Scaling Qatar’s Startup Ecosystem

05 October 2022

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All over the world, startups are experiencing a rapid economic uptick. Led by the tech sector, which has grown 2.3 times more than their non-tech counterparts since the pandemic, startups are on the rise with record amounts of funding funneled into new, innovative ideas. In 2021 alone, a record 540 companies achieved unicorn status with 113 ecosystems producing at least one billion-dollar-plus behemoth.

Within this growing plethora of opportunities, Qatar’s startup ecosystem offers a promising home to many entrepreneurs. The FIFA World Cup 2022™ host is undergoing rapid development, currently ranking 4th globally in SME financing – an indicator of its commitment to startups.

While Qatar, ranked by the World Bank as the 4th wealthiest country in the world on a GDP (PPP) per capita basis, did not build its economic prowess on startups, it is acutely aware of their crucial role in economic prosperity. Particularly as the country is moving away from hydrocarbon dependency towards a diversified economy.

A single job at a startup creates five other indirect jobs in the market. Startups encourage companies to innovate, increase productivity and revenue, and form partnerships to work towards digitalisation and sustainability. Studies have also shown that the number of startups in an economy is directly proportional to GDP growth.

The startup economy is worth more than $3.8 trillion today, more than the individual GDP of most G7 economies. Year after year, investments in early-stage and growth-stage companies are reaching new highs.

While global venture investments reached $300 billion in 2020, in the Middle East, venture capitalists only invested $1 billion, demonstrating that this is an underrepresented market with huge potential. For Qatar, further development of its startup ecosystem will accelerate its transition to the socio-economic standards set out in its national development plan, the Qatar National Vision 2030.

Essentially, a successful startup ecosystem requires three elements: talent, capital and market. Big ideas from academia, science, and business are turned into marketable products by investors and, eventually, patronised by the consumer.

Qatar has already laid the foundation for such an ecosystem.

It has built a robust infrastructure required to support business growth, from ecological sustainability to ICTs. The country’s world-leading educational institutions, including the Qatar campus of Carnegie Mellon University (CMU-Q) and Hamad Bin Khalifa University (HBKU), lead research and development and promote entrepreneurship.

Business incubators and accelerator centres, from Qatar Fintech Hub (QFTH) to Qatar Science and Technology Park (QSTP), support the government’s efforts to create a sound startup ecosystem, inviting promising entrepreneurs from across the world to start their incubation journey in Qatar. Their incentives range from cash injections of $600,000 to scale businesses up to incorporation in the QSTP Free Zone.

On the macro level, the SMEs sector accounts for approximately 97% of total companies in Qatar and 31-34% of total employment. Perhaps unsurprisingly, FinTech startups secured the most venture capital deals last year. Over the years, the country’s startup environment gradually transformed into a full-fledged ecosystem. At its bedrock lies Qatar’s entrepreneurship ecosystem, which ranks 3rd in the Arab world and 8th globally.

The Investment Promotion Agency Qatar’s recently published Qatar’s Startup Ecosystem report, which contextualises the current state of Qatar’s startup ecosystem, and examines regional as well as global trends in the sector to identify common elements and strategies that can further improve Qatar’s ecosystem. The report also includes a comparative analysis to summarise the key features of Qatar’s startup ecosystem.

The result is remarkable, untapped growth potential.

With fewer than 1,000 startups, Qatar is still in its initial phase of the four-pronged Ecosystem Lifecycle Model: Activation, Globalisation, Attraction, and Integration. With its eyes set on the Globalisation phase, Qatar is investing in a fully-fledged startup support network that can generate a 2-4% GDP boost by 2033, nearly 40,000 new jobs, a diversified economy, and increased FDI through global venture investments.

Next to global startup giants such as the US, UK, China, and Germany, Qatar is a small country with only 2.8 million people. However, the experience of countries such as Sweden demonstrates that population size does not determine success. Qatar can create a more substantial market base by developing a labour force that leans on high-skilled labour. Through initiatives like Qatar Development Bank’s Tasdeer Promotion and Tasdeer Development, it is already setting substantial capacity-building incentives for non-hydrocarbon exporters.

What’s more, social attitudes to entrepreneurship are changing – for the better.

Today, 82% of the Qatari population believes that entrepreneurship is a good career choice. The country is meeting this paradigm shift with new programmes that provide training and entrepreneurial skills, such as QSTP’s Arab Innovation Academy, the first and most extensive entrepreneurship program in the pan-Arab region.

Qatar continues to gain momentum as a rising startup hub. A recent partnership between Qatar Development Bank and Startup Genome, a leading research and policy advisory organisation for governments and private institutions, aims to create more opportunities for local startups to get national and international exposure.

Meanwhile, a dedicated Sport Accelerator and Qatar SportsTech offer opportunities for sports businesses looking to establish themselves in Qatar and to match with leading brands and organisations. Building on the country’s upcoming role as host of FIFA 2022, Qatar is leveraging its status as a global sports business hub to create unmatched business and investment opportunities.

Qatar’s commitment and investment have created an, albeit young, innovative startup ecosystem that is eager to offer entrepreneurs across all industries, from sports and ICT to sustainability and logistics, a soft-landing spot. With it comes country-wide venture funding that hit a record of QAR 69 million last year, growing by 92% from 2020, and unparalleled market access to more than 25 economies worth $6 trillion in combined GDP – all within 3,000 km.

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