More than half of all start-up founders in the Middle East and North Africa said securing funding for their ventures was the biggest cause of stress in their entrepreneurial journey, according to a report.
The Covid-19 pandemic and scaling the business were the joint second reasons for stress, each voted for by 33.7 per cent of entrepreneurs. Work-life balance was underscored by 27.4 per cent of founders, while setting up the venture was selected by 26.3 per cent as a stress factor, followed by team management at 18.9 per cent.
The research report was compiled by entrepreneurship ecosystem Wamda, Microsoft for Start-ups and UAE-based digital media agency EMPWR.
The study polled 101 start-ups in the Mena region, of which 50 per cent were in the UAE.
Developing a start-up ecosystem and supporting small and medium-sized businesses are key planks of the UAE's economic development agenda. The government, both at the federal and emirate level, has rolled out schemes, including initiatives easing access to financing to support new ventures.
The total funding secured by start-ups in the Mena region rose by 64 per cent in the first half of the year to $1.2 billion, according to a report from data platform Magnitt. The UAE led the way in terms of deal numbers, with its start-ups securing 61 per cent of all Mena investments, the report found.
The SME sector in the UAE accounted for 94 per cent of all companies and employed more than 86 per cent of the private sector workforce at the end of 2019, according to Ministry of Economy data. In Dubai, the commercial and trading centre of the Middle East, smaller businesses make up about 95 per cent of all companies, account for 42 per cent of employment in the emirate and contribute 40 per cent of Dubai's gross domestic product, according to Dubai SME estimates.
However, despite increasing interest from angel investors and venture capital firms to fund promising start-ups, many entrepreneurs live well below their means to finance their businesses, which leads to increased stress. Start-up founders are twice as likely to develop depression issues, EMPWR said in a statement on Thursday.
More than half of all start-up founders rated mental well-being among their top five concerns. Other issues include business growth (72.6 per cent), financial concerns (68.4 per cent), family issues (37.9 per cent) and physical health (31.6 per cent), according to the report.
Only 2 per cent of healthcare budgets in the Mena region is currently being spent on mental health, according to the Institute for Health Metrics and Evaluation.
Coupled with the impact of the Covid-19 pandemic on young entrepreneurs, this could lead to an economic burden of $1 trillion by 2030, the report said.
About 36 per cent of start-up founders in the Mena region rate the state of their mental health as bad, while only 9.9 per cent rate it as good, the report said.
Nearly 44.2 per cent of respondents said they spend more than two hours a week trying to de-stress.
There is a critical need for accessible and affordable mental health services that specially cater to entrepreneurs, the EMPWR report said.
However, good relationships between co-founders can help start-ups to better navigate pandemic headwinds. More than 95 per cent of entrepreneurs look at co-founders as family members and/or friends, according to the report.
“It has been fascinating to witness the impact of relationships between start-up co-founders and their companies in the aftermath of the global pandemic,” said Ally Salama, chief executive of EMPWR.
“Many described their relationships with such partners and cohorts as being more like family. We found that entrepreneurs operating as a team were more likely to have a stronger sense of well-being and suffer less loneliness.”
EMPWR is working to launch a network to provide youth in the Mena region with a peer-support and mental health resource. This is an attempt to increase conversations around mental well-being among young people in the region, the statement said.
“Twenty-eight per cent of the Middle East’s population is between 15 and 29 years. Mental health issues are widespread among them but less than half are willing to seek help, due to cultural stigmas and stereotypes,” Mr Salama said.
The initiative is an attempt is to mainstream the conversation around the issue, so “this silent epidemic can be addressed”, he said.