Startup Funding: Jonathan Lahyani, General Partner MENA and GCC Regions, The Lab Ventures Jonathan Lahyani, General Partner MENA and GCC Regions, The Lab Ventures, on the strategies founders can use to set their startups apart and draw investor interest across MENA.

This article is part of Startup Funding - Investor Insights Every Entrepreneur Needs by Entrepreneur Middle East, a series where the MENA region's leading venture capitalists share practical advice to help founders navigate the challenges of building and scaling a startup.

Jonathan Lahyani, General Partner MENA and GCC Regions, The Lab Ventures, on the strategies founders can use to set their startups apart and draw investor interest across MENA.

What differentiates the startups that continue to attract capital in the MENA region? Where do you see real, defensible value being created in MENA versus hype?
The most defensible value I see being created right now is the UAE's massive investment in AI infrastructure, including partnerships with NVIDIA and OpenAI, as well as a focus on compute and semiconductors. After reading Chip Wars, it became clear that whoever controls computer infrastructure controls the next wave of technological, geopolitical, and commercial power. The UAE is positioning itself to be a dominant player in AI over the next 5-10 years, and this country-level advantage will cascade down to SMEs, giving local companies access to computing power that is simply not available at the same scale in Europe or other regions.

At the startup level, defensibility comes down to business model, not just technology. Tech tools are commodities now; they can be replicated quickly and easily. That's why at The Lab Ventures, we focus on platform businesses with network effects: marketplaces where supply and demand create natural moats, dual revenue engines combining transactions and GMV, or businesses where communities and ecosystems make switching costs prohibitively high.

We also see value in operating across Europe and the GCC - multi-market resilience matters when regional dynamics shift. We deliberately focus on 'unsexy' sectors, such as construction tech and proptech. I prefer being a big fish in a small pond than being a small fish in a big one. These are less crowded, less hyped markets where we can add real value. We're not chasing the latest AI tool trend; we're backing platforms that utilise technology to solve complex, mundane problems with genuine competitive advantages.

Can you share a personal anecdote, either a pitch that truly impressed you, or one that missed the mark and why?
I once backed a founder for months who had built a solid MVP and showed real motivation - but completely fell apart during the investment committee presentation. He was extremely shy, couldn't articulate why we should invest, and failed to convey the impact his company could have in the market. We didn't move forward.

At the time, it felt unfair to me - like Amazon's approach of having people write memos instead of presenting, which gave everyone an equal chance to convince, regardless of their presentation skills. But in venture capital, execution matters as much as the idea, and if you can't sell your vision to a room of friendly investors, how will you sell to customers, recruit talent, or rally your team during tough times?

Recently, I met a founder in the sports industry, which is entirely outside my area of expertise and interest, not a sector I typically invest in. But within minutes, he had me convinced. Why? Deep domain expertise. He knew his space inside and out, could explain complex opportunities in simple terms, and could defend his thesis against any criticism. His clarity and conviction made him credible, even though I know nothing about football.

We ended up writing a small check, ensuring he'd get the technical support to execute his vision. The lesson? You don't need to be the most polished presenter, but you do need to show you're the right person to solve this problem. Mastery of your domain beats charisma every time.

Related: Startup Funding: Rema Alyahya, Vice President - Venture Capital, Merak Capital

Beyond capital, how do you measure your impact as an investor — in shaping founder mindsets, governance, and long-term growth?
Our operational VC model isn't just about capital - it's about rolling up our sleeves and getting into the trenches with founders. I measure impact by whether the company would have survived, pivoted, or scaled without us in the room. Financial returns matter, but so does whether we helped founders break through plateaus, navigate crises, or avoid fatal mistakes.

I've spent months doing executive coaching with founders. I've rebuilt product roadmaps when companies didn't have a product lead. I've coded features myself and pushed them live to portfolio company platforms. I've helped neutralize co-founder deadlocks, challenged burn rates like a co-founder would, and been in the room during crisis moments - whether that's a tech meltdown or a fundraising gap. We've rebuilt entire technology stacks from the ground up, helped with cross-border expansion, and built teams in new markets.

One example: we acquired a company two years ago that was in a dire state - legacy technology, a failing business model, and founders who were burned out and demoralized. We came in, restructured their equity to realign incentives, overhauled their technology and operations, and worked side by side with them on product and management fundamentals. That company is on track to 8x revenue this year from our initial investment, and the founders are energized again. That's the impact that matters - not just capital, but being in the foxhole when it gets hard.

For founders pitching in 2025, what are the biggest red flags you're seeing, and the traits you wish more entrepreneurs would show?
The biggest red flag? Pitching the wrong investor. Most decks I receive show zero research - B2C startups pitching a B2B-only fund, cosmetics or wine businesses pitching a proptech/construction tech investor. It signals a spray-and-pray approach, treating fundraising like a commodity task rather than a strategic partnership.

Beyond that, I see three recurring issues: First, AI buzzwords without a 10x breakthrough - it's not enough to slap 'AI-powered' on a slide. Second, unrealistic valuations. Too many founders with lifestyle businesses expect venture-scale valuations without venture-scale growth or margins. Valuation is tied to revenue, EBITDA, and trajectory; if the numbers aren't there, the valuation can't be either. And third, businesses with poor unit economics and high burn rates often hope that pushing harder will create a breakthrough. In 2025, the path to success is profitability, not praying for a miracle.

What I wish more founders would show? Do your homework. Know who you're pitching and why you're a fit. Demonstrate capital efficiency by leveraging AI and technology to reduce operational costs and enhance margins, not just to chase hype. And be realistic about your business. If you're building a great lifestyle business, own it, don't try to force-fit it into a VC model. But if you're aiming for venture scale, show me the path: the unit economics, the moat, the 10x potential. Coachability and self-awareness go further than overconfidence ever will.

Sectors to watch - what sectors are standing out to you now?
We focus on sectors where we can drive real societal impact: proptech, construction tech, and healthtech. These aren't the flashiest spaces, but they touch how people live, work, and stay healthy - foundational aspects of society. By focusing vertically on these specialized sectors rather than spreading ourselves thin, we can go deep and truly understand where the transformation is happening.

What makes this moment exciting is that AI is fundamentally reshaping how these sectors operate. In proptech, we're seeing marketplaces evolve beyond listings - they're becoming intelligent ecosystems that streamline people's lives through digital interfaces. Generative AI creates new ways to interact with both structured and unstructured data, making property search, management, and transactions simpler and more intelligent. What used to require multiple platforms and manual processes can now happen conversationally through AI interfaces.

Looking ahead, the next wave is robotics powered by AI. We're moving toward a world where robots will handle everyday tasks, such as cleaning, maintenance, caregiving, learning skills by observation, and constantly improving through connectivity. Given the UAE's position as a computing powerhouse and its investments in AI infrastructure, we're likely to see these transformations materialize here first. That's why we're positioning our portfolio companies to ride this wave, not just using AI as a buzzword, but building the infrastructure and platforms that will power how people interact with property, construction, and healthcare in an AI-native world.

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