PayPal bets on AI, crypto with MENA headquarters in Dubai

PayPal is establishing a foothold in the Middle East and North Africa with a new regional headquarters in Dubai and a $100 million investment aimed at using cryptocurrency and artificial intelligence to make cross-border payments faster and cheaper.

The move marks PayPal’s most ambitious expansion into MENA to date and reflects what the company sees as a tipping point in how people and businesses move money across borders, Otto Williams, the company’s Senior Vice President for the MENA region, told The Circuit.

“Opening a regional office in Dubai underscores our long-term commitment to the Middle East and North Africa,” Williams said in an interview in Dubai during last week’s GITEX Global 25 exhibition. “With $100 million in dedicated funding, we aim to lower friction, reduce costs and build seamless pathways for people and businesses to send and receive money across borders using crypto and AI.”

PayPal wants to cash in on what it sees as an advantage against popular networks such as Western Union, MoneyGram and WorldRemit that handle international money movement in the region. With AI tools working in the background to catch fraud, the 25-year-old Silicon Valley firm co-founded by tech entrepreneur Peter Thiel can route payments more efficiently and provide better currency exchange rates. Target customers range from government agencies and multinational corporations to small businesses, consumers and freelancers.

“When you think about the Middle East and Africa – 80 countries with rapidly accelerating digital innovation and very young, mobile-connected populations – it’s clear there’s tremendous opportunity,” Williams said.

Amid widely varying levels of banking infrastructure and regulatory standards across MENA, locating its regional hub in Dubai gives PayPal a regulatory base, an established fintech ecosystem and access to markets stretching from North Africa to the Gulf and Central Asia. 

The new headquarters, which was opened in April, will coordinate licensing, partnerships, compliance, product rollout, and customer support in the region for PayPal, which has half a billion active accounts worldwide and processed $1.7 trillion in payments last year.

The UAE office will also look to establish new partnerships and collaborative ties with government agencies and companies across the region, such as with Dubai’s Roads and Transport Authority  and DP World, where the company is trying to streamline business-to-business payments between importers and exporters.

“We don’t expect it to be easy, but we’re already engaging with regulators, central banks and local partners across the region to ensure compliance and build trust,” Williams said. “We work with governments to get it right.”

Williams, who earned an MBA from the University of California at Berkeley, was hired by PayPal last year from Visa, where he was a Senior Vice President for the region and invented a global remittance system for which he received a U.S. patent. Williams is also regional chief of the new PayPal World service that connects directly with a range of digital wallets and international payment systems, including Venmo, Mercado Pago and Tenpay Global.

The company is not without competition as it tries to wrest some of the lucrative remittances market from traditional exchange houses in the region. Last week London-based Wise, which offers low-cost international money transfers and exchange rates, announced it had secured approvals to operate in the UAE, while fellow British neobank Revolut is also preparing to launch.

PayPal’s expansion will also require navigating a patchwork of rules around crypto, payments and data, Williams said. Some countries in the region permit digital assets under controlled frameworks, while others restrict or prohibit them. Williams said PayPal, which operates its own stablecoin called PYUSD, is preparing country by country. 

 “We believe significantly reducing friction in cross-border payments – with crypto and AI – is not just a disruptive proposition, it’s a necessary evolution,” Williams said. “Our $100 million commitment is the down payment on a future where moving money across borders is as easy as sending an email.”

Oryx invests Gulf sovereign cash in early-stage MENA startups

When London-based Salica Investments launched its Oryx Fund four years ago, the central strategy was to nurture early-stage startups in the Middle East and North Africa, preparing them to take calculated risks and reap higher returns.

Backed by Saudi Arabia’s Jada Fund of Funds, the Saudi Venture Capital Company, UAE-based Mubadala and state-owned investors in Oman and Jordan, the $50 million fund now operates from offices in Dubai, Abu Dhabi, Riyadh and Muscat, Oman.

Some of the standout companies in Oryx’s portfolio are digital mortgage platform Holo, quick delivery service Barq and Grubtech, which modernizes restaurant operations.

In an interview with The Circuit, Ivo Detelinov, a General Partner in both Salica and Oryx, said the fund looks for startups that address “big themes,” such as digital economics, construction technologies and connected communities. Detelinov is a Board Member of the Middle East Venture Capital Association.

Sara Enan, a Principal at Oryx who also joined the interview, said she’s “magnetized by founders who see blind spots in complex markets. Some of my most exciting finds have been women entrepreneurs in rigid sectors.”

Among Oryx’s successes was co-leading last July’s Series A funding round for 44.01, a climate tech startup based in Oman, which raised $37 million. In October, the fund participated in a $3.7 million pre-seed round for Neuphonic, a text-to-speech AI startup based in London that is seeking to expand in the GCC market. The interview has been edited for length and clarity.

What trends do you see in the Middle East that are driving Oryx’s investment strategy?

Sara Enan: As we enter 2025, we see four key trends shaping MENA’s venture landscape: the continued growth in Embedded FinTech, ConstructionTech, FoodTech, and Real Estate Tech; increasing AI integration across regional technology solutions; the return of mega deals fueled by international investor interest; and the emergence of regional technology IPOs.

Are there specific sectors or industries that Oryx Fund is particularly interested in when making investments?

Ivo Detelinov: We have witnessed the MENA VC ecosystem reach its third iteration – MENA 3.0. – whereby the MENA region emerges as a hub for globally innovative startups. When evaluating sectors, we first look at “big themes”, such as digital economics, construction technology and connected communities. Within these broad themes, we particularly like technology verticals that drive consumers and businesses through access to embedded finance, improved productivity, or those that enable individuals through innovative technologies to receive better, faster and more cost-efficient delivery of healthcare or education.

What are the most exciting aspects as a VC investor of identifying startups that show real promise?

Sara Enan: When I scout for investments, I’m magnetized by founders who see blind spots in complex markets. Some of my most exciting finds have been women entrepreneurs in rigid sectors who showed me a completely different way of looking at old industry problems.

How does Oryx approach risk when evaluating new opportunities in the Middle East?

Ivo Detelinov: We are particularly focused on understanding the regulatory/licensing process in industries that are subject to regulation in our region. Our team works extensively with regulators in our main geographical markets in a continuous effort to keep current with not only what the current regulation is, but also with where the direction of future regulation may be going next. Other risks inherent in our industry are assessing the competition and the risk that the technology we invest in becomes obsolete in the future. Our extensive due diligence process and collaborating with our colleagues in Europe help us understand and manage these risks well.

What key principles or values guide your investment decisions?

Sara Enan: We focus on three core areas: First, we identify technology verticals with accelerating momentum that create tangible value for clients across B2B, B2G, and B2C sectors. Second, we seek founders who combine a growth mindset with the ability to build empowering cultures. Third, we bring a mission-driven approach, aligning with our portfolio companies on value creation while maintaining transparent relationships throughout our journey together.

How do geopolitical factors, such as regulatory changes or regional instability, influence your investment decisions?I

Ivo Detelinov: Our decade-long experience in MENA venture capital has been marked by stability and growth, supported by forward-thinking regional policies. We maintain close relationships with regulatory bodies across financial services, healthcare, and other key sectors. This stability, combined with visionary economic policies, continues to drive the region’s robust growth trajectory.

HSBC tops Standard Chartered in Mideast investment banking fees

A jump in dealmaking across the Middle East and North Africa has generated an estimated $1 billion in investment banking fees so far this year – a 27% boost over the first nine months of 2023, with HSBC leading the pack.

London-based HSBC earned $80.4 million in fees during the first three quarters of 2024, or 7.8% of the total investment banking pool, Zawya reports, citing LSEG Deals Intelligence.

Coming second in the banking field’s league tables was Standard Chartered with $56.5 million in fees, followed by First Abu Dhabi Bank with $56 million. The highest amount of investment banking fees were generated from Saudi Arabia ($470.7 million), followed by the UAE ($395.9 million), Qatar ($45 million), Kuwait ($41.7 million) and Egypt ($25.1 million).

The largest deal in the MENA region during the first nine months of 2024 was ADNOC’s $14.8 billion takeover offer for German chemicals company Covestro, according to the LSEG data. The largest during the third quarter was UAE clean energy firm Masdar’s offer to buy Spain’s Saeta Yield from Brookfield Renewable for $1.4 billion.

VC funding drop spawns acquisition prospects for Mideast startups

The steep decline in venture capital investment across the Middle East and North Africa has turned many tech startups into ripe candidates for acquisition, the head of fund-tracking platform MAGNiTT says.

Watching the industry slide for the 16th month in a row, Philip Bahoshy, CEO of Dubai-based MAGNiTT, tells The Circuit that the bottom may be in sight.

“This is a great opportunity for potential M&A activity where international investors may encourage their portfolio companies to acquire companies in the region for expansion, or startups and corporates acquiring for market share,” Bahoshy said. 

“Valuations are beginning to come down, making it a lot more appealing for investors, especially those that have dry capital.”

Emerging venture markets – a group of territories that includes Africa, the Middle East, Turkey, Pakistan and Southeast Asia – raised $3.5 billion in the first six months of 2024, marking a 34% decline compared to the first half of last year, according to MAGNiTT’s Emerging Venture Markets Venture Investment Summary.   

Saudi Arabia led the region in VC funding, coming second only to Singapore in emerging markets and raising $412 million, a 7% drop compared to the same period last year.  

Despite a decline in almost all VC metrics in the first half of 2024 – funding, deal count and exits – Bahoshy said he has noticed some signs that may signal a turnaround is near. 

The overall decrease in venture investing has tracked alongside a growing preference for early-stage rounds, indicating a trend that mimics more developed markets, Bahoshy tells The Circuit.

“Investors globally continue to look for opportunities in venture as things potentially look to pick up, especially at [the] early stage,” Bahoshy said, adding that the number of active investors in MENA is on the rise. 

MENA funding rounds fetching check sizes of $1 million to $5 million have tripled in the last several years, rising from 15% in 2020 to 45% in the first half of 2024.  

This shift indicates a growing focus on nurturing emerging startups. Bahoshy suggests that if this pattern holds, “funding is likely to pick up and hence the inflection that we may be bottoming out in the next two quarters.” 

He points to relatively low deal counts in the wider MENA region, but says Saudi Arabia and the UAE will continue to attract deals.  

The kingdom saw a 3% drop in funding rounds to settle at 63 in the first half of the year compared to the same period last year. The UAE saw an 11% increase and 83 transactions. 

Bahoshy expects more of the same as the year goes on, with room for growth if – and it’s a big if – interest rates come down.

As the focus shifts to early-stage ventures, valuations will become more realistic and based on fundamentals like profitability, he added.  

Investors are now focused on deals with strong foundations, good product-market fit and productive founding teams. Unlike a few years ago when investments were made with less due diligence due to FOMO and technology hype cycles, investors are now making targeted bets, particularly at early stages, according to Bahoshy.

The willingness of Gulf sovereign wealth funds to back venture capital firms looking to invest in the region is another potentially crucial factor in venture funding’s turnaround.  

Bahoshy notes investor appetite remains cautious. “People are still concerned about the economic environment. A lot of people are looking at the geopolitical situation. Many are looking at what the political situation is globally, whether it’s in the U.S., Europe, where we’ve just seen two elections take place,” he explained. 

He believes that a reduction in interest rates, which would lower the cost of capital, might stimulate late-stage funding.  

“If things begin to pick up in the wider economy, globally and here in the region, we’ll see similar to what’s happening in the U.S., at least quarter on quarter growth in funding,” he said. 

While transaction numbers might not rise, Bahoshy has found his silver lining: he expects investors to “place bigger bets” on newer startups – creating a larger pipeline of companies on the rise. 

Cybersecurity threats highlight need for Mideast cooperation

Concern about cybersecurity is bringing together states in the Middle East and North Africa to develop a regional approach to repelling digital threats.

Representatives from the United Arab Emirates, Bahrain, Israel and the U.S. participated last week in a forum at the Atlantic Council in Washington, D.C., to discuss making cybersecurity a new field for cooperation under the Abraham Accords.

“What we are doing here is seizing upon a geopolitical opening,” Robert Silvers, the U.S. Homeland Security undersecretary for strategy, policy and plans, said during the May 23 panel discussion, which was webcast from the Washington think tank. “We can work together as partners to harden up our defenses.”

Citing statistics that showed Israeli companies receiving 40% of global private capital invested in cybersecurity in 2021, generating $8.8 billion in exports, Israel’s ambassador to the U.S., Michael Herzog, said his country wants to share its expertise with regional partners.

“We live in the same region. We are targeted by the same actors: state actors, non-state actors and cybercriminals,” Herzog said. ‘It’s only natural that we cooperate in the field of cybersecurity since we have so much going between us in so many fields [under the normalization agreements signed in 2020].”

The forum was organized by the Atlantic Council’s N7 Initiative, which is supported by the Jeffrey M. Talpins Foundation in New York. The program aims to generate ideas for policymakers to strengthen and expand the Abraham Accords for greater cooperation between Arab countries and Israel.

Cooperation between the U.S. Navy and Bahrain, where the U.S. 5th Fleet is based, could serve as a model for protection against computer threats, said Bahrain’s ambassador to the U.S., Abdullah bin Rashed Al Khalifa.

“It’s about time that we do the same in the cyber realm,” he said. “The time is now, and I think that there is an appetite with the Abraham Accords. It has really opened up the opportunity to work together.”

Among other participants in the forum were Mohamed Al-Kuwaiti, the UAE government’s head of cybersecurity; Jeanette Manfra, global director of security and compliance at Google; Rep. Elissa Slotkin (D-MI), co-chair of the House Cybersecurity Caucus; and Sen. James Lankford (R-OK), co-chair of the Senate Abraham Accords Caucus.

Ukraine deal narrowly averts grain crisis across North Africa

WASHINGTON, D.C. — As ships loaded with wheat and corn finally departed from the Black Sea port of Odesa last week, it appeared the world had dodged yet another humanitarian crisis in North Africa.

Whether the grain deal arranged after weeks of complex negotiations involving Russia, Ukraine and Turkey will hold remains to be seen. What’s clear, though, is the role Ukraine and Russia have played through their exports in preventing civil disruption in capitals from Cairo to Tripoli.

“Egypt has probably been affected directly by this war in Ukraine more than any country in the region,” Motaz Zahran, Egypt’s ambassador to the United States, said in an interview, pointing to food shortages that shook past governments. “We consider ourselves among the victims.” 

The two warring countries have until now supplied 80% of Egypt’s wheat imports — 50% from Russia and 30% from Ukraine — as well as 40% of its tourist traffic. The fighting brought both to a halt, trapping some 20 million tons of grain inside Ukraine, with virtually no room to store it all.

Gulf is Watching

Middle East risk manager Ghanem Nuseibeh said the Gulf states — particularly Saudi Arabia, the UAE and Qatar — will do whatever they can to help Egypt, such as financing grain imports, because they fear a repeat of the popular insurrections from 2010 known as the Arab Spring that spread through the region and were touched off, in part, by food shortages and rising food prices.

“Egypt’s stability is paramount to the Gulf and the rest of the region,” Nuseibeh, founder of London-based Cornerstone Global Associates, told The Circuit.

David Beasley, executive director of the United Nations World Food Program, said that even before the Russia-Ukraine conflict, the situation in Africa was dire, given all that preceded it: COVID-19, ethnic war in Ethiopia, the crisis in Afghanistan and worsening drought across the continent. Then came Ukraine — “a nation that grows enough food to feed 400 million people — from the breadbasket of the world to now the longest bread lines of the world,” he said at a July 19 forum with the Council on Foreign Relations.

“It’s going to get much worse,” warned Beasley, whose agency before the war typically sourced half the wheat, barley, corn and other grains purchased for distribution worldwide from Ukraine. “What we were seeing in 2021 has unfolded now to be exacerbated or put on steroids because of the Ukrainian situation.”

The repercussions are also being felt in Tunisia, where food scarcity was among the  problems that sparked the Arab Spring. “This war shows us just how dependent we are,” Hanéne Tajouri Bessoussi, Tunisia’s newly installed ambassador in Washington, said in an interview. “Before this, no one was aware of the importance of this country in Europe — even though the war is far from us.”

Recalling Arab Spring

It was Tunisia, after all, where on Dec. 18, 2010, a young fruit vendor named Mohamed Bouazizi set himself on fire to protest police corruption and mistreatment, sparking a wave of unrest in part because of food shortages that quickly spread to Algeria, Jordan, Egypt and Yemen. Within months, Tunisian strongman Zine El Abidine Ben Ali had fled to Saudi Arabia and Egypt’s Hosni Mubarak had resigned after 30 years in power. Civil wars in Libya, Syria and Yemen endure to this day, all stemming from the unrest triggered by the original protests.

And today, climate change, extreme drought and supply chain disruptions resulting from the pandemic have exacerbated food shortages throughout North Africa and the Middle East, adding a dangerous element to the already unstable mix.

In April, Saudi Arabia, Qatar and the United Arab Emirates pledged up to $22 billion to shore up Egypt’s economy, mindful that weak finances and food scarcity can undermine political stability throughout the Arab world.

Tajouri Bessoussi, who took up her post last December — only two months before Russian President Vladimir Putin ordered the invasion of his smaller neighbor — said more than 60% of her country’s wheat supply comes from Russia and Ukraine.

“The economic situation in Tunisia is very bad,” she said. “It was further aggravated by the COVID pandemic, and now the war in Ukraine. The current government is trying to implement essential reforms to put Tunisia back on the path of growth and prosperity, and for that, we are now negotiating with the IMF,” she noted, referring to the International Monetary Fund.

Skyrocketing Prices

Zahran, Egypt’s ambassador, said that despite the steep decline in tourism — a mainstay of Egypt’s economy — gross domestic product grew more than 3 percent a year during the pandemic. This year, GDP was projected to grow by 5.7%, but that was before Russia’s invasion sent food prices skyrocketing. On top of that, Egypt saw a slowdown in the passage of vessels through the Suez Canal, which generates a significant part of its budget, Zahran said.

Egypt joined 140 other nations in condemning Russia for invading Ukraine. The resolution passed the U.N. General Assembly 141-5, with 35 countries abstaining. “That vote in itself reflects Egypt’s principled positions despite the fact that its impacts on the economy are horrible,” Zahran said. “It’s a matter of principle.”

Egypt has not, however, downgraded its relations with Moscow or prevented Russian vessels from transiting the Suez Canal.

Before the Ukraine war broke out, Egypt’s government under President Abdel Fattah al-Sisi scrambled to find other sources of grain, said Mirette Mabrouk, a senior fellow at the Washington-based Middle East Institute.

“At the beginning, they said they had about nine months’ supply of wheat,” Mabrouk said in a July 15 webinar. “The problem is that wheat goes into making bread, and bread is highly subsidized in Egypt.”

Bread Subsidies Matter

In fact, after Egypt received an IMF loan in 2016, it embarked on a very aggressive reform program that involved slashing or removing most subsidies. The only one left untouched was the bread subsidy, to which two-thirds of Egyptians are entitled. 

“That bread can very often make the difference between you going to bed hungry or not,” said Mabrouk, noting that 29.6% of Egypt’s people live below the poverty line. “It’s so sensitive that the price of subsidized bread in Egypt hasn’t changed in 35 years. The last time they tried to raise prices, in 1977, it touched off two years of rioting.”

Michael Brodsky, Israel’s ambassador to Ukraine, said he remains deeply concerned. “This war in Ukraine is affecting the Middle East very badly,” Brodsky said in a phone interview. “We should remember that rising food prices were among the biggest reasons for the Arab Spring, so this is potentially very dangerous.”

The grain deal signed July 23 in Istanbul and brokered by the U.N. and Turkey was especially tricky, requiring attention not just to the sensitivities of Russia and Ukraine, but also to those of Turkish President Recip Tayyip Erdogan, Nuseibeh said.

“Turkey is trying to benefit politically from this, and as long as the Turkish intervention helps reduce risks of hunger,” Nuseibeh said, “the region will welcome this with the proviso that it does not come at a steep political cost.”

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Amid global slowdown, VC founder Elie Wurtman says Gulf can help in plugging Israel’s tech talent gap

Venture capitalist Elie Wurtman sees the Gulf Arab states as potential saviors for Israeli companies that can’t hire enough engineers. First, though, they’ve got to weather the global market crisis that threatens to dry up funding.

Time to be prudent:  “I don’t think it’s doomsday across the board, but companies that require substantial capital may be challenged,” Wurtman, co-founder and managing partner of Jerusalem-based Pico Venture Partners, said in an interview with The Circuit’s Jonathan Ferziger. “This is a good time to be more prudent with expense management.”

Funding tight: As the Nasdaq stock index has fallen almost 30 percent this year, many of Israel’s biggest tech companies trading on the New York exchange have seen their market values plunge and the economy is getting hammered. In turn, investors in the country’s more than 6,000 start-up companies, which range from cybersecurity firms to telehealth services for pet cats and dogs, are cutting back.

 Tax-free income: In the meantime, Wurtman is looking at Israel’s deepening ties in the Gulf to help solve the chronic shortage of software developers that plagues the burgeoning tech industry in a small country of 9.5 million. The pro-business policies in Bahrain and the United Arab Emirates, including tax-free income and liberal work visa policies to fuel their oil pumping, expat-driven economies, should draw Israeli companies to set up remote operations in the two Gulf nations that normalized ties with the Jewish state through the Abraham Accords in 2020, he said.  “Within several years, you’ll have dozens, or even hundreds of Israeli companies with satellite development offices in the Gulf,” he said.

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Shifting environment

UAE climate minister says Israel offers Emiratis a model of collaborative, interconnected ecosystem’

When Mariam bint Mohammed AlMheiri landed in Tel Aviv last year, she didn’t know what to expect. A serial startup founder and environmentalist, AlMheiri is used to experimenting and exploring. But as the first United Arab Emirates minister to visit Israel after the Abraham Accords normalized ties between the countries in 2020, she was taking a leap of faith.

Stirring interest: Convincing Israeli entrepreneurs to come to the UAE is easy, but getting Emirati businesses interested in Israel is more challenging, AlMheiri, the UAE’s minister of climate change and the environment, told The Circuit’s Gabby Deutch at the Milken Institute Global Conference earlier this month in Los Angeles.  “I’ve seen more interest in Israel working in the UAE, but I think that’s because they are further down the line in their business mindset,” she noted. “The UAE is still coming along to this idea of being also a kind of ‘startup nation’ as well.”

Dynamic hub: The Abraham Accords provided Israeli businesses with an unexpected and lucrative opportunity: access to one of the most dynamic business hubs in the world. And the new relationship gave the UAE a model of how to build a collaborative, interconnected tech ecosystem. What Emirati companies are looking for, AlMheiri said, is “technology partners more than looking at market access.”

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