The Middle East/North Africa (MENA) region has become a hub for Web3 technology due to several factors, including a large and youth-heavy population, widespread mobile and internet usage, rapid digital transformation, growing interest in cryptocurrencies and blockchain, and a strong entrepreneurial culture. These factors combined have created favorable conditions for the growth of Web3 technologies. As a result, an increasing number of startups, investors, and developers are adopting decentralized technologies and actively exploring new use cases for blockchain and cryptocurrencies. Most Web3 VC activity in the area is concentrated in the UAE and Israel due to state support, an attractive regulatory environment, and developed VC ecosystems.
Dubai has positioned itself as the key international hub for Web3, hosting a diverse array of blockchain and Web3-centric events, summits, innovation hubs, investors, and startups. The Web3 landscape in the country has undergone remarkable growth and transformation in recent years, with over 1,500 blockchain organizations now operating. This expansion has been supported by VCs launching funds specifically targeted at the Web3 industry, as well as government entities that have created an accommodating regulatory environment, along with free-trade zones and hubs. The Dubai Virtual Asset Regulatory Authority (VARA) is the world’s first regulator for virtual assets. The creation of VARA signals the government’s commitment to creating a regulatory environment that is both accommodating and predictable for blockchain companies. This approach has already been recognized by major players such as Binance and Crypto.com, both of whom have recently expanded their presence in the UAE.
Dubai is emerging as a prominent crypto capital due to its advantageous geographical location, regulatory openness, abundance of capital and talent, entrepreneurial vibes, and high quality of life.” Having witnessed the significant growth of the ecosystem since 2017, we at Sharding Capital have extremely bullish expectations for the MENA crypto ecosystem. We firmly believe that this region has the potential to become the largest global crypto hub within the next five years.
Belinda Zhou, Founding Partner of Sharding Capital
Similarly, Israel has a strong tradition of innovation and a thriving startup ecosystem, fueled by a large pool of skilled tech talent and a supportive government. In addition, the country is home to a robust academic research community specializing in computer science, cryptography, and cybersecurity, which has played a critical role in advancing the development of Web3 technologies. Furthermore, Israel provides a favorable regulatory environment for blockchain and cryptocurrencies, with clear legal frameworks and supportive policies in place. Additionally, the country has a well-established network of investors, including venture capital firms and angel investors, who are keen on supporting Web3 startups and fostering innovation in the sector.
According to the Crypto Oasis Ecosystem Report on the United Arab Emirates, the MENA region has emerged as a “thriving hub for entrepreneurship” in 2022, despite the worldwide decline in VC activity. The report highlights that the region has experienced significant growth as a FinTech hub, with the sector receiving the highest amount of funding in the region totaling $1.68B in H1 2022, far surpassing the previous year’s total. Among other MENA countries, the UAE ranked first in FinTech funding with a total of $819M in H1 2022.
Here, we provide an overview of notable investors, participants in the Web3 ecosystem, and events in the MENA region that may be of interest to Web3 founders seeking opportunities for fundraising, networking, and partnerships.
Morningstar Ventures is a blockchain-focused VC firm based in Dubai that mainly invests in early-stage token and equity rounds. Founded in 2012, the firm has invested in several high-profile startups, including the Polkastarter launchpad and the GameFi infrastructure developer Ancient8. Morningstar Ventures has a portfolio of 90 companies across various segments including gaming, infrastructure, DeFi, metaverse, and NFT, making it one of the most prolific blockchain investors in the MENA region.
Morningstar Ventures is also backing MultiverX, a blockchain protocol previously known as Elrond Protocol, and its ecosystem projects.
Morningstar Ventures made a $5M investment in 37xDubai during Q1 2023. 37xDubai is an interactive and immersive digital art gallery which offers educational programs, activations, private events, and monthly gatherings with the aim of creating a global network of digital art enthusiasts (source).
NewTribe Capital is one of the largest Dubai-based, blockchain-oriented Web3 VCs that specializes in early-stage blockchain enterprises and has a portfolio of over 100 projects.
Some of their prominent investments include NEAR Protocol, PAID Network (DeFi ecosystem), and a recent investment in SuiPad, an IDO&INO platform on Sui.
Woodstock Fund is another Dubai-based VC with a portfolio consisting of Web3 companies involved in infrastructure, DeFi, NFT, metaverse, and gaming. Founded in 2019, the firm positions itself as a “thesis and research-driven” venture capital firm with a strong conviction that the growth of Web3-based technologies can bring about a convergence of cultures and economies, enable financialization without intermediaries, and facilitate the virtualization of experiences.
The fund is led by its Indian founding partners, Pranav Sharma and Himanshu Yadav, who actively support Indian-founded startups such as Covalent and Biconomy. Nonetheless, the firm’s portfolio is geographically diverse and includes startups from the USA, Europe, and Asia.
Founded in Tel Aviv in 2018, Collider is Israel’s largest Web3-native VC, serving as an investor and incubator for Web3 startups. The firm is primarily focused on supporting early-stage startups, protocols, and products that are building the digital native economy.
Collider’s portfolio consists of a range of projects, including DeFi ventures like Gnosis, Voltage Finance, Liquality, NAOS Finance, StakeWise, and Sovryn, as well as infrastructure projects like dWallet Labs, RedStone, and BEAM. Additionally, the firm has invested in wallet solutions such as ZenGo, and trading, investing, and liquidity platforms such as Efficient Frontier and CoinAlpha.
Cypher Capital is an early-stage VC that primarily invests in Web3 infrastructure and applications, but also covers other areas, including venture capital, public markets, nodes, and mining.
The firm was founded in Dubai in 2022. Since then, it has participated in six funding rounds, including a cross-chain decentralized exchange called zkLink in May 2023 and Megaton Finance (an AMM-based DEX) in April 2023. Bill Qian, a former Binance executive, is among the fund’s founders and acts as its Chairman.
Earlier this month, Cypher Capital announced the launch of Cypher Hub, a co-working space located at Jumeirah Beach Residence in the heart of Dubai. The space is available free of charge for any Web3 or blockchain project (source).
Sharding Capital is an early-stage, Web3-native VC firm founded in 2021. They distinguish themselves by offering comprehensive post-investment support and nurturing their deep roots in the Middle East region.
Headquartered in Dubai, Sharding Capital collaborates with government entities, funds, exchanges, and incubators to help the Middle East as a region explore the new crypto economy. From this unique position, Sharding Capital is able to support a diverse portfolio on a global scale by facilitating precise market penetration and meaningful exposure.
Their portfolio is highly diversified and includes infrastructure, DeFi, NFTfi, and RWA projects. Notable investments include Galxe (formerly known as Project Galaxy), a prominent Web3 community builder with 30M users, Biconomy, a popular relayer infrastructure network, and Phaver, one of the largest user apps on the Lens Protocol.
Sharding Capital’s flagship event, Shard Dubai Demo Day, stands out as one of the largest demo days in the Middle East region. The event is known for the high caliber of its showcased projects and the attendance of notable VC firms in the audience. In March 2023, Sharding Capital hosted Shard Dubai, their biggest Web3 demo day to date, in collaboration with DIFC Innovation Hub, DMCC Crypto Center, and DeFi provider Mimo Capital.
Cryptomeria Capital is an early-stage VC firm based in Dubai, with a presence in Singapore and Hong Kong. They have actively participated in numerous seed and Series A funding rounds, playing a significant role in supporting projects such as MetisDAO, a layer-2 rollup platform, Dexlab, a token minting platform, INTMAX, a stateless zkRollup, and Metaestate, a metaverse service provider, where they led the funding round.
The firm has also established a corporate partnership with Axon Partners Group. Axon is one of the largest European VC fund managers with net assets exceeding €500M and a recent successful IPO on the Spanish stock exchange BME under the ticker “APG.”
Sheesha Finance is the first DeFi mutual fund based in Abu Dhabi and founded in 2021. The firsm provides a platform, where users can hold and stake their tokens and collect rewards from partner projects on Ethereum, Binance and Polygon chains. Sheesha also acts as a decentralized tokenized incubator and accelerator for web3 startups.
The firm invested in several DeFi and FinTech projects, including a DeFi hub Voltage Finance, and a decentralised investing platform TeraBlock.
First Stage Labs (FSL) is a Dubai-based VC firm and venture builder that was established in 2021. The company specializes in co-founding blockchain-based projects and offering them capital and advisory services. First Stage Labs concentrates on Web3 projects geared towards achieving mass adoption. At the moment, FSL has co-founded four projects: the Getgems NFT marketplace, a GameFi project called TON Play, the Tonstarter launchpad , and STON.fi (the first TON-based DEX). The firm has also invested in a portfolio of companies, including the SocialFi project Fanzee and FanTON, a sport-themed NFT project.
First Stage Labs is recognized as a “TON Ecosystem venture builder” which actively supports TON-based projects and has a close partnership with The Open Network (TON).
Some global Web3-native investors are expanding their operations in the MENA region, including the Singapore-based DWF Labs, which has an office in Dubai. DWF Labs previously collaborated with DMCC Crypto Centre, a Dubai-based ecosystem for Web3 and blockchain firms that offers office space and various resources for executing business operations, networking, and business development opportunities (source).
Web2 Investors Who Support Web3 Projects
BECO Capital is a Dubai-based VC firm founded in 2012. The company is focused on early-stage investments in consumer, enterprise software, FinTech, healthcare, and Web3 companies. While the majority of their Web3 investments are in DeFi, exchanges, and infrastructure, BECO Capital also focuses on financial services and enterprise solutions, supporting Web3 companies that address common pain points related to consumer experience, enterprise applications, and infrastructure.
Some of their investments include Thala Labs (a DeFi protocol on Aptos), CoinMENA (a platform for crypto investing), and Nibiru Chain (a DeFi hub).
Mubadala is a sovereign investment fund based in Abu Dhabi, which was founded in 2017 with the original goal of advancing the oil industry in the emirate. Today, Mubadala has a diversified portfolio across various industries, including industrials, healthcare, real estate, utilities, FinTech, software, e-commerce, biotech, and Web3. Additionally, the portfolio has a diverse geographical spread, with investments in companies across MENA, Europe, the USA, and Southeast Asia.
Mubadala backed a number of crypto-related companies, such as the FinTech startup Ramp Network and the institutional crypto asset trading platform MidChains.
Mubadala is one of the backers of Hub71, a global tech ecosystem in Abu Dhabi that features a dedicated section for blockchain projects called Hub71+ Digital Assets (source).
Hub71 is a tech ecosystem located in Abu Dhabi that launched a $2B program earlier this year to support Web3 and blockchain technology startups in the UAE. The program provides startups with access to programs and networks, as well as potential corporate, government, and investment partners (source).
Hub71 is backed by prominent entities such as Mubadala, Abu Dhabi Investment Office, and Abu Dhabi Global Market (ADGM). A range of investors are also involved in the program, including Shorooq, Middle East Venture Partners, B&Y Venture Partners, global.ventures, Data Collective, and MSA Capital. According to their website, there are currently two blockchain companies working as part of Hub71: MidChains, a blockchain-based investment exchange, and BitOasis, a digital asset wallet.
DMCC Crypto Centre is a division of the Dubai Multi Commodities Centre, the UAE’s largest free-trade zone. The Crypto Centre is currently home to a community of 550 crypto and blockchain companies, and it provides them with office space and all the necessary support to run their operations, such as educational and networking events or advisory and incubation services. Member companies can obtain a Crypto License, which enables them to conduct various crypto-related activities. The license specifies four types of activities in the “Business Activities” category and eight types in the “Regulated Virtual Assets Activities” category, covering a wide range of Web3 and blockchain segments, such as exchanges, DeFi, NFT, metaverse, payment solutions, and mining.
DMCC Crypto Centre receives support from several companies, including TDeFi (a Web3 incubator and consulting firm), DWF Labs (a Singapore-based VC firm that focuses on Web3 startups), and Boba Network (a multichain L2 blockchain platform).
Protocols and Infrastructure
StarkWare Industries is an Israel-based developer founded in 2018 that specializes in developing zero-knowledge proof technology, which addresses the scalability issue of the Ethereum blockchain by compressing information.
StarkWare also invests in blockchain projects with some notable companies in its portfolio, including dYdX (a DEX aggregator), =nil; Foundation (an Ethereum research and development firm dedicated to management systems and applied cryptography), and Braavos (a wallet). The company also supports StarkNet-based projects, including the lending protocol zkLend and the permissionless derivatives protocol ZKX.
The company’s estimated value was $8B in May 2022 when it closed its Series D round with participation from Tiger Global Management, Greenoaks Capital Partners, and Coatue Management.
Efficient Frontier is a Tel Aviv-based trading firm and market maker that operates on centralized and decentralized exchanges. The company has partnered with several top CEXs and DEXs, including Binance, Huobi, Coinbase, and Uniswap. Starkware and Collider Ventures are among its backing investors.
The firm offers a range of services such as liquidity provision, token listing support, insights on market conditions, risk management, growth strategies, and optimized trading execution through programmable executions.
Efficient Frontier has made several investments since 2021 and was involved in zkLink’s recent seed fund earlier this month.
Orbs is a blockchain infrastructure for businesses founded in 2017 and headquartered in Tel Aviv. The company is pioneering a “hybrid consensus architecture” that allows businesses to keep control of their costs, governance, and performance, while still using a decentralized Proof-of-Stake ecosystem with a permissionless validator pool.
The Orbs Network acts as a decentralized cloud and allows developers to expand smart contracts with L3 decentralized backend services. The project offers cloud execution services and a decentralized virtual machine that make it possible to run functions and deploy custom services on decentralized validator nodes without blockchain-specific knowledge.
Orbs closed its ICO earlier this month with support from DWF Labs. The firm invested in two TON-based projects: Tonstarter (a launchpad) and Megaton Finance (an AMM-based DEX).
Venom Foundation is a Web3 ecosystem that includes its own network called Venom Blockchain, as well as several decentralized tools and a venture fund named Venom Ventures. According to Crunchbase, Venom Ventures raised a total of $1B in a single venture fund, which was announced on Jan 11, 2023. The fund was launched by Venom Foundation together with Iceberg Capital.
One of their distinctive features is a deep focus on testnet activity. Venom Foundation acquired Everscale in January 2023 with the intention of using it as a workchain dedicated to testing protocols before launch. Everscale was originally launched as an independent blockchain, “Free TON”, based on the Telegram Open Network open-source code and whitepaper.
It is worth noting that many blockchain and crypto ecosystem players are expanding their presence in the MENA region due to its accommodating regulation. This group includes major crypto exchanges such as Crypto.com, Binance, MidChains, BitOasis, and Rain Financial, all of which are partners of the Middle East, Africa, and Asia Crypto and Blockchain Association (MEAACBA). Crypto.com is also considering the UAE as one of its international hubs (source).
Several major blockchain networks are also closely interacting with MENA-based Web3 ecosystem actors. For instance, Polygon, Algorand, and TON have all partnered with Hub71 (source), while Ripple recently announced a new office location in Dubai (source).
We have prepared a list of upcoming Web3-related events in the MENA region for our readers who are interested in networking opportunities and wish to gain exposure for their projects:
May 28 — June 4 2023, Tel Aviv, Israel
This event provides an opportunity for face-to-face interactions and in-depth discussions centered around decentralized Web3 technology. The event serves as a platform where builders, designers, developers, and entrepreneurs from the Web3 community can gather, share knowledge, and create relevant content related to a wide range of topics and areas of expertise. Attendees can expect conferences, workshops, hackathons, and networking sessions that delve into subjects such as dApps, smart contracts, tokenization, and the future of the decentralized web.
June 21–22, 2023, Dubai, UAE
The World Token Summit serves as a platform to showcase the diverse viewpoints and potential within the blockchain and Web3 ecosystem. The summit brings together founders, emerging crypto exchanges, crypto projects, blockchain enthusiasts, investors, entrepreneurs, and industry leaders, providing a space for exploring new projects and investment opportunities.
The upcoming edition of the summit will cover a broad spectrum of the cryptocurrency industry, including discussions on regulations, interactive sessions on emerging innovations, and insightful deliberations on investment opportunities.
October 2–5, 2023, Dubai, UAE
The Blockchain Economy Summit brings together influential figures from the crypto industry and experts to explore the future of finance. The event serves as a platform for engaging discussions, networking opportunities, and the exploration of blockchain technology’s potential impact on various sectors of the economy.
The summit offers a diverse range of activities, including keynote speeches, panel discussions, workshops, and exhibitions. Esteemed speakers and thought leaders will share their knowledge and perspectives on critical topics such as DeFi, blockchain scalability, digital assets, adoption, and the future of cryptocurrencies. The primary objective of the summit is to foster dialogue and collaboration among established organizations, emerging startups, and government representatives to propel innovation and development within the blockchain economy.
As a leading gathering in the region for the blockchain and cryptocurrency world, the latest edition of the Blockchain Economy Dubai Summit promises to be a significant event with a global impact.
October 15–18, Dubai, UAE
The summit was launched in 2018 and is now known as “MENA’s most immersive large-scale blockchain conference and exhibition.”
The 5th Future Blockchain Summit will be held at Dubai Harbour and will serve as a global meeting point for the latest technology trends in blockchain and Web3.
The four-day event will offer industry experts opportunities to network, attend expert conferences, and participate in transformational workshops exploring various Web3 themes. The summit also features the Supernova Challenge for founders to pitch their ideas and the Investors Program & Forum for potential funding opportunities.
The Business Outlook for the MENA Web3 Ecosystem
We believe that the MENA region is an attractive destination for blockchain and Web3 companies, offering an optimal balance between accessible capital and a supportive regulatory environment. MENA has a robust financial ecosystem with access to various funding sources. Although not as extensive as that of the US, the MENA ecosystem is still significantly diverse and active in terms of deal volume. While financial regulators in the US and EU are tightening the screws and potentially limiting business opportunities for blockchain and Web3 companies, MENA regulators have demonstrated their commitment to supporting local Web3 ecosystems. The region is effectively striking a balance between improving their service standards while preserving the ease of doing business.
For these reasons, First Stage Labs and a significant portion of our portfolio companies are headquartered in the UAE. As the local Web3 ecosystem continues to evolve, we continue to monitor opportunities, strike deals, and source talent in the region as part of our strategy.
If you are looking for fundraising or networking opportunities in MENA, check out our CRM with Web3 investors in the region. Are you interested in building with us? DM us on Twitter or visit our official website: http://fslabs.io/.
Are you a VC that works with MENA-based Web3 startups, but you weren’t included in our list? DM our Partner Kirill Malev.
We are First Stage Labs. Accelerating Blockchain Startups to Escape Velocity.