Why founders and fintechs are the X factor for VCs

• Founders are main investment driver
• Fintechs are a lucrative market
• Accelerators and incubators competition

Personalities, teamwork, market size and originality. Technology founders seeking cash or incubation may be better served looking in a mirror rather than analysing code, according to investors.

“The founder is always the main driver as to whether we invest,” Lucy Chow, senior advisor at angel investors 2022 Female Angels, tells AGBI.

The inverse also holds true: founders that “obviously do not play well together” are a “huge red flag,” Chow adds.

Alongside cold hard cash, founders are also competing for places in technology startup accelerators and incubators that are proliferating across the Middle East as the region’s tech industry evolves.

A startup accelerator is a short term, intensive programme designed to help early-stage startups grow, while incubators nurture companies over a longer period.

Places on these programmes are hotly contested – being selected on an incubator scheme can be a ticket to more funding and building better products.

In April Google launched an accelerator for AI startups in the Middle East and North Africa. It also announced that it is backing Saudi Technology Ventures’ new AI investment fund.

Saudi Arabia has also launched a separate national incubator programme designed to accelerate the growth of early-stage AI startups. 

Lucrative fintech market

Market potential is important for winning funding or incubation, Chow says. “The larger the addressable market, the more appealing.”

But the downside is that startups in incubator programmes often have to give up a significant amount of equity in their company.

Silicon Valley accelerator YCombinator, for example, which has nurtured startups across the Middle East including Egypt’s Thndr and the UAE’s FinFlx, is also a VC company.

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Fintech is one of the Middle East’s most lucrative markets. In 2024 the sector raised $644 million in venture funding across dozens of companies. 

“We assess fintech startups based on three pillars: market opportunity, founder-market fit and scalability,” says Ryaan Sharif, general manager of VC and accelerator Flat6Labs UAE.

“Standout fintechs demonstrate strong technical execution, a deep grasp of local financial systems, and the ability to form strategic partnerships with banks, telcos or regulators.”

Imitation does not suffice. Sharif’s team avoid “copy-paste” models from other geographies. 

“We avoid startups that treat fintech as a generic model without considering regulatory complexity,” he says.