MENA tech predictions for 2025

Hi, friends 👋

Today's edition dives into something a little different: Yes, that’s right – if you weren’t already sick of predictions on the MENA tech and VC landscape for the upcoming year, allow us to gently tip you over the edge with today’s edition.

While my predictions may err on the conservative side – my crystal ball evidently has some sort of safe setting enabled – I've sought out the insights of some top regional VCs to make up for my lack of courage.

At the end of this edition, you'll find takes from the much more qualified sages; Hasan Haider (Managing Partner at Plus VC), Khaled Talhouni (Managing Partner at Nuwa Capital), Zach Finkelstein (Managing Partner at Class 5 Global), and Ivo Detelinov (General Partner at Oryx Fund).

Whenever I think of making predictions, 'Nostradamus' invariably springs to mind. Known for his vague and provocative style, this 16th-century astrologer, Michel de Nostradame, penned nearly 6,500 prophecies, often in cryptic verse. He received patronage from notable figures like the Medici family and whilst derided for his prophecies in some quarters, he saw commercial success during his lifetime, so honestly, I respect the hustle. If born today, I get this feeling that it’s likely he’d enjoy X in its current form.

However, it was in the 20th century in particular that Nostradamus’s fame soared when his book, The Prophecies, was translated and introduced to an English-speaking audience. Many believe he has predicted significant historical events such as the French Revolution, the world wars, the rise of Hitler, and even the moon landing.

In the text of his book, each four-line block, called a quatrain, attempts to predict the future. While logic might suggest Nostradamus' claims could apply to almost any event, some of them come eerily close to reality.

Take for example this quatrain, thought to predict the French Revolution:

"Songs, chants, and demands will come from the enslaved,
Held captive by the nobility in their prisons,
At a later date, brainless idiots,
Will take these as divine utterances”

This verse could be interpreted as invoking the storming of the Bastille in 1789 at the height of the French Revolution, with a little contorting and wilful blindness.

With Nostradamus's enigmatic legacy in mind, I've decided to embrace the role of seer myself. Here are my prophecies for the next 12 months…

🔮 Our predictions for 2025:

Jamie’s take

🇸🇦📈 Saudi IPOs on the rise

From ancient sands, wealth's hidden spring shall rise,
New kings of commerce under burning skies.
Power shifts as old realms bring forth gold,
Economic dominance, foretold and bold.

Globally, the pace of tech IPOs has slowed significantly since the heady days of pandemic frenzy. This deceleration is marked by some private giants like SpaceX, OpenAI, and Stripe raising billions to delay, and sometimes entirely bypass, the public market route.

Contrastingly, in the MENA region, public listings continue to be the quintessential liquidity event, despite slowly evolving secondary markets. Although Talabat's debut back on DFM back in December hasn’t quite lived up to its initial excitement from a market performance perspective, it remains a success worth celebrating.

Coincidentally, today, for instance, the beauty e-commerce platform Nice One goes public on the Tadawul. While significant, this event alone may not suffice to secure an A grade for the prediction I’m about to make.

I think it’s a well known secret within the region that there are a number of tech companies gearing up for IPOs. A notable example is the BNPL unicorn, Tabby. As divulged by General Manager Abdulaziz Saja at the 24 Fintech Conference, Tabby is preparing for a potential late 2025 or 2026 IPO in Saudi Arabia, and is already streamlining its governance and financial frameworks in anticipation.

Additionally, the online flower and gifts delivery platform, Floward, led by Abdulaziz Al Loughani, is firmly on the IPO trajectory. Initially slated for a mid-2024 debut on the Tadawul, and having engaged financial powerhouses Goldman Sachs and HSBC Holdings as early as late 2023, an IPO appears to be a question of when, not if.

Nailing my colours to the mast, I predict at least five tech IPOs in Saudi Arabia alone in 2025.

If I was to hazard a guess, I’d go for; Nice One (cheating, I know), Floward, Foodics, TruKKer and Unifonic.

There, I’ve said it. Next.

🏗️ Sustained momentum in contech

With iron’s touch and flame’s fierce embrace,
Old cities rise anew from their crumbling base.
Rebuilt and strong, their foundations renewed,
Contech’s momentum, in prophecy viewed.

I can’t help but be bullish on contech. 2024 marked a breakout year for the sector in MENA, raising an unprecedented $38.6 million in the first half alone – a staggering 1069.7% increase from 2023. I’m conscious that things did slow down markedly in H2, but you can’t always have your cake and eat it. Last year’s growth spanned various focus areas, with Tenderd raising significant funds in telematics, BRKZ continuing to make impressive strides in the marketplace sector (watch out for their new embedded finance BNPL layer), and WakeCap, a workforce management solution, acquiring Silicon Valley-based Crews by Core.

Giga-projects like The Line in NEOM, Trojena, and Jeddah Tower have dominated headlines, while the broader Middle East region has seen project awards surge by over 50% in 2023 compared to 2022, underscoring a very clear direction of travel.

Reflecting this trend, Wa’ed Ventures co-led a $52 million Series B for US-based Mighty Buildings, aimed at establishing manufacturing operations in Saudi Arabia and the UAE.

Despite these advancements, the challenge of a shallow startup pipeline ready to absorb such capital remains.

The April launch of the first Construction Tech Specialised Fund and Accelerator Program in Saudi Arabia, initiated by Startup Wise Guys (SWG), SEEDRA Ventures, and the National Technology Development Program (NTDP), is a much needed, and positive development.

Looking ahead to 2025, while sustained levels of capital deployment may not occur, I’m going out on a limb to suggest we’ll see an increase in the volume of investments, signalling a potential sleeping giant awakening.

🌍 Increased growth stage funding by international investors

Golden streams across barren lands do flow,
Sowing seeds where mighty empires grow.
From foreign shores, wealth comes to sustain,
As ancient alliances are forged again.

The regional growth stage funding gap has been articulated and outlined ad nauseum. By the end of 2023, using three different methodologies, STV estimated that approximately $25 billion would be needed for growth-stage funding over the next five years.

In the interest of brevity, the challenge is two-fold:

1. Growth-stage companies require more capital to reach successful exits

2. Successful exits are necessary to build a track record that allows VC investors to attract more funds.

Raising capital for growth-stage funds involves courting institutional investors such as sovereign wealth funds (SWFs), pension funds, and endowment funds, which is markedly different from early-stage funds that mainly target high-net-worth individuals (HNIs) or family offices. However, these institutional investors often have strict policies that prioritise funds with a proven track record of exits and realised returns.

The question then of course is, how to overcome this detrimental circular dependency?

Well, time, for one. Exits don’t grow on trees. If my predictions for 2025 hold true, upcoming IPOs should help move the needle.

And secondly, we’ll need international growth-stage investors step up to the plate to bridge the gap until that time.

We've already seen promising developments last year, such as Silicon Valley’s General Catalyst making its first investment in Saudi Arabia by participating in a $67.5 million Series B funding round for open banking platform Lean Technologies. Now that General Catalyst, with $30 billion in AUM and a history of backing significant U.S. tech companies like Snap, Stripe, and Airbnb, has dipped its toes into the Arabian Gulf, let’s see what’s next.

Likewise, eyewa's $130 million Series C round led by global growth investor General Atlantic, who has a longstanding presence in the region with nearly $1 billion invested since 2012 in companies like Property Finder and Trendyol Group, underscores this trend. The recent establishment of new offices by General Atlantic in Riyadh and Abu Dhabi bodes well.

💸 Expansion of secondaries funds

In fires of change, the old guard’s treasures cast,
New fortunes shaped as echoes of the past.
From silver grasps, wealth's new paths are found,
In shifting sands of finance, fortunes are bound.

The broader the range of viable exit strategies, the better. Traditionally confined to M&A and the occasional IPO, the ongoing development of the secondaries market is essential in our world where liquidity reigns supreme.

In many respects, the success of my earlier prediction hinges on this development, as secondary transactions before a large funding round are particularly attractive to major global investors in companies with streamlined cap tables.

Local entities are beginning to make their mark; for instance, Key Capital is targeting a Q2 2025 close for their inaugural $50M secondaries fund. They are very likely just the beginning. Watch this space in 2025.

🤖 AI everywhere

Beneath the stars, new sages find their lore,
Guided by wisdom from the days of yore.
AI ascends, where ancient secrets meet,
Technological enlightenment at their feet.

No particular prescience here; I honestly just want to make sure I get at least one prediction right!

VC Predictions for 2025

The experts take (sans verse)

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