Tech start-ups face a harder test

For Oman’s technology start-ups, launching a company is only the beginning. The harder test is whether they can win substantial customers, raise capital to expand and compete in markets much larger than their own.
Abdullah al Shaksy, Co-founder and Chief Executive Officer of Muscat-based venture capital firm Phaze Ventures, says later-stage financing is one constraint. More fundamental, however, is whether a company has a sufficiently distinctive product, a credible market and a team capable of delivering growth.
In written responses to the Observer, he said investment decisions often turn on the prospects for expansion rather than the quality of an idea alone.
“When we pass, the concern is often an unclear path to achieving the scale and impact we are looking for as a VC, or weak differentiation compared to regional or international competition,” he said.
The distinction matters in a relatively small economy. A technology company may find its first clients in Oman, but its long-term commercial prospects can depend on replicating that business in Saudi Arabia, the UAE and other markets, where customers, competitors and financing needs may be different.
The Small and Medium Enterprises Development Authority reported in January that Oman had 205 registered technology- and innovation-based start-ups, with annual investment in such businesses of RO 11.5 million. Those figures offer a measure of the sector’s size, but do not show how many companies generate sustained revenue overseas.
For Al Shaksy, the gap is not simply a shortage of seed funding. He said angel investors, accelerators and smaller funding programmes have become more accessible, while businesses that have proved their products can still struggle to secure the larger investments required for expansion.
Customers present another obstacle. Major local companies and institutions can provide the commercial references that young businesses need when approaching buyers abroad. Lengthy purchasing decisions, however, can slow the process.
“As buyers, investors and supporters, that means taking calculated risks on emerging local companies and shortening decision-making cycles so they can move faster,” Al Shaksy said.
A contract with an energy company, logistics operator, bank or healthcare provider can give a local start-up something more valuable than an endorsement: evidence that its technology works in a demanding commercial environment.
Al Shaksy sees those same sectors as the most promising starting points for artificial intelligence businesses. His argument is that founders with specialist knowledge and access to customers are better placed than teams developing AI applications without a clearly defined industry problem.
“The opportunity is to build the product, proprietary data, networks and capabilities that turn models into dependable work and real world impact,” he said.
That approach puts measurable business results ahead of the technology label. In industries where downtime, operational delays or compliance failures carry high costs, a start-up needs to show that its product can reduce those costs or improve service reliably enough for customers to keep paying for it.
Regional venture investment is also increasingly concentrated. Research firm MAGNiTT reported that AI and AI-enabled companies attracted $678 million in venture funding across the Middle East and North Africa in the first half of 2026, accounting for half of all regional venture investment but only a quarter of transactions. The UAE accounted for 93 per cent of that AI funding, underscoring how concentrated the market has become.
Oman has examples of firms moving beyond the domestic market. Carzaty, an automotive technology company previously backed by Phaze Ventures, expanded into the UAE before being acquired by Mexico-based Kavak. School transport technology provider eMushrif secured a $7.5 million funding round in January after building operations in Oman and Kuwait, with plans to expand further in the Gulf.
Al Shaksy said Phaze Ventures has invested nearly $10 million cumulatively in technology businesses based in Oman or established by Omani founders since 2018. The figure measures cumulative investment in Oman-linked businesses, not the capital committed to its two new funds.
The examples show that overseas growth and investor exits are possible, but they do not in themselves establish how widely those outcomes are being achieved across the sector.
A second challenge is the legal and financial structure of the companies themselves. Start-ups seeking international investors need shareholding arrangements and financing instruments that prospective backers can readily understand, particularly when a business expects to raise successive funding rounds across jurisdictions.
Al Shaksy called for continued development of flexible share classes, clear investor rights, practical share issuance and convertible financing. He also highlighted digital incorporation, electronic signatures, remote share transfers and affordable professional services.
The aim, he said, should be to allow companies to raise capital internationally while keeping their holding companies and intellectual property in Oman. Such arrangements matter because a company can be founded by Omanis yet have much of its ownership, financing activity and intangible assets located elsewhere.
Oman established the International Financial Centre of Oman under Royal Decree 8/2026, creating a dedicated legal framework intended to support international financial activity. Al Shaksy said Phaze Ventures had held discussions with the centre and other government and business bodies about reforms. His proposals should not be read as a claim that every instrument he identifies is currently unavailable; the practical test will be how easily founders can use the applicable arrangements.
The debate coincides with the second phase of Oman’s National Digital Economy Programme for 2026–2030, which targets RO 300 million in technology investment and 3,000 direct jobs annually. Commitments and policy targets, however, tell only part of the story. An export-oriented technology sector also needs repeat customers, follow-on financing and a framework that helps companies retain value at home.
By 2030, Al Shaksy wants to see more Omani technology firms selling internationally and attracting foreign investors on commercial terms. Phaze Ventures’ new Oman-focused fund is intended to back a small number of AI-enabled businesses, rather than provide financing to every promising start-up.
For the wider sector, the more revealing measure of progress may be how many companies move from local pilots to recurring overseas revenue — and how much of the value they create remains in Oman.