New VC funding report shows UAE registers 61 percent of MENA investments and deals

10x Industry

Mita Srinivasan
10x Industry
Published:

New VC funding report shows UAE registers 61 percent of MENA investments and deals

Recovering from COVID-19, transactions in MENA grew by 23 percent and investment tripled between Q3’20 and Q2’21 across the region according to latest VC funding report from MAGNiTT

MAGNiTT has issued its H1 2021 country reports that include a MENA (Middle East & North Africa) overview as well as a deep dive into Saudi Arabia, UAE, Egypt, Turkey and Pakistan.

The H1 2021 report for the MENA Startup Ecosystem showed that UAE led investment growth for the region by number of deals and funding, acquiring 61 percent of all MENA investments. Together, the top 3 MENA Hubs, UAE, Egypt, and KSA, accumulated 71 percent of capital deployed. After two consecutive quarter-to-quarter growth, UAE closed 65 deals in H1 2021 accounting for 26 percent of all transactions in MENA.

VC funding in MENA in H1 2021 increased by 12 percent from the same period in 2020, marking a quarterly and half-yearly record high level of capital deployed. VC funding in H1’21 also saw a 64 percent increase YoY. Transactions in MENA grew by 23 percent and investment tripled between Q3’20 and Q2’21. Yet, number of deals closed in 2021 saw a 20 percent decrease YoY. Sector wise, the MENA Food & Beverage sector took the biggest share of funds while the most amount of deals were closed by Fintech startups.

The H1 2021 Saudi Arabia (KSA) Venture Investment Report revealed that VC Funding in KSA increased by 64 percent YoY, accounting for 94 percent of VC capital invested in FY’20. The country also witnessed record levels of half-yearly capital raised in H1 2021 accounting for 14 percent of MENA VC funding. KSA surpassed Egypt to rank second by share of total MENA funding while accounting for 22 percent of the region’s VC transactions. 69 percent of investors backing Saudi-based startups were headquartered in the country, while 15 percent were based in MENA.

The UAE report for H1 2021 showed that VC investment in the UAE exceeded that of FY’20 by 24 percent. Total funding increased by 69 percent YoY with the Kitopi deal accounting for 61 percent of capital deployed in MENA. Investment in Fintech over H1 2021 grew by 49 percent YoY, while the sector accounted for 23 percent of all transactions closed in MENA in the same period. The UAE VC ecosystem also saw a shift towards later-stage deals in H1 2021 as deals sized above $3M went from accounting for 23 percent of all deals in 2020 to constituting 40 percent of all transactions in H1 2021.

Amongst the top three MENA countries, UAE, Egypt and KSA, Egypt was the only one to see an increase in deal count YoY. In H1 2021, VC investment in Egypt grew by 29 percent YoY, accounting for 91 percent of total capital deployed in 2020. Early-stage funding in Egypt grew, where rounds sized below $500K increased by 10pp between 2020 and H1 2021. 30 percent of investors backing Egypt-based startups were from the UAE and KSA combined.

According to a message from Philip Bahoshy, Founder and CEO of MAGNiTT, “If Q1 2021 was categorized as a period of steady recovery across the Emerging Venture Market VC ecosystems, H1 2021 saw records broken across all geographies, as investor appetite returns to the VC asset class.”