The foreign investment flow to the Middle East region is the latest to get hit because of the escalation of conflict in the region, with a significant slowdown expected in investment deals in the region in the immediate term, top executive of a global VC and fintech firm said.
Market sentiment could be impacted also by factors like rising oil prices and volatility in the global markets, potentially leading to a dip in investor confidence.
“Geopolitical conflicts, like the current escalation in the Middle East, tend to create short-term headwinds for VC (venture capital) and PE (private equity) investments as investors become more risk-averse and cautious,” Lex Webster, Managing Partner at Exinity, a globally leading fintech and VC firm, told Arabian Business.
“In the immediate term, we may see deal flow slow down and an increased focus on safeguarding existing portfolios,” he said.
Webster, however, said global VC and fintech players like Exinity will take a long-term, strategic view on investments in the UAE and the region.
“While the short-term instability is concerning, the fundamentals of the UAE and the wider region – such as a young, tech-savvy population, strong government support for innovation, and a push towards economic diversification – continue to make the Middle East an attractive investment destination,” he said.
Exinity, headquartered in the UAE with offices in the UK and Cyprus, is regulated across multiple jurisdictions, including the Financial Services Regulatory Authority (FSRA) of Abu Dhabi Global Market (ADGM).
UAE’s resilience, emphasis on innovation to drive long-term investor interest
Webster said the resilience and growing emphasis on innovation in the UAE are likely to continue driving long-term investor interest, despite temporary headwinds.
In the short-term, however, investors are to stay vigil in monitoring the regional situation and also protecting their existing investments in the region, he said.
“At Exinity, we will stay vigilant in monitoring the situation but will remain focused on [investment opportunities in] ventures that align with our broader vision of financial empowerment and digital transformation,” he said.
Webster also drove home Exinity’s investment commitment in the region by announcing a major investment deal in the UAE – a $10 million investment in the UAE-based PiP World, a pioneering Web3 gaming and EdTech venture.
He also disclosed that Exinity is also on the lookout for similar high-potential early-stage and growth-stage ventures in the UAE and the broader Middle East that align with its focus on financial technology, digital education, and Web3 innovation for investment opportunities.
“The [Middle East] region is undergoing a rapid digital transformation, and we see a tremendous opportunity to support ventures that drive financial empowerment, digital inclusion, and innovative fintech solutions.
“We are particularly interested in projects that bridge traditional finance and new technologies, offering unique value propositions and addressing real-world challenges,” Webster said.
He said: “While we are selective in choosing partners, our goal is to invest in ventures that have the potential to create sustainable impact and add value to the communities they serve.
We remain actively engaged in identifying ventures that fit this vision and look forward to supporting the next wave of innovation across the region.”
Exinity’s focus in the Middle East market
Webster also disclosed Exinity’s plans for making substantial investments in the Middle East as “it is a key strategic market” for the VC and fintech firm.
“We are committed to deepening our presence and investments in the region.”
He, however, did not elaborate on the quantum of investments they will be making in the region.
“While we can’t disclose specific figures, we are actively looking to allocate a significant portion of our investment resources.”
The investment expert said the firm will identify ventures that are driving financial inclusion and simplification, digital literacy, and Web3 innovation, “as we see these as key pillars for future growth in the Middle East.”
“We believe the region is poised to become a global hub for digital finance, and Exinity intends to play a pivotal role in shaping this transformation through strategic investments, partnerships and of course through bringing our own products to market here.”
Webster said within the region, Saudi Arabia will be a major focus market for Exinity.
“Saudi Arabia is a strategic market for Exinity, and we see significant potential for growth and investment there,” he revealed.
PiP World deal to push financial literacy through Web3
The Exinity top honcho said exploring and supporting new opportunities in the Web3 and blockchain space will be among the firm’s investment strategies in the Saudi market – as well as in the wider region.
“As the blockchain landscape evolves we are looking at strategic partnerships and investments that complement our broader goal of driving financial empowerment and innovation.
“Our investment in PiP World is testament to this commitment and we see great potential leveraging Web3 technologies to enhance financial literacy, provide value to emerging markets and create new channels of engagement,” Webster said.
He said the investment also aligns seamlessly with Exinity’s vision of empowering the next generation of investors.
“By leveraging PiP World’s gamified learning ecosystem, we’re able to bridge the gap between traditional finance and emerging technologies, driving mass adoption of financial education and empowerment,” Webster said.
Saad Naja, CEO and Founder of PiP World, said Exinity’s investment in the company will enable it to advance its mission to transform the way people learn about financial markets.
“This investment will enable us to expand our offerings and reach more users globally, particularly in the emerging markets where financial tools and knowledge are scarce,” Naja told Arabian Business.
The PiP World chief executive said one of the biggest challenges today is the widespread lack of financial literacy.
“Schools and universities rarely teach fundamental concepts like managing finances, understanding compound interest or building diversified portfolios. Because of this many people are not prepared to make informed financial decisions.
“Pip World is trying to address this gap through gamification and real-world simulations. In our game ‘PiP Trader’we integrate real-time market data and scenarios allowing players the experience what it is like to manage money and investments in a dynamic and engaging way,” Naja said.
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