Muscat, the capital city of Oman, is experiencing an exciting transformation as it becomes a hub for innovative startups. Driven by a combination of government initiatives, venture capital, and a growing talent pool, Muscat is quickly establishing itself as an attractive destination for entrepreneurs and businesses.
The Sultanate’s commitment to economic diversification and technological advancement is clear through its Vision 2040 strategy, which seeks to reduce Oman’s reliance on oil by creating a sustainable and diverse economy.
Oman Vision 2040 and the Shifting Economic Landscape
Oman’s Vision 2040 is a bold plan aimed at steering the country away from an oil-dependent economy toward a more diversified and sustainable economic model.
The government is investing heavily in innovation, technology, and infrastructure to support this transition. With a projected $39 billion in investments and 6,500 industrial projects, Vision 2040 aims to create 270,000 job opportunities across various sectors.
Special Economic Zones and Industrial and Logistics Zones have been set up to attract investment and foster business growth, making Oman an appealing destination for international and local entrepreneurs alike.
The Duqm Free Zone, for example, has emerged as a flagship logistics project, strategically located with access to a deep sea port, an international airport, and industrial facilities. This infrastructure not only supports Oman’s growing logistics sector but also positions Muscat as a critical player in regional and global trade.
The Rise of Startups and Venture Capital
Muscat’s startup ecosystem is thriving, with the city attracting a growing number of tech-driven businesses. Several factors contribute to this dynamic environment, such as the availability of venture capital funds, government-backed initiatives, and a wealth of young, entrepreneurial talent.
The presence of highly skilled professionals, including software developers, business strategists, marketers, and designers, has created a fertile ground for innovation.
The Oman government has taken proactive steps to support the startup ecosystem. In April 2024, the Supervisory Committee of the Promising Omani Startups Programme revealed plans to launch a Venture Capital (VC) fund aimed at empowering entrepreneurs and driving investments into tech-based startups.
This initiative, called the Oman Future Fund, has an ambitious goal of raising $5.2 billion over five years to attract foreign investments and support local Small and Medium Enterprises (SMEs).
Moreover, the $180 million Jasoor Fund, a collaboration between Abu Dhabi’s ADQ and the Oman Investment Authority, is focused on enhancing the digital economy. This fund will focus on creating investment opportunities worth up to $8 billion in Oman’s emerging technology sectors.
These investments are designed to create a thriving ecosystem for entrepreneurs by offering both financial backing and access to valuable business networks. A prime example of this is the collaboration between Asyad Group, a leading logistics provider, and Omantel, a national telecommunications company.
Together, they launched an innovative accelerator program to support local tech startups, particularly those in the logistics industry. The Promising Omani Startups Forum, held in Muscat in December 2023, further demonstrated the growing interest in startups, drawing over 1,500 participants to explore the latest trends and opportunities.
Oman’s Startup Ecosystem: Key Metrics and Insights
The startup ecosystem in Oman has shown promising growth, albeit at a slower pace compared to global standards. Several key metrics provide a clear view of the current state of the ecosystem and how it compares with global averages.
- Ecosystem Value (H2 2021 – 2023): Oman’s ecosystem is valued at $343 million, significantly lower than the global average of $29.4 billion.
- Total Early-Stage Funding (H2 2021 – 2023): Omani startups raised $27 million, far behind the global average of $655 million.
- Ecosystem Value Growth (H2 2021 – H2 2023 vs. H2 2019 – H2 2021): The ecosystem saw a 2% growth, well below the global average of 46%.
- Number of Unicorns (H2 2021 – 2023): Oman has yet to produce a unicorn, while the global average stands at 3.
- Median Seed Round (H2 2021 – 2023): The median seed round in Oman is $200,000, compared to the global average of $985,000.
- Median Series A Round (H2 2021 – 2023): Omani startups raised $1.6 million for Series A rounds, while the global median is $7.5 million.
- Software Engineer Salary (2023): In Oman, software engineers earn an average salary of $33,000, below the global average of $47,000.
- Early-Stage Funding Growth (2020-21 vs. 2022-23): The early-stage funding growth in Oman is 8%, reflecting a steady increase.
- Total VC Funding (2019 – 2023): Omani startups secured $38 million in venture capital, compared to the global average of $4.6 billion.
- Time to Exit (2019 – 2023): The average time for startups to exit is 4 years in Oman, faster than the global average of 10 years.
- Exit Amount (2019 – 2023): Exits in Oman amounted to $40 million, while the global average exit amount is $8.9 billion.
- Exit Count (2019 – 2023): Oman has seen 4 exits during this period, compared to the global average of 80 exits.
Oman’s startup ecosystem remains in the early stages of development compared to global averages, with lower funding, exits, and unicorns. However, its potential for growth, especially with new initiatives, is evident.
The Value of Oman’s Startup Ecosystem
While the startup ecosystem in Oman is still in its early stages compared to global standards, it has seen substantial growth in recent years. Between H2 2021 and H2 2023, the total ecosystem value reached $343 million, with $27 million in early-stage funding.
Despite these figures being below global averages, they represent a positive trajectory, with a 2% growth in ecosystem value over the past two years.
A key challenge for Oman’s startup ecosystem is the relatively low funding compared to global standards. The median seed round raised in Oman between H2 2021 and H2 2023 was $200,000, significantly below the global median of $985,000.
Similarly, the median Series A round was $1.6 million, while the global average stood at $7.5 million. However, the ecosystem is showing promise, with continued growth and government initiatives designed to increase funding in the coming years.
Key Strengths in Oman’s Startup Ecosystem
Several sectors within Oman’s startup ecosystem are experiencing rapid growth, with the country increasingly positioning itself as a leader in technology, sustainability, and innovation. Among the most promising sectors are cleantech, Industry 4.0, and fintech.
Cleantech: Building a Green Future
Oman is placing significant emphasis on sustainability, with the country planning to invest $30 billion to become the world’s largest green hydrogen hub. This aligns with Oman’s goal of achieving net-zero carbon emissions by 2050.
Several initiatives have already taken shape, including the involvement of Samsung C&T in Oman’s Salalah H2 Green Ammonia Project in December 2023. Additionally, the country hosted the International Solid Waste Association World Congress in November 2023, showcasing its commitment to sustainability and waste management solutions.
In 2024, UAE energy giant ADNOC, along with Oman’s carbon removal company 44.01 and other partners, successfully completed a joint mineralization project in Al Fujairah.
These investments highlight Oman’s growing focus on clean energy and environmental responsibility, creating significant opportunities for startups in the cleantech sector.
Industry 4.0: Driving Digital Transformation
Oman has also made significant strides in the realm of digital transformation. The country’s digital transformation market is projected to reach $3.5 billion over the next five years, driven largely by Industry 4.0 technologies such as automation, artificial intelligence, and the Internet of Things (IoT).
Oman is positioning itself as a leader in Deep Tech, and the government is investing in new sectors, including semiconductor manufacturing, to further diversify its economy.
A notable success in this sector came in January 2024 when Innotech, a construction tech startup, won $500,000 during the Beban TV show, a regional platform for private-public investment opportunities.
This victory underscores the growing interest and support for technology-driven businesses in Oman, particularly in the construction and infrastructure industries.
Fintech: Strengthening Digital Finance
The fintech sector in Oman has also experienced rapid growth, thanks to active collaboration between regulators, experts, and industry leaders. In January 2024, the Central Bank of Oman (CBO) signed a collaboration agreement with ITHCA to support fintech growth in the country.
This partnership is part of a broader effort to establish a regulatory framework that fosters innovation and attracts investment. Muscat is home to several successful fintech startups, such as Mamum and Triterras, which teamed up in December 2023 to enhance trade finance and short-term lending in the region.
In 2024, Thawani, a fintech company based in Muscat, earned a spot in Forbes’ list of the top 50 strongest fintech companies in the Middle East. These achievements highlight the increasing importance of digital finance and the potential for fintech startups to thrive in Oman’s growing economy.
Why Entrepreneurs Should Choose Muscat
For entrepreneurs considering expanding or relocating their businesses to Muscat, several factors make the city an attractive option. These include its strategic location, business-friendly environment, and dedicated support for startups.
Strategic Location: A Gateway for Trade
Muscat’s geographical location on the Arabian Sea makes it an ideal hub for regional and global trade. The city’s well-developed transportation infrastructure, including ports and airports, connects Oman to Asia, Africa, and the Middle East, facilitating the movement of goods and services.
Oman’s neutral political environment further enhances the city’s appeal, offering a stable and secure base for international commerce.
Business-Friendly Environment: Incentives for Growth
Oman has established a number of free-trade zones to attract international investors and businesses. These include the Duqm Free Zone, Sohar Free Zone, Salalah Free Zone, and Innovation Park Muscat, among others.
These zones offer tax exemptions and the opportunity for 100% foreign ownership, making Oman an appealing destination for foreign entrepreneurs.
Additionally, Oman has introduced a variety of incentives to support foreign investment, such as lower government fees, expanded land use, and easier access to capital. The country is also developing new programs to foster growth in sectors such as technology, renewable energy, and healthcare.
Dedicated Support for Entrepreneurs
Muscat’s startup ecosystem is well-supported by a network of incubators, accelerators, educational institutions, government agencies, and investors. The Rising Omani Startups Program, for example, is a three-year national initiative aimed at stimulating the country’s emerging tech-driven startups.
This program focuses on three main pillars: capacity building, financing and investing, and a supportive regulatory framework. In December 2023, the program hosted the Investment and Startup Summit to further support technology and innovation-based businesses.
The Authority for Small and Medium Enterprises Development (ASMED) has registered over 100,000 SMEs and startups, providing funding, incubation programs, and support services to ensure the success of these businesses.
The Oman Investment Authority (OIA) is another key player, managing state funds and investing in high-growth sectors both within Oman and internationally.
Key Players in Oman’s Startup Ecosystem
Oman’s startup ecosystem benefits from the active involvement of several key organizations, which work collaboratively to support the growth of new businesses.
- The Rising Omani Startups Programme: This program is designed to stimulate innovation-driven startups and spread the culture of entrepreneurship across educational institutions. It focuses on three main pillars: capacity building, financing, and creating a supportive regulatory framework.
- Oman Investment Authority (OIA): As Oman’s investment arm, the OIA manages state funds and plays a central role in advancing economic sectors. In 2022, the OIA spent 187 million OMR on more than 8,000 SMEs, making it a critical player in the national economy.
- Ministry of Transport, Communications, and Information Technology: MTCIT is focused on developing the transport and logistics sector, with a goal of ranking among the top 10 globally by 2040. It also works on implementing digital strategies that drive technological innovation.
- Ministry of Higher Education, Research, and Innovation (MOHERI): This ministry is dedicated to fostering sustainable learning, scientific research, and competitive national capabilities. It also provides valuable opportunities in entrepreneurship education through workshops and university programs.
- Omantel Innovation Lab: The innovation arm of Omantel promotes entrepreneurship and innovation in new technologies. It acts as a catalyst for startup growth by offering partnerships, resources, and access to expertise.
- Authority for SMEs Development: This authority has been instrumental in the registration of over 100,000 SMEs and startups. It offers incubation programs and funding opportunities to empower innovative, tech-driven businesses.
- Oman Future Fund: With a focus on economic diversification, this fund invests in high-growth sectors such as technology, renewable energy, and healthcare. It is a key part of Oman’s broader efforts to achieve sustainable development in line with Vision 2040.
Looking Ahead
Muscat presents an array of compelling reasons for startups to establish their presence in Oman. Its strategic location at the crossroads of Asia, Africa, and the Middle East makes it an ideal hub for international trade and logistics.
Additionally, the government’s commitment to fostering a business-friendly environment, coupled with incentives such as tax exemptions and foreign ownership rights, makes Muscat an attractive destination for investors and entrepreneurs alike.
Oman’s investment in infrastructure, particularly in free trade zones and industrial hubs, further strengthens Muscat’s position as a growing startup ecosystem. The presence of key players in the logistics, tech, and finance sectors, as well as strong government support, offers startups the resources and opportunities they need to scale and succeed in the region.
Oman’s startup ecosystem is thriving, and Muscat is at the heart of this exciting transformation. The country’s Vision 2040 strategy, along with its strategic location, government support, and innovative initiatives, make it an attractive destination for entrepreneurs and investors.
With key sectors like cleantech, Industry 4.0, and fintech gaining momentum, Oman is poised to become a global leader in technology and sustainability, offering startups the perfect environment to grow and succeed.
