Start-ups in the UAE, Saudi Arabia and Egypt secured the most funding in the first half in Mena as the region’s venture capital landscape witnessed a 33 per cent increase in investor number, reflecting the thriving entrepreneur ecosystem in these countries.
In terms of deal count, the UAE topped the list with 83 transactions, an 11 per cent annual increase. Saudi Arabia followed with 63 deals, a 3.0 per cent drop, Egypt with 28 . per cent, a 15 per cent decrease, and Morocco and Bahrain with 10 and 7, respectively.
With $412 million, Saudi Arabian start-ups were top in securing venture capital funds followed by the UAE with $225 million, and Egypt with $86 million. However, all these markets saw a drop of 7, 19, and 75 per cent, respectively, according to venture data platform MAGNiTT.
Morocco and Kuwait joined the top five with $17 million and $14 million, respectively.
The Saudi venture investment market began the year in line with its performance in H1 2023, with non-mega deals accounting for 68 per cent of the value of venture investment in H1 2024, up from 35 per cent in H1 2023.
MAGNiTT data revealed that despite the increase in investors, only $768 million in funding was poured into regional startups, a drop of 34 per cent year on year.
E-commerce was the most funded sector with $244 million in funding, while fintech was the industry of choice in terms of deal count.
The Public Investment Fund’s Sanabil Investments was the most active investor in the region with $57 million in capital deployed.
According to Philip Bahoshy, CEO of MAGNiTT, the second half of the year is expected to see an uptick in VC activity.
In terms of trends, the wider Mena region including both the UAE and Egypt are likely to benefit from a very strong fourth quarter, while the third quarter is expected to be a little bit quieter, he said.
He said from a macroeconomic perspective, political stability is the key. Interest rate declines to bring liquidity back into the markets is important as well as conferences and events that can highlight the opportunities for the Middle East versus other geographies will be very important in seeing strength across the wider MENA region.
Bahoshy said both the UAE and Saudi Arabia are well-positioned to see continued strength in their ecosystems despite the slowdown in venture and macroeconomic environment, adding that the UAE’s growth in transactions is extremely positive.
For early-stage investment, they are expected to be positioned as one of the leading ecosystems to attract international companies to set up and grow across the wider Mena region, Bahoshy said.