RIYADH: The Middle East does not have a shortage of startups pitching for capital, but investors are still struggling to find companies with the market knowledge, traction and technological differentiation required to justify an investment, according to Hussein Attar, CEO of Tech Invest Com.
Venture capital firms can receive between 2,000 and 3,000 pitches a year, Attar said, yet many founders approach investors before researching competitors or proving customer demand.
“You have to prove to the market that what you’re building is actually much needed,” he said, adding that contracts, customer discussions and minimum viable product tests can help founders close the gap between an idea and a viable business.
The real sourcing problem
For investors, the difficulty is not generating deal flow but identifying the small number of companies capable of meeting investment criteria.
Across the Middle East and North Africa, only 214 venture transactions were completed in the first half of 2026, according to MAGNiTT, as deal count fell 41 percent year on year to its lowest half-year level since at least 2022.
Funding also became more concentrated, with the 10 largest transactions accounting for 58 percent of the $1.35 billion invested during the period.
Attar said qualified companies are harder to find because many of the most promising founders already operate within established professional networks. “Who you know, who you talk to, who introduces who” can determine whether an investor gains access to differentiated companies, he said.
Hussein Attar, CEO of Tech InvestCom. (Supplied photo)
That makes ecosystem participation part of investment strategy. Attar advised investors to strengthen their networks, contribute to the entrepreneurial community and build relationships with other funds.
Speaking at events, delivering workshops and joining industry panels can make investors more visible to founders. For later-stage firms such as Tech Invest Com, relationships with seed investors are particularly valuable because earlier backers have already evaluated the company and observed its progress.
These referrals often produce some of the firm’s strongest opportunities because the referring investors can explain why the company is distinctive, Attar said.
Traction before fundraising
Founders frequently undermine their credibility by claiming they have no competitors. Failing to identify similar businesses can indicate that the founder has not researched the market adequately.
Attar said startups should understand who else is addressing the same problem, how those companies are positioned and why their own product can compete.
Similarities are not necessarily a weakness, provided the founder can explain how the team, technology or execution model creates an advantage.
“Coming in with the blindness of ‘no one’s like us’ is the worst thing you can do,” he said.
Another common mistake is treating funding as the starting point for building the company.
Founders should instead demonstrate that customers recognize the problem and are willing to engage with the proposed solution.
That evidence can include contracts, a customer pipeline, structured discussions or tests of a minimum viable product. Each step reduces the gap between a founder’s claims and proof of market demand.
“Many of the startups feel that ‘I’m going to stay until funding comes,’ and that’s the worst thing you can do,” Attar said.
AI needs a market
The same commercial test applies to artificial intelligence startups. Attar said Tech Invest Com is interested in AI-enabled companies, but the presence of AI alone does not establish a compelling investment case.
“Focus on the commercialization and having AI enablement is the right way to go,” he said. “Show us that you can sell the solution to others.”
Companies must demonstrate how AI improves efficiency, solves an identifiable industry problem or strengthens an existing product.
Attar said many businesses developing deep-technology products or AI agents still struggle to communicate their value to customers.
Potential buyers are evaluating a growing number of similar products and may hesitate to adopt technologies they do not fully understand.
Founders therefore need to package their capabilities into products that are easy to integrate and use.
Once a company enters an organization through a clearly defined commercial application, it can expand its services.
The initial priority should be reducing adoption barriers rather than expecting customers to purchase a broad or technically complex proposition.
Building lasting advantages
Tech Invest Com began investing in technology in 2005 and expanded into venture capital in 2019. It focuses primarily on MENA-based series A and B startups, investing between $1 million and $3 million, while selective seed investments range from $200,000 to $1 million.
Attar said the firm is particularly interested in business-to-business Software-as-a-Service companies because its shareholders, including family offices with interests in banking, manufacturing, real estate and retail, can become customers or commercial partners.
Fintech remains attractive, although several segments have become crowded. The firm is also monitoring insurance tech and property tech, but differentiation remains central to its assessment.
Attar pointed to portfolio company Merit Incentives as an example of how deeper examination can change an investor’s initial view.
Although the loyalty sector appeared crowded, the company had built a merchant network covering more than 3,000 brands across 150 countries, creating infrastructure that could be offered to corporate clients.
The company also demonstrated an ability to convert introductions into customers, addressing concerns about whether it could adapt and sell effectively in Saudi Arabia.
“Exits are always great, but we’re not pressuring the startups for it,” Attar said.
Rather than pursuing growth at any cost, he said companies should build toward profitability while strengthening their brands and market positions.
For founders and investors, the more durable strategy is to focus on commercial evidence, defensible technology and relationships that continue creating value after an investment is completed.
