Pandemic funding bubble trouble for Arab digital startups?

DUBAI: A rush to fund digital startups in the region risks creating a valuation bubble, according to entrepreneur and Wamda CEO Fadi Ghandour.
It comes a mid a flurry of major funding announcements from regional startups in recent weeks as Dubai, Abu Dhabi and Riyadh all compete to attract exciting new technology businesses.
But the weight of capital chasing such investments, including from sovereign wealth funds, could lead to valuation bubbles in some cases, Wamda chairman and CEO Fadi Ghandour told Bloomberg TV on Monday.
“Since the pandemic the whole digital ecosystem which we were predicting to happen within ten years actually happened within a couple of months, so everything digital is growing exponentially,” he told Bloomberg. “Everything that is digital is exploding. So lots of new money and lots of new startups.”
However the weight of funds targeting the sector may be pushing up valuations, he said.
“There is so much new money coming into the market. Sovereign wealth funds are starting to invest and they are seeding a lot of VCs and so I think yes there is a little bit of a valuation bubble,” he said.
The startup sector in the Gulf is thriving with a number of high profile funding deals announced in recent weeks.
Most recently, Riyadh-headquartered buy now pay later platform Tamara raised $110 million in a Series A round led by leading global payment processor Checkout.com.
Huspy, a Dubai-based PropTech startup, also raised a funding round for an undisclosed some this month.