With more and more new fund managers establishing in the Middle East, the region's alternatives industry is fast catching up with the more developed industry hubs worldwide. Venture capital is enjoying a particular boom in appetite, with 33 venture firms setting up shop between 2018 and 2020. While these managers may not yet command the scale of funds raised by larger, more established managers, competition among GPs in the Middle East is rising. This is a good sign for the future development of alternatives more generally.

Preqin deals data shows software, internet, and financial services industries make up the majority of venture capital activity in the region, with success in these sectors drawing in capital from international investors in ways not seen before. 

The growth of alternatives is being aided by governments in the region as a means of transforming economies. With a policy goal of diversifying away from oil, sovereign wealth funds and government agencies are using private capital models to find a balance between economic development and financial returns. The demographics of the region make it an increasingly attractive market. Amid increasing incentives for companies to establish themselves in the Middle East, we expect growth to pick up in the coming years.

In our latest report, we look deep into the data and speak with local industry experts to evaluate how the success of the venture capital space is laying the foundations for the growth of private capital more broadly.