Bahrain Startup Ecosystem Report

Highlights of Bahrain’s Startup Ecosystem

Bahrain’s Startup Ecosystem generated $1.2 billion in value between July 2021 and December 2023.
It witnessed 40 percent compound annual growth compared to the previous period.
Ranked among the top 10 MENA ecosystems in several crucial metrics.
Notable strengths in fintech, cybersecurity, AI, big data, and analytics.
Competitive edge in attracting and retaining skilled tech talent.
Significant progress in establishing a supportive ecosystem for startups.

Bahrain emerges as a thriving startup hub, offering a welcoming business environment amidst its diverse society. The Bahrain Startup Ecosystem Ranking has improved significantly in recent years.

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As of 2024, Bahrain ranks 67th worldwide, having dropped seven places from previous rankings.
The Bahrain Startups scene is thriving with new companies emerging, it remains one of the Middle East’s most attractive destinations for establishing a startup, ranking 4th regionally.
Bahrain, with a population of approximately 1.5 million, stands out for its diverse and multicultural society.

Over half of its residents are expatriates, contributing to a broad cultural blend and widespread use of English. This multicultural environment makes Bahrain an appealing location for international entrepreneurs and investors.

Economic Landscape and Support Systems

While Bahrain’s economy has historically been anchored in the oil and gas industry, the country has made significant strides in diversifying its economic base.

Bahrain Startup Trends indicate a strong future for technology and innovation. The establishment of supportive ecosystems for startups, alongside the adoption of technological innovation, underscores Bahrain’s commitment to fostering entrepreneurship.

Entrepreneurship in Bahrain has seen significant growth over the past few years. The Bahrain Startup Ecosystem Report highlights key areas of growth and opportunity.

Legal and Regulatory Framework

Bahrain offers a conducive legal framework for startups. The country is known for its business-friendly policies, including lower taxes and operational costs compared to other regional countries.

Notable initiatives such as StartUp Bahrain and Bahrain FinTech Bay, supported by robust public sector involvement, reflect Bahrain’s proactive approach in nurturing a thriving startup ecosystem.

Tax Benefits: Zero corporate tax and competitive cost structures.
Ownership Policies: 100% foreign ownership permitted.
Operational Costs: Generally lower than in neighbouring countries.

Key Initiatives and Programs

The Bahrain Economic Development Board (EDB) plays a pivotal role in attracting global startups through various incentives. Their efforts are complemented by Tamkeen, a government agency offering programs like the Start Your Business Program to support new ventures.

StartUp Bahrain: Provides a collaborative platform for entrepreneurs.
Bahrain FinTech Bay: Focuses on nurturing financial technology startups.
Tamkeen Programs: Includes financial grants, training, and mentorship opportunities.

Role of the Private Sector

The private sector is also instrumental in Bahrain’s startup ecosystem. Notable contributions include the establishment of the Global Tech Hub by Citi, offering a platform for entrepreneurs, investors, and corporations to collaborate on innovative projects.

Events such as the World Entrepreneurs Investment Forum, hosted in Manama, further underscore Bahrain’s commitment to facilitating global entrepreneurial connections.

Global Tech Hub: A space for innovation and collaboration.
World Entrepreneurs Investment Forum: Promotes global partnerships and investment opportunities.

The Vibrant Startup Community

Bahrain’s startup scene is characterized by a growing number of tech startups and a supportive community of innovative companies.

The country hosts various events and accelerators aimed at fostering entrepreneurship and innovation. Bahrain Innovation is at the forefront of the country’s economic development.

Bahrain Economic Vision 2030 aims to create a diversified and sustainable economy. The Job Market in Bahrain is evolving with the rise of new startups.

Events and Accelerators: Regularly organized to support startups.
Startup Visa Program: Simplifies the process for foreign entrepreneurs to establish their businesses in Bahrain.
Startup Map: Provides a comprehensive overview of the startup landscape in Bahrain.

Key Strengths of Bahrain’s Startup Ecosystem

Multicultural Society: Attracts a diverse range of entrepreneurs and investors.
Business-Friendly Environment: Low taxes, 100% foreign ownership, and competitive operational costs.
Government Support: Strong backing from agencies like EDB and Tamkeen.
Private Sector Involvement: Significant contributions from global corporations.
Technological Innovation: Emphasis on fostering tech startups, particularly in the fintech sector.
Global Connectivity: Events and forums that connect entrepreneurs globally.

Challenges and Opportunities

Despite the significant progress, Bahrain’s startup ecosystem faces certain challenges, including competition from neighbouring countries and the need to continually innovate to attract and retain talent.

However, the opportunities for growth and development remain substantial, particularly with ongoing government and private sector support. Bahrain Startup Challenges include accessing international markets and securing funding.

Challenges:
- Competition from other regional hubs.
- The continuous need for innovation and talent attraction.
Opportunities:
- Expansion of tech and fintech sectors.
- Increased global partnerships and investments.

Overview of Bahrain Startup Ecosystem: Startup Genome Report

Bahrain’s startup ecosystem is experiencing significant growth, making the Kingdom an ideal launchpad for startups driven by innovation, regulatory support, skilled talent, and increasing funding opportunities.

The year 2023 marked considerable progress in enhancing Bahrain’s business environment and solidifying its position as a hub for entrepreneurial activities. The Bahrain Startup Community is vibrant and collaborative.

Bahrain’s startup ecosystem has demonstrated significant growth, generating $1.2 billion in value between July 2021 and December 2023.
This impressive achievement was highlighted in the 2024 Global Startup Ecosystem Report (GSER) by Startup Genome and the Global Entrepreneurship Network.
It showed a 40 percent compound annual growth compared to the previous period.
This economic impact is reflected through exits and valuations, key metrics that underscore the financial contributions of startups.

Supportive Entrepreneurial Environment

Tamkeen, in collaboration with Startup Genome, has played a pivotal role in fostering a supportive entrepreneurial environment in Bahrain.

The GSER places Bahrain among the top 10 MENA ecosystems in several crucial metrics, indicating the kingdom’s progress in nurturing its startup ecosystem. Middle East Startups often look to Bahrain as a model for success.

Key Metrics and Rankings

Bahrain’s ecosystem is evaluated based on various metrics:

Performance: This metric assesses the overall size and effectiveness of an ecosystem, based on the accumulated value created by tech startups through exits and funding.
Bang for Buck: This evaluates the average growth potential acquired by tech startups after securing venture capital funding.
Innovation: Measured through research and patent activity, Bahrain ranks among the top 15 MENA ecosystems in this domain.
Early-Stage Funding: Bahrain is also within the top 15 MENA ecosystems for fostering innovation through early-stage funding activity and investor participation.
Talent and Experience: This category recognises long-term trends in key performance factors, highlighting Bahrain’s strengths in developing a skilled workforce.

Competitive Edge in Talent and Innovation

The GSER acknowledges Bahrain’s competitive edge in attracting and retaining skilled tech talent.

The kingdom’s startup ecosystem stands out in specific sectors such as fintech, cybersecurity, artificial intelligence (AI), big data, and analytics.

These fields are notable for their high concentration of talent, robust support resources, and a growing number of startups.

Commitment to Nurturing Entrepreneurship

Bahrain’s commitment to nurturing its entrepreneurial landscape is evident. The kingdom champions innovation by enabling skill development and providing access to funding for entrepreneurs.

This supportive environment has led to significant progress in establishing a thriving ecosystem for startups.

Insights from GSER

The GSER draws on expertise from representatives in over 40 countries, offering valuable insights and guidance to policymakers and private sector leaders.

These insights aim to cultivate thriving startup communities, recognized as primary drivers of job creation and economic growth.

Contributions from thought leaders and regional players further enrich the report’s data-driven findings, based on extensive research and policy advocacy over the past decade.

Bahrain’s Progressive Approach

Bahrain’s achievements are particularly noteworthy in fintech and Sharia-compliant financial services regulations. The kingdom’s support for the regional expansion of startups highlights its progressive approach, making it a key player in the global startup ecosystem.

Future Trends: Business Environment Improvements

Bahrain’s startup ecosystem has shown remarkable growth and development, positioning the kingdom as a key player in the MENA region.

The supportive environment, coupled with significant achievements in various metrics, highlights Bahrain’s commitment to fostering innovation and entrepreneurship.

Introduction of Sijilat 3.0

In 2023, Bahrain introduced Sijilat 3.0, an upgraded commercial registration system designed to attract investors by simplifying the business registration process.
This enhancement makes it easier and more efficient for startups to establish themselves in the Kingdom.

Hope Ventures and HQ Launch

Hope Ventures launched HQ, Bahrain’s largest community-based coworking space.
This initiative provides startups with a collaborative environment to innovate and grow.
HQ serves as a central hub for entrepreneurs, fostering a sense of community and shared purpose.

Advances in Tech Infrastructure

Bahrain made significant advancements in tech infrastructure in 2023, including Beyon’s digital investments and Batelco’s implementation of Internet Protocol Version 6.
These improvements ensure that startups have access to cutting-edge technology, enabling them to compete on a global scale.

Global Recognition

Bahrain’s efforts have not gone unnoticed. In 2023, the Kingdom ranked #4 in MENA for financial, investment, and trade freedom according to the Heritage Foundation Index.
Additionally, Bahrain was recognized globally as #7 in the ICT Development Index, highlighting its commitment to creating a robust digital ecosystem.

Startup Support and Funding Opportunities

Key Players in the Ecosystem

The growth of Bahrain’s ecosystem is driven by key players such as Tamkeen, Tenmou, and Hope Fund.

These organizations provide crucial support through various initiatives, helping startups secure the funding and resources they need to succeed. Startup Funding in Bahrain is becoming more accessible to budding entrepreneurs.

Financing Platforms and Incubation Programs

In 2023, Bahrain saw the launch of several financing platforms, including Beban TV and Crowdfunding, providing startups with access to capital.

Additionally, incubation programs like the Tech Riyada Business Acceleration Program play a pivotal role in nurturing early-stage startups.

The year it also witnessed more than 200 business-related events, providing ample networking and growth opportunities for entrepreneurs.

Emergence of New Fintech Ventures

The Fintech sector in Bahrain continues to thrive with new ventures such as Spire Technologies, TerraPay, and Beyon Money. Venture Capital firms are increasingly interested in Bahrain’s startup potential.

These companies are facilitating remittances and streamlining lending processes, contributing to the Kingdom’s dynamic financial landscape. Investment Opportunities in Bahrain attract investors from around the world. Business Setup in Bahrain is streamlined to encourage new ventures.

Talent Development Initiatives

Strategic Partnerships for Skill Development

Bahrain’s commitment to fostering talent, especially in tech, is a key development focus.

In 2023, Tamkeen established numerous strategic partnerships with local and international institutions, including the General Assembly, Apple Academy, Microsoft Academy, Think Tank, Reboot, and SANS.

These collaborations bridge skill gaps and cater to the evolving needs of the market. The Bahrain Digital Economy is expanding rapidly, creating new opportunities.

Extensive Training Programs

Tamkeen provided over 10,700 training opportunities for Bahrainis in 2023, with more than 1,000 Bahrainis trained through tech partnerships.

These initiatives ensure that the local workforce is equipped with the necessary skills to thrive in a rapidly changing technological landscape.

Key Ecosystem Metrics

Ecosystem Valuation

Between H2 2021 and 2023, Bahrain’s startup ecosystem was valued at $1.2 billion, compared to the global average of $29.4 billion.
This growth reflects the Kingdom’s concerted efforts to create a thriving environment for startups.

Early-Stage Funding Achievements

Total early-stage funding in Bahrain amounted to $100 million during the same period, while the global average stood at $655 million.
This funding is crucial for nurturing innovative startups in their nascent stages.

Growth in Ecosystem Valuation

Bahrain’s ecosystem value grew by 40% from H2 2019 to H2 2021, compared to the global average of 46%.
This growth underscores the effectiveness of Bahrain’s strategies to support startups and stimulate economic growth.

Investment Rounds and Engineer Salaries

The median seed round in Bahrain was $500,000, while the global average was $985,000.
The median Series A round in Bahrain was notably higher at $16 million, compared to the global average of $7.5 million.
Additionally, software engineers in Bahrain earned an average salary of $50,000 in 2023, above the global average of $47,000.

Early-Stage Funding Growth Rate

Early-stage funding in Bahrain grew significantly, rated at 6 on a scale of 1 to 10 (with 10 being the highest), reflecting the Kingdom’s robust support for new ventures.

Total VC Funding and Exits

From 2019 to 2023, Bahrain secured $349 million in total VC funding, compared to the global average of $4.6 billion.
The time to exit for startups in Bahrain averaged 7.3 years, shorter than the global average of 10 years.
The exit amount during this period was $30 million, while the global average was $8.9 billion. Bahrain recorded three exits, compared to the global average of 80.

Sectoral Strengths

Fintech Sector Dominance

Fintech is a central focus in Bahrain, attracting the majority of startup funding. Several enablers, including Bahrain FinTech Bay and the Central Bank of Bahrain, support the sector.

Key regulatory developments such as the regulatory sandbox launched in 2017, the enactment of open banking in 2020, and recent expansions in crypto assets regulation, position Bahrain as a fintech pioneer.

Its developments include the acquisition of Bahrain FinTech Bay by BENEFIT, Bank ABC’s launch of instant blockchain payments, Binance’s launch of crypto futures, and the upcoming Fintech Academy.

Cybersecurity Advancements

Cybersecurity in Bahrain is underpinned by national efforts and a robust ICT infrastructure. The National Cyber Security Centre (NCSC), formed in 2020, is the key entity advancing cybersecurity.

Supporting initiatives include national strategy objectives, evolving regulations by the Central Bank of Bahrain, and training programs. Emerging cybersecurity startups such as CTM360 contribute to the sector.

Recent developments include NCSC’s partnership with Microsoft to bolster information security, the launch of Bahrain’s Cybersecurity Sciences Academy, and Resecurity’s expansion. Bahrain ranked #5 in cybersecurity in the 2023 IMD World Digital Competitiveness Ranking.

Growth in AI, Big Data, and Analytics

AI and Big Data are rapidly emerging in Bahrain, with concerted efforts for deployment and advancement. A key objective of Bahrain’s Digital Economy Strategy 2022-2026 is to expand the use of AI to foster government innovation.

Developments in education and training include Bahrain Polytechnic AI Academy and Tamkeen’s collaboration with AWS and BIBF to train 60 Bahrainis on machine learning and AI technologies.

AI PropTech Estater.com raised $5 million in a Series A round in March 2023, and ARRAY Innovation launched in 2024 as an AI digital solutions consultancy.

Benefits of Establishing a Startup in Bahrain

Robust Support Ecosystem

Bahrain offers a strong startup support community, including both public and private sector players.

The ecosystem provides access to a range of accelerators, incubators, and investors. With developing coworking spaces for incubation and increased opportunities for regional and international exposure, Bahrain presents an attractive proposition for startups.

Fintech support through enablers such as FinHub 973, CBB’s innovation hub, and HP Spring Studios, the first MENA fintech-focused venture studio, offer ample support in this space.

Hub for Tech Talent

Bahrain ranked #1 in the MENA region for Finance Skills, Language Skills, and Employee Training in the IMD World Talent Rankings 2023.
The Kingdom possesses a highly skilled and tech-savvy workforce, with a strong national commitment to fostering digital talent.
Bahrain is home to world-class education and specialized training initiatives, supported by Tamkeen and leading partners such as the SANS Institute and AWS.

Prime Location for Business

Bahrain offers an ideal environment for business setup and scaling. The Kingdom’s central location grants access to the GCC and MENA markets.

With lower operational costs compared to other regions, an accommodative investment environment featuring 100% foreign ownership and zero corporate taxes, Bahrain provides an attractive business landscape.

Startups benefit from Tamkeen’s support for the employment of Bahraini talent and a well-established infrastructure, alongside pioneering regulations to ease business operations.

Startup Success in Bahrain

Tamkeen was founded in 2006 by the National Communication Centre. It has completed four strategy cycles, each tailored to meet contemporary requirements. Tamkeen empowers Bahrainis to become employees of choice and enables the private sector to become the key engine of economic growth.

In 2023, Tamkeen surpassed its target by supporting over 20,000 Bahrainis for employment and training, and over 5,000 enterprises for growth and development.
Tamkeen launched Kawader in 2023, a national skills portal aimed at job seekers, business owners, and enterprises to enhance the participation of local talent in Bahrain’s economic growth.

It partnered with KPMG to launch the Low-Code Center of Excellence, a first-of-its-kind initiative aimed at advancing technological innovation and digital transformation in the Kingdom through training and skills development.

Bahrain Startup Success Stories inspire many young entrepreneurs in the region. The Entrepreneurial Ecosystem in Bahrain is supported by various initiatives and programs.

Key Ecosystem Contributors

Bahrain FinTech Bay

Bahrain FinTech Bay, a leading MENA fintech hub, offers incubation, acceleration, and education programs.
It collaborates with stakeholders to develop the ecosystem and support local startups through various initiatives, including incubation programs and an upcoming FinTech Academy.

Tenmou

Tenmou, Bahrain’s first Business Angels Company, provides mentorship and capital to innovative Bahraini entrepreneurs.
In 2023, it achieved five exits, funded over 30 startups, created 200 jobs, and enabled $10 million in follow-up funding.

Hope Fund

The Hope Fund’s investment arm, Hope Ventures, co-invests in scalable Bahraini businesses, while its talent arm, Hope Talents, supports entrepreneurs.
Its reality show, “Beban,” has raised over $6.3 million for local youth entrepreneurs.

StartUp Bahrain

StartUp Bahrain, the national ecosystem for innovative startups, comprises various stakeholders.
It offers a competition boot camp ‘StartUp Bahrain Pitch’ and hosts events for entrepreneurs to network, learn, and pitch their ideas.

Central Bank of Bahrain

The Central Bank of Bahrain’s Regulatory Sandbox allows firms to test fintech solutions; 23 companies have exited, and seven have been licensed as of 2023.
FinHub973 supports innovation, and amended regulations enable new consumer finance models like “buy now, pay later“.

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Looking Ahead

Bahrain’s startup ecosystem is rapidly evolving, marked by significant advancements in the business environment, tech infrastructure, and talent development.

With strong support from key players, innovative financing platforms, and a commitment to fostering a skilled workforce, Bahrain is well-positioned to become a leading hub for startups in the MENA region.

The Bahrain Startup Future looks promising with ongoing government support. The Kingdom’s strategic location, favourable business conditions, and thriving sectors such as fintech, cybersecurity, and AI make it an attractive destination for entrepreneurs looking to launch and scale their businesses.

As Bahrain continues to enhance its startup ecosystem, it promises a bright future for innovative ventures and economic growth.

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