MAGNiTT, MENA’s most powerful startup platform, tracking the region’s start-up ecosystem, today released their H1 2019 MENA Venture Investment Report, which provides an in-depth analysis of start-up funding and venture capital across the Middle East and North Africa. The report highlights positive news for the continually growing ecosystem with strong growth through a record number of transactions. Total funding across MENA-based start-ups was up 66% from H1 2018.
Philip Bahoshy, MAGNiTT’s Founder, shared “ The MENA region is hitting its inflection point. The acceleration of funding we saw in the latter half of 2018 has continued into 2019.” Bahoshy also notes that “there are many signs of an ever-maturing ecosystem. As start-ups grow, we have seen more start-ups raising larger tickets, more exits and continued interest from International investors in the region, especially from Asia.” He also pointed to “UBER’s acquisition of CAREEM is another example of a large international player acquiring a local company after Amazon’s acquisition of Souq. This will further act as a catalyst to spur on the regions entrepreneurial environment”
H1 2019 saw 238 investments in MENA-based start-ups, amounting to $471M of total funding. This is an excellent indicator, a 66% increase in investment dollars compared to H1 2018, in which $283M was invested. The number of deals remained healthy at a record high, up 28% compared to H1 2018, showing continued appetite in start-ups from the region at all stages of investment.
Speaking about the results, Noor Sweid, General Partner of Global Ventures notes “The growth in the start-up and tech ecosystem in the region is phenomenal, and yet, we are just at the beginning of a trajectory that will see technology-driven companies grow significantly and incredibly quickly over the coming years. These numbers illustrate the momentum and successes that the underlying companies and founders are achieving, and the growth in the investment ecosystem and opportunities alongside them.”
The UAE remains the most active startup ecosystem with 26% of all deals and 66% of total funding. Saudi Arabia was one of the fastest-growing ecosystems, up 1% from H1 2018 recording 26 investments in H1 2019. The UAE has maintained its dominance with 26% of all transactions made into UAE-headquartered start-ups in H1 2019, while it also accounted for 66% of total funding.
HE Khalfan Belhoul, CEO of the Dubai Future Foundation, explains this by highlighting that “With the vision of our leaders, and a strong strategy in place, the UAE has cemented its position as an ideal destination for startups, founders, creative thinkers, and innovators. We have leveraged that vision, through creating dynamic co-working spaces, agile legislation that supports innovation and attractive visa policies for entrepreneurs and business professionals, and we continue our efforts toward positioning Dubai as a global testbed for cutting-edge technologies”.
However, the landscape continues to evolve. Tunisia was the fastest-growing ecosystem in H1 2019 – receiving the 5th highest number of deals at 8% of all deals, up 4% from H1 2018. While Saudi Arabia recorded a 2% increase in the number of deals, up to 11% of all transactions across the MENA region.
FinTech retained its top spot in H1 2019 and accounted for 17% of all deals. Notable investments include the $8M in Yallacompare, $6M in Souqalmal and $4M in Beehive. E-commerce still remains prevalent accounting for 12% of all deals, followed Delivery & Transport, which was the third most popular industry in terms of total deals in H1 2019, accounting for 8%.
130 institutions invested in MENA-based start-ups in H1 2019, of which 30% were from outside the region. 500 Startups remained the most active venture capital firm, especially at early-stage investments, while Flat6Labs was the most active accelerator program.
Moreover, H1 2019 saw the influx trend of foreign investors to continue. The entrance of China’s MSA Capital and Germany’s food conglomerate Henkel, among others, highlighted continued international interest in MENA start-ups. In fact, 30% of all entities that invested in MENA-based start-ups were international investors.
Walid Faza, Partner and Chief Operating Officer of MSA Capital explains, “Chinese models are shaping the consumption habits of emerging market tech consumers and MSA’s deep knowledge in both ecosystems positions us to add a lot of value to companies based in MENA”
EMPG received the highest amount of funding by a single start-up, raising $100M in February 2019. Yellow Door Energy ($65M) and Swvl ($42M) complete the top 3. In total, the top 10 deals in H1 2019 account for 62% of the total investment amount in H1 2019, down 9% from H1 2019. In terms of exits, H1 2019 has seen 15 start-up exits take place across MENA, an increase of 5 compared to H1 2018.
The largest of these was Careem’’ landmark exit to Uber. Magnus Olsson, Co Founder, Chief Experience Officer noted “Our $3.1B deal with Uber was a hugely significant moment, not just for Careem, but also for the Greater Middle East. It was the largest tech deal this part of the world has ever seen and puts our region’s emerging technology ecosystem on the map of both regional and foreign investors.” On the impact the deal will have across the ecosystem, Olsson notes “Careem views its colleagues as owners of the business and so we introduced an equity scheme that will now see them financially benefit from the transaction. We hope that the deal will act as a catalyst for the next generation of tech startups in our region.”