Venture capital funding for startups in the Middle East and North Africa grew 20% annually to more than $2.3 billion in the first three quarters of 2022, putting it on track to potentially surpass total investment attracted in 2021, a study by Magnitt found.
Funding hit $512 million in the third quarter, which was the lowest since the first quarter of 2021, the data intelligence firm said in its quarterly update, citing global economic and geopolitical factors.
That, however, put total funding in 2022 at more than 80% of the 2021 level, leaving the industry a full quarter to match or even exceed last year’s total of around $2.8 billion. .
“This is accompanied by a slowdown in global investment amid general uncertainty due to the current economic crisis, rising levels of inflation and rising interest rates,” Magnitt said. in the report.
The start-up sector has grown exponentially in recent years, with entrepreneurs using innovation to meet consumer needs. They are also increasingly seeking funding from global investors to accelerate their development.
The industry’s growth has accelerated alongside increasing digitalization in key sectors such as retail, services, e-commerce and government.
Egypt, the United Arab Emirates and Saudi Arabia retained the top three positions in terms of financing value and number of deals, capturing more than 75% of all investment in the Mena region, Magnitt said. .
Fintech remained the top industry during the period, with 94 deals valued at $747 million, an annual increase of nearly three-quarters, he added.
The Mena FinTech companies that made headlines in the fundraising were Tabby from the United Arab Emirates with $150 million, Tamara from Saudi Arabia with $100 million and Wave Mobile Money from Senegal with $91.6 million.
VC outflows in the first nine months hit a new high of 56, which already exceeds the 40 outflows recorded in 2021 with a full quarter remaining this year.
Funding for start-ups in the UAE rose about 5% in the third quarter to $148 million from $141 million a year ago, Magnitt said in a separate report.
The first nine months of 2022 were “relatively slower” – funding fell 7% to $845 million and the number of deals remained essentially flat – after a record 2021 for the Emirates, he said. note.
“This is in line with the global market trend as the ecosystem has been impacted by tough economic headwinds,” Magnitt said.
UAE companies raised $699 million in the first half of 2022, ranking the Emirates as the top country for venture capital funding in the Mena region, Magnitt reported in August.
UAE-based startups have raised 57% of total 2021 funding out of 67.6% of total deals so far this year, and UAE funding value has accounted for more than a third of total investments in the Mena region, making it the top destination in the region. for the period.
FinTech remained the most funded industry in the UAE through September, securing more than a quarter of total deals, while the number of exits doubled from all of 2021, marking a record high .
Saudi Arabia, on the other hand, saw a 3.5% increase in seed funding in the third quarter of 2022, to $232 million from $224 million a year ago, Magnitt said in another report. report.
While the last three-month period was by far the lowest of the year, total funding for the first nine months of 2022 nearly doubled to $818 million across 106 deals, he added.
“Saudi Arabia recorded a positive performance in the first three quarters of the year, defying the slow trend of the global ecosystem. The kingdom saw significant growth in funding,” Magnitt said.
The value of the investment for the first three quarters of 2022 surpassed the record funding for all of 2021 by 50%, regaining a 35% share of Mena’s total funding.
Saudi Arabia was also the only country in Magnitt’s Emerging Risk Markets category to record mega deals – funding worth $100 million or more – in the third quarter.
Updated: October 08, 2022, 2:20 p.m.