Oman has successfully built a robust pipeline for nascent ideas, offering pre-seed funding, accelerators, and foundational legal support.
But for global investors, the real opportunity lies at the most critical structural bottleneck in the entire MENA region: the significant capital divide between Seed stage success and Series A scale-up.
Omani companies are proving their efficiency in the early stages, achieving an average valuation of $4 million upon receiving investment from the Oman Technology Fund (OTF). Now, they must navigate the “scale-up chasm.”
Challenges and Strategic Opportunities Ahead: Investing Beyond the Seed Stage
Analysis of MENA regional funding in 2024 reveals a dramatic escalation in capital requirements that presents a severe hurdle for local champions seeking regional or global scale:
| Funding Stage | Average Round Size (USD) | Implication |
| Pre-Seed | $1.4 Million | Strong regional activity and initial support. |
| Seed | $3.95 Million | Consistent early-stage traction. |
| Series A | $14.1 Million | The Critical Hurdle: A mammoth financial leap required for market expansion. |
| Series B | $47.9 Million | Requires deep, specialized global funds for rapid scaling. |
For an Omani startup exiting a local accelerator with a $4 million valuation, the jump to securing a $14.1 million Series A round is challenging. This phase requires not just capital, but sophisticated governance, access to global networks, and deep sector expertise that specialized international Venture Capital (VC) funds provide.
The Role of Sovereign Capital vs. Foreign Direct Investment (FDI)
The Omani government has strategically stepped in to bridge this gap through the Future Fund Oman (FFO), managing a substantial OMR 2 billion (approximately $5.2 billion) mandate to invest in the non-hydrocarbon economy. FFO acts as a critical sovereign gap-filler, ensuring domestic champions like the AI-powered SafaQat secure necessary funds to scale.
However, sovereign capital cannot solve the challenge alone. International capital and expertise are required to generate sufficient demand for the highly skilled talent Oman is creating (such as the 8,000+ graduates from the Makeen initiative ).
Currently, Foreign Direct Investment (FDI) remains highly concentrated: 80.69% of total FDI still flows into Oil and Gas. Non-hydrocarbon sectors like Financial Intermediation (4.25%) and Manufacturing (8.98%) hold a small share. Global VCs can directly address this imbalance by providing non-hydrocarbon capital, validating Oman’s strategic pivot, and maximizing returns.
Strategic Entry Point for Venture Capitalists: Target the Gap
For growth-focused investors, Oman offers a highly attractive entry point:
- High-Quality Deal Flow: Companies exiting OTF Jasoor Ventures are vetted and ready for global scaling, with the OTF actively engaging with foreign capital and expertise to facilitate cross-border partnerships.
- Mitigate Risk with Sovereign Alignment: The optimal strategy involves co-investment alongside the FFO. This approach significantly reduces regulatory risk and provides immediate validation of the startup’s national strategic importance.
- Utilize Financial Levers: Structured investments allow VCs to leverage the 0% corporate tax rate for the first two years of operation for strategic digital and green technology companies , drastically improving the portfolio company’s initial capital efficiency.
- Addressing the Credit Need: Beyond equity, significant opportunities exist in debt financing. The broader MENA region still faces an estimated $250 billion SME credit gap. Specialized financing platforms can play a vital role in providing flexible, non-dilutive growth capital to Omani SMEs.
By targeting the Series A and B stages, international VCs can become the essential partners needed to transform successful Omani ventures into regional powerhouses, securing stakes in market leaders primed for international growth.
