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The MENA region has reached another watershed moment in its Venture Capital history this past week. Since starting MAGNiTT in 2015, we have been tracking investment and data trends from across the region. We have witnessed founders aspiring for mega exits, investors looking for returns to match, and governments working to see the fruits of their efforts return in success stories. Yet, today we are witnessing critical moments in historic times.
2020's global pandemic took a huge toll on economies locally, regionally, and globally. Precisely, Venture Capital Ecosystems saw slow dips as investors and founders struggled in adapting to a new norm.
However, 2021 has picked up where 2019 left off. Today marked a promising turning point for the MENA region after the announcement of Kitopi's $415M Series C investment. At over $1.2BN invested in MENA based startups across the region in only the first 6 months of the year compared to $1.1BN invested in the full year of 2020, we have seen a new record set for capital deployed, with 6 months of the year yet to come! This number excludes venture debt investments, an instrument that is relatively new to the region but is being used at a higher frequency to support startups raising rounds.
While Kitopi's investment marks signs of return for mega deals in MENA, it also highlights a growing regional trend summed up in 3 key attributes:
- Increased international appetite for MENA startups. Soft Bank's participation along with Disrupt AD, Riley amongst others reflects a growing international interest in local startups. Early this year we saw Sequoia's first investment in the MENA region along with other regular international investors including Endeavour Catalyst, MSA Capital, Kingsway capital and Tiger Global.
- Honed focus on later stage investment highlighting the gradual maturity of the ecosystem. The investment activity in 2021 has been consistent in investors’ preference for transactions at later stage deals over riskier earlier stage startups in 2020. As startups also mature, they are requiring increased investment rounds to scale and develop into key players in the region. This has been seen through large later stage investments in companies like Tribal Credit, Sary, Trella and Floward. This does, however, raise the concern around neglecting early stage investment which set the pipeline for future deal flow.
- Investor returns starting to bear dividends. Firstly we are seeing the return of Exits in the MENA region. To date we are already at more than half of 2020 levels with Exits in companies such as Mumzworld, Spotii and Synkers. Secondly, as we see the development of later stage investments, it is likely that many of these rounds will include secondary acquisitions as companies look to tidy up their cap tables.
This outlines a very positive trajectory for the Ecosystem as we enter H2 where we will likely see the return of offline events such as GITEX and Expo 2020, the re-emergence of much missed accelerator programs, and the reignition of founders’ cross border activity to scale up and compliment their online activity.
We at MAGNiTT will continue to ensure we keep you informed with the latest information, data, and transactions with a commitment to credibility and accuracy of data as we scale beyond MENA, already starting with Turkey and Pakistan and further to Africa in H2 2021.
Browse All Startup Exits in MENA since 2019