RIYADH: Startups in the Middle East and North Africa (MENA) secured $1.3 billion in funding during the first nine months of the year, marking a 13 percent year-on-year decline, according to recent data.
MAGNiTT, a venture capital data platform focusing on emerging markets, disclosed this in its third-quarter report. The report analyzed investment trends across the Middle East, Africa, Southeast Asia, Pakistan, and Turkey for the first nine months of 2024.
Despite a global slowdown in venture capital activity, MENA demonstrated resilience, outperforming other emerging venture markets (EVMs).
Philip Bahoshy, CEO of MAGNiTT, emphasized the region’s growing appeal to global investors, especially for early-stage investments. “MENA’s performance in the first nine months of 2024 highlights the region’s increasing attractiveness to global investors, particularly at the early stages. The number of investors has grown by 34 percent year-on-year, driven by a 69 percent increase in international investors,” he noted.
Bahoshy also pointed out that the fourth quarter traditionally sees strong performance, with events like Expand North Star and the Future Investment Initiative Forum expected to further boost funding activity in MENA.
Overall, EVMs experienced a significant downturn, raising $4.9 billion—a 45 percent year-on-year decline. Southeast Asia and Africa recorded the steepest drops, while the Middle East and North America saw the smallest decrease, supported by two consecutive quarters of year-on-year funding growth.
MENA startups secured $1.3 billion across 352 deals, reflecting a relatively modest 6 percent drop in deal count compared to the same period last year. Total investors in MENA increased by 34 percent, underscoring the region’s attractiveness among EVMs. However, there were only 17 exits during the first nine months, marking a 50 percent year-on-year decline.
Fintech remained the top sector in MENA, attracting $480 million across 72 deals. The Saudi Public Investment Fund’s Sanabil Investments was the most active investor in terms of funding, deploying $59 million, while Flat6Labs led in deal count with 37 transactions.
In contrast, Africa and Southeast Asia saw substantial contractions in venture capital activity. African startups raised $839 million, a 38 percent year-on-year decline, with deal volumes falling by 42 percent to 202. This downturn was largely driven by an 81 percent reduction in accelerator investments.
Looking ahead, Bahoshy stated that the fourth quarter will be pivotal, particularly given global trends pointing toward lower interest rates and a potential uptick in investment activity. “The fourth quarter of 2023 set a high benchmark with two mega deals in Saudi Arabia and the year’s highest quarterly funding in MENA. With global trends pointing toward lower interest rates and an uptick in investment activity, the fourth quarter of 2024 will be a crucial period. All eyes are on whether we can exceed last year’s performance,” he added.
