hints at a high level of confidence in these firms’ self-valuation. Having an exit strategy is important because it provides a clear roadmap for the future and allows a business to negotiate a merger or acquisition on its own terms, avoiding any pressure to sell itself short.
Many scale-ups are looking for additional funding, though others are not, the survey shows. In the Middle East, a whopping 100% of scale-ups said they are looking for more investments – far higher than in other regions.
“Ecommerce, fintech and deeptech are some of the leading sectors in Saudi Arabia right now,” said Matt Jones, manager at Saudi UK Tech Hub, an expert interviewed in the Deloitte report.
“There are several sectors showing strong potential in the Kingdom. Fintech is the standout sector in Saudi Arabia’s innovation ecosystem, supported by policy and wide consumer demand. In 2024, fintech remained a top draw for investors, leading with the most transactions.”
