ATM 2024: Start-up funding is growing in the Middle East but more investment is needed, says experts

ATM 2024: Start-up funding is growing in the Middle East but more investment is needed, says experts

ME's contribution to global travel revenues is equivalent to share of international startup funding, 5%

Experts shone a spotlight on the Middle East’s travel investment ecosystem at Arabian Travel Market (ATM) 2024, last week.

Panellists speaking during the exhibition’s entrepreneurship summit said levels of industry funding are growing in the region but that more needs to be done to support travel startups.

The speakers included Margaux Constantin, partner of McKinsey & Company; Danny Cohanpour, CEO of Trove Tourism Development Advisors; Charaf El Mansouri, co-founder and CEO of Dharma; Mona Faraj, co-founder and CEO of ExploreTECH; and Amna Al Redha, manager of AviationXLab, which is part of the Emirates Group Future Technology and Innovations team.

This talking point is illustrated through data. According to figures from McKinsey & Company, the Middle East’s contribution to global travel revenues currently stands at approximately 5%, which is comparable to the proportion of international startup funding it is attracting.

While levels of investment have increased significantly in the wake of the global Covid-19 pandemic, speakers noted that funding for regional travel entrepreneurs is growing from a relatively low base.

Danielle Curtis, Exhibition Director ME, Arabian Travel Market, said: “It is encouraging to hear that travel investment is increasing in the Middle East, but it’s clear that more can be done to nurture entrepreneurs and startups operating in the region. 

"While panellists acknowledged that there are various challenges facing those looking for funding, there is also significant potential for growth in this space and plenty of room for disruption.”

Speakers noted that various hurdles must be overcome by travel and startup entrepreneurs seeking investment, such as perceived levels of risk and long wait times on returns. Nevertheless, panellists argued that companies with genuine value propositions are well-placed to identify and attract the right backers.

They also highlighted the growing importance of technologies such as artificial intelligence (AI), Web3 and cryptocurrency in securing financial backing. 

Although these elements represent secondary focuses for the majority of travel entrepreneurs, panel members emphasised the importance of incorporating the latest innovations in business strategies when pitching to investors.

Commenting on the need for a shift in mindset from funders, McKinsey’s Margaux Constantin, said: “If I look at our clients who are interested in investing in travel and tourism in the Middle East, 90% come with the same three parameters for investment, which are asset-light, EBITDA-positive and minimum-ticket-size [companies]. 

"The reality is that this intersection is incredibly thin, so investors are going after the same very small pool of companies. 

"We need a change in expectations and interests from investors to fuel entrepreneurship in [the region’s travel] sector.”