Insights from the Emerging Venture Markets ecosystem: Reflecting on MAGNiTT’s 2021 EVM Report
For the first time ever, MAGNiTT’s newly released annual venture investment report gives a high-level overview of the latest trends in the MENA, Pakistan, and Turkey venture capital ecosystem.
After what has been an unprecedented year, it was also an unpredictable one for VC funding. The report deep-dives into all of the key funding data points in 2020 and how the ecosystem has been affected by the backdrop of COVID-19. As a result, we also spoke to key individuals in the Emerging Venture Markets entrepreneurial ecosystem, from investors, founders, government, and international stakeholders, who provided their expert insights on the year gone and what the future holds for 2021.
Hear from them below:
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The International Perspective
Courtney Powell, Chief Operating Officer - 500 Startups
“2021 will be the tipping point for entrepreneurship in MENA. It’s the culmination of years of work throughout the ecosystem by key stakeholders, most especially the Founders. Deal flow is healthy and getting stronger every day, there’s more capital available than ever, and there’s an intense hunger to see the region diversify away from historical GDP drivers and become a leading knowledge economy.”
Mike Butcher MBE, Editor-at-large - TechCrunch
When asked about predictions for the region: “Firstly, the growth we’ve seen will continue as the region itself grows. Secondly, that the pandemic will force both businesses and consumers into greater and greater levels of digitization of their lives and work. Thirdly, that the vaccine, when distributed, will unlock a new economic boom in the region. Fourthly, that all of the digitization and new working and living practices from the pandemic will be ‘backed-in’ to the new economic reality.”
The Investors’ Perspectives
Allen Taylor, Managing Director - Endeavor Catalyst
“2020 was such a wild year! After a brief pause in Feb/ March, new investments in venture capital came roaring back in May/June and stayed strong through the 2nd half of the year, particularly in emerging markets with more mature VC ecosystems (e.g. Latin America, SE Asia). In this regard, I think MENA — like Sub-Saharan Africa — was a bit slower to “come back” from the initial pause, but is starting to make that comeback now. On the entrepreneur side, we saw tons of great companies launching and growing during 2020, and expect many of them to get funded during the first half of 2021.
"I believe the region needs no less than $2BN to $3BN of new investments every year for the next 5 years to get the ecosystem to realize its full potential… Venture funding is available, but COVID-19 tells us all how important it is to not only think of GMV/Top line growth at any cost, but to improve margins and understand resilience in its deepest sense, which requires mature founders and a deep team.’’
MENA’s Government Perspectives
HE Khalfan Belhoul, Chief Executive Officer - Dubai Future Foundation
“We believe that 2021 will be a pivotal year in the startups ecosystem, not only in Dubai but the wider region. Dubai has been a leader in developing the venture capital space, and while COVID has had its challenges, we have seen resilience and adoption of technology as key to the growth of our economy. 2021 will be a year in which we see further strengthening of our position as a leading city that attracts startups, innovators, and investors alike globally.
“Through its many programs, ventures, and innovation ecosystems, such as the Dubai Future Accelerators, AREA 2071, and the Dubai Future District, Dubai is committed to creating a strong infrastructure for startups to set up, grow and scale across the region. With the lion’s share of funding going to UAE based startups, we have seen many historical success stories and provided a track recorded for further investment in the future. We are also keen to open opportunities for international VC to set up in Dubai to further foster venture growth for the region."
Eng. Saleh Al-Rasheed, Governor of Small and Medium Enterprises General Authority - Monsha’at
“Monsha’at has played a key role in supporting the VC industry in Saudi Arabia through a number of initiatives which aim to support start-up growth, incentivize investment in promising sectors, as well as fill the financing gap in the industry. The Saudi Venture Capital Company (SVC) was instrumental in attracting regional and international asset managers, as well as incentivizing local players to invest in the venture capital space.
"This year, we witness an increasing appetite of VC investors towards innovative digital solutions that assist in overcoming obstacles presented by COVID-19, especially in later stages. To date, the initiative has committed more than SAR 757m through 17 investment funds and invested in more than 145 startups. The company has also invested directly in 36 deals under the co-investment program with institutional and angel investors."
MENA Investors’ Perspectives
Nabeel Koshak PhD, CEO - Saudi Venture Capital Company (SVC)
“Saudi Arabia is witnessing an increase in the quality and quantity in the deal flow of startups. More venture capital funds and angel investor groups are arising. I am thrilled by the distinguished entrepreneurs that are creating fastgrowth and scalable startups. Despite the slowdown of COVID-19, Saudi Arabia saw a record increase in VC funding (55%) in 2020, compared to 2019.
"On the regulatory and legal fronts, the recent update of the Capital Market Institutions Regulations, as well as the expected launch of the new Companies Law and the updated Investment Funds Regulations in 2021, will definitely play a crucial role in the further development of the VC ecosystem.”
Marie-Therese Fam, Managing Partner - Flat6Labs
“Contrary to 2020 being a challenging year for the entire world, it was a spectacular year for technology startups. 2020 saw many rising stars in the FinTech, Education, Healthcare, Gaming, Logistics, E-Commerce industries which are by design leveraged on scaling up through technology. We saw many of our portfolio companies make huge leaps in growth and in fundraising … I believe the future holds more for technology startups in Egypt, particularly as funds are finding their way to the Egyptian ecosystem from all over the world. It is a very healthy sign and I believe 2021 will be another phenomenal year for the startup ecosystem in Egypt and the entire MENA Region.”
The Turkish Perspective
Cenk Bayrakdar, Managing Director - Revo Capital
“COVID-19 has been a catalyst for rapid technological change driven by the shift in consumer and enterprise behavior from the status quo; increasing the appetite for experimentation and reducing adoption hurdles especially in FinTech, Retail, Healthcare, and Education. We are seeing accelerated interest in disruptive FinTech and Turkey is paving the way for transforming into a FinTech hub. Overall the world is becoming a digital pro-forma, and with access to the necessary capital, Turkish entrepreneurs and startups will be able to leverage that.”
The Pakistani Perspective
Aatif Awan, Founder & Managing Partner - Indus Valley Capital
“2020 proved that follow-on capital would flow to Pakistan quickly for startups that execute well. Airlift raised a large round, $12M, within just 7 months of us leading their initial rounds. Bykea raised a $13M series B round, led by Prosus. Many top VCs including First Round Capital, Prosus, Global Founders Capital, Village Global, Quiet Capital, GFC, YCombinator, Pioneer Fund have invested in Pakistan in 2020. We expect this trend to accelerate in 2021, as Pakistan crosses the 100M broadband subscribers milestone. We’re focused on bringing the Pakistani diaspora, aka Wapistanis, back to the country to help the startup ecosystem in its next phase of growth.
2020 saw more investment in fewer deals, reaching a record high of over $1BN invested across 496 deals. Discover more trends and insights in our NEW 2021 Emerging Venture Markets Report.