Middle East and North Africa (MENA)-based startups raised over $700 million in 2019 region with Egypt leading the pack according to a report by MAGNiTT, MENA’s most comprehensive startup data platform.
Dubbed the 2019 MENA Venture Investment Report, the report provides an in-depth analysis of startups and venture capital (VC) investment across the MENA.
‘All of these records point towards a maturing ecosystem,’ says Philip Bahoshy, MAGNiTT’s founder & CEO. ‘With exits at an all-time-high, including MENA’s first unicorn exit, the region’s founders, investors, and governments are seeing the returns on their efforts in the tech venture space.’
The report shows that the number of investments in the region rose up 31% from 2018 as 2019 saw 564 investments.
The investments amounted to $704M in total funding, up 13% compared to 2018, excluding previous mega-deals in Souq and Careem.
The report tracks investments in 17 Middle East and North Africa (MENA) countries: Algeria, Bahrain, Egypt, Iraq, Jordan, Kuwait, Lebanon, Libya, Morocco, Oman, Palestine, Qatar, Saudi Arabia, Syria, Tunisia, United Arab Emirates, and Yemen.
From the report, Egypt had the highest number of deals, while the UAE saw the majority of funding. In 2019, the country surpassed others to rank first by number of deals across MENA for the first time – 25% of all deals.
However, UAE maintained its historical dominance as the largest recipient of total funding (60%) pegged on continued government support, corporate venture interest, and growing investor appetite for startups headquartered in the UAE.
In the report, Saudi Arabia, emerged the fastest-growing ecosystem across MENA, which now ranks third in both number of deals and total funding in the region.
Record year of exits in 2019, including the first MENA unicorn
2019 saw more exits take place than ever before across MENA at 27. Several industries in the region, including e-commerce & transport, are heavily fragmented, and investors and startups are looking to consolidate.
With Uber’s $3.1B acquisition, Careem became the first unicorn exit in the MENA region. Speaking on the impact of their exit, Magnus Olsson, co-founder and Chief Experience Officer of Careem shared, ‘We hope that our efforts have set the way forward for other tech startups to approach expansion across the greater Middle East, and that our deal with Uber will act as a catalyst for further investment into the ecosystem.’
A record of 212institutions invested in MENA-based startups in 2019
Investor appetite for MENA’s tech startups is growing as the ecosystem matures. Average ticket size is also up by 7% across all deals in 2019. Moreover, 2019 saw the emergence of non-traditional tech investors such as corporates, PEs, family offices and asset managers, which saw a 39%increase from last year.
2019 also saw an increase in international investor participation. In fact, 25% of all entities that invested in MENA-based startups were based outside of the MENA region, marking a new record high.
Moreover, government support was especially evident in the venture capital space, with many governments across the Middle East including KSA, UAE and Bahrain setting up Funds of Funds. Ali AbuKumail, Senior Private Sector Specialist at the World Bank, shares, ‘Many governments in the region have been playing an active role in growing ecosystems conducive to entrepreneurs, including technical and financial support programs and policy reforms – there is a direct correlation between a business-friendly environment and increased entrepreneurial activity.’
FinTech remains the most active industry by number of deals
FinTech retained its top spot in 2019 and accounted for 13% of all deals. The Delivery & Transport industry, however, accounts for the highest amount of funding of any industry at 19%, as bus transportation startups such as Swvl ($42M) and trucking startups such as TruKKer ($23M) raise sizable funding rounds.
