In These Industries, the COVID-19 Crisis is a Startup Bonanza



Amidst an unprecedented pandemic, how can small businesses, often the hardest hit in times of global crises, survive the turbulent times ahead in 2020?

While businesses across a myriad of sectors are struggling to keep themselves going, the pandemic has been a particularly tough spell for SMEs, which, along with their employees, face an uncertain future.

“Undoubtedly, startups in all industries and at all stages across MENA will be re-evaluating their business models and revisiting their product-market fit. [But] some industries have seen a surge in consumer demand,” MAGNiTT’s Philip Bahoshy told Zawya. For the founder and CEO of the online MENA startup ecosystem, the COVID-19 crisis is yet another situation that separates the winners from the losers.


Since hundreds of millions of students were prevented from physically attending school, the coronavirus outbreak has been a windfall for online education companies across the globe. The situation is no different in the Middle East, with flourishing homegrown businesses such as Noon Academy, one of the fastest-growing ed-tech startups in the Middle East; Amman-based startup Little Thinking Minds (LTM); UAE-based edutainment startup Lamsa; and Jordan-based education technology startup Abwaab. Their success is due to their ability to upscale their businesses and meet the rising demand as the pandemic escalated.

“Ed-tech has been on an upward trend in the MENA region, with 2019 seeing more deals in the industry than any previous year,” Bahoshy explained. “During the COVID-19 period, we have seen more customers turn to online education to supplement their learning. Certain startups that have historically focused on in-person education, such as coding, are now looking to move their education online and pivot their business models accordingly.”

According to Bahoshy, ed-tech’s success shows that a fresh approach is key to aligning the interests of customers’ current needs with their future needs, by creating short-term solutions that can evolve into longer-term revenue streams.


Another thriving sector is the online gaming and entertainment sector, with the lockdowns keeping millions of their target audience at home and in need of distraction. And it is not just the giants of the industry, such as Netflix and MBC, that have proved popular. In the Middle East, game publisher startups such as Play3arabi, Tamatem, and Falafel Games, as well as music platform Anghami and entertainment platforms such as UTURN, Starz Play and Telfaz11, are thriving.

“Gaming and entertainment startups have seen an uptick in usage, with streaming platform Anghami reporting that it has seen a significant increase in users,” Bahoshy said. “To help combat the COVID-19 downturn in revenue, the startup has pledged $3 million (AED 11 million) of free advertising towards small and medium-sized enterprises in the region. […] Play3Arabi [is] the latest gaming startup that has received funding from international investors.”


Healthcare technology, as an industry, is poised for future growth, with several health-tech and biotech startups stepping forward to develop potential vaccines and treatment options to cure or mitigate the spread of the coronavirus. Others, such as the UAE-based startup MONDIALAB, are focusing on shortening the duration of testing by supplying hand-held quick-testing kits. Still others are capitalising on the demand for remote healthcare for the millions whose movements are restricted by lockdowns.

“One of the first sectors that saw a significant increase in interest is health-tech, with many healthcare platforms providing either consultations or information [based on] medical information,” said Bahoshy. “Moreover, many have focused on specifically targeting COVID-19 by making specific information around the virus available, as well as producing the relevant items to combat the virus.”

The UAE has even been assisting in providing solutions to hospitals and clinics in the country. Earlier this month, six telemedicine solutions were approved for use in the UAE by the Telecommunications Regulatory Authority (TRA), including UAE startups Okadoc and GetBEE.


Compared to the industries above, local cleaning businesses, such as Justmop, Helpling, JustClean, and Washmen, have remained relatively quiet. Nevertheless, Bahoshy believes that they are likely to also emerge as stronger businesses following the crisis.

“Certain startups in the industry have quickly adapted their business model, either by pledging to provide free cleaning for those in need for every order that they get, while some have moved into the disinfection space [for factories or residential properties]. With businesses, schools and public spaces among those that being disinfected and deep-cleaned, and hygiene a watchword on everyone’s lips, business is only likely to soar.”


The fitness sector has also remained relatively quiet, but it too has potential. The coronavirus may have shut down fitness studios and personal training studios around the country, but it has opened new prospects for home workout apps and for fitness instructors to shift from in-person studio classes to streaming on Zoom, Instagram Live or YouTube.

Bahoshy predicts that, with $11 million invested in sports and fitness startups over the past few years, home workouts could be a significant investment opportunity in the future.


Online transactions have skyrocketed since the coronavirus crisis hit, and Bahoshy noted that fin-tech startups in general have seen an increase in traffic, especially payment gateways and e-wallets such as homegrown Middle Eastern businesses PayTabs and Telr. “Cryptocurrency exchanges, such as RAIN, have also seen an increase in traffic, as more consumers try to hedge their portfolio against drops in oil and the general stock market.”

For Bahoshy, resilience is “about always looking at how we can solve problems with the resources that are available to us.”

“How does MENA look to capitalise on the current situation to further position and strengthen itself across the global startup and venture landscape, to emerge a reference hub for others?” The answer, Bahoshy believes, is accepting the so-called “new normal”.

“In the Middle East, a number of SMEs across financial and business sectors have found ways to thrive in a time of crisis,” he said. “[This is] thanks to changes to their business model, new initiatives to help save their company and the wider industry, and simply realising that in times of unprecedented change, ‘Business as usual’ was no longer an option.”

Despite the COVID-19 crisis, MENA's startups saw an increase in funding in Q1 2020. Find out more in our Q1 2020 MENA Venture Investment Report which is hot off the digital press.