MAGNiTT Intelligence: May sees a decline in deals compared to last year, but rebounds from April

We are a few months into a pandemic, and the Middle East and North Africa (MENA) startup ecosystem is still seeing more total funding in 2020 YTD, with $51M in total funding raised in May 2020 alone. The funding in May is mainly attributable to Swvl’s $26M fundraise. Nonetheless, according to MAGNiTT’s May 2020 Dashboard, disclosed funding dropped by 7% from May 2019, and number of investment deals saw a 27% drop from 45 deals in 2019 to 33 deals in 2020 as COVID-19 continues to bite.

As the drawbacks from COVID-19 increase, more and more efforts to minimize the impact of the pandemic on SMEs are being established, such as Abu Dhabi’s Hub71 initiative to support startups by covering all employees’ housing and office space rents for two months, with intentions to extend further support after evaluating the situation.

Moreover, Dubai Economy forms an alliance with NRTC Fresh and InstaShop grocery delivery app to enable customers the luxury of same-day-delivery of fresh fruits and vegetables from the comfort of their home. On top of that, in an effort to support the local Food & Beverage industry in the UAE, food tech entrepreneurs band together with the BuyNowDineLater.com initiative which allows members of the public to purchase gift vouchers from restaurants and cafés operating in the country for later use when restaurants re-open their doors.

 

Now, while these initiatives are taking place and everyone is adjusting to the 'new normal', activity in the startup space is slowly beginning to pick up. Yes, funding and deals are still down compared to the same month last year, but there was an encouraging jump of 93% in deals from April 2020 to May 2020. Of those deals, Egypt witnessed the highest number, 12 deals, followed by the United Arab Emirates (8), Saudi Arabia (7), and Bahrain (2). Egypt also accounted for the largest share of total funding with ($36M) – mainly due to Swvl's funding round – followed by the United Arab Emirates ($8M), Saudi Arabia ($2M), and Bahrain ($1M).

Amid the uncertainty regarding Early Stage investments, with pre-seed deals seeing a big hit in recent months, the Misk500 MENA Accelerator accounted the highest number of investment deals in May 2020, investing in 16 startups through its third cohort. Moreover, 500 Startups, Flat6Labs, Tenmou, and Class 5 Global made at least 2 investments each, while 21 other investors made 1 investment each.

Lastly, there are still new investors that are entering the scene. With 2019 seeing a record number of investors, 2020 has already seen more than 100 entities make investments in MENA-based startups. The latest new entrant is Nafithat Al Mustagbal Investments, which made its first investment in Saudi-based Grintafy Technologies's $1.2M funding round, together with Saudi Aramco's Wa'ed Ventures. This, and more, is covered in the full May 2020 Dashboard.


Discover more details in our May 2020 Dashboard.