MAGNiTT Intelligence: Pre-money valuations in the UAE see a slight dip in 2019, with international investor interest at an all-time high
For the first time, MAGNiTT has included pre-money valuations in a research report, as we look to continually obtain more in-depth and broader information on the venture capital and startup ecosystem in the Middle East and North Africa.
The 2019 UAE Venture Investment Report highlights that the average pre-money valuations of both Seed and Series A funding rounds in the UAE fell slightly from 2018 to 2019. However, looking at the past few years, there has been an upward trend in both Seed and Series A funding rounds. Compared to just 5 years ago, the pre-money valuation at Seed funding rounds has doubled, showing a clear upward trend.
Anecdotally, many investors have seen a rise in valuations, as more regional investment entities are being formed and international investors are coming to the UAE and wider MENA region. This includes investors making investments out of their international funds, but also international investors setting up dedicated funds for regional startups, as they look to increase their exposure to the region.
Examples include China-based venture capital firm MSA Capital, which has recently launched a dedicated $50M fund with Al Salam Bank in Bahrain, as well as Modus Capital launching their $75M Modus MENA Venture Fund I (MMVFI) to target regional startups.
Not surprisingly, more entities than ever before made investments in UAE-based startups, with a large share of them coming from MENA-based and international investors. Over the last few years, the main driver of this growth has come from international investors – both MENA-based and outside MENA – coming to invest in UAE-based startups, with the number of MENA-based investors increasing 8-fold from 2015 to 2019.
With increased government support in all of the Emirates to attract foreign investors to the country, this trend is expected to continue. Consequently, with more money eyeing to invest in UAE-based startups, pre-money valuations will be driven up through the increased supply of capital and increased competition for high-quality deals.
Do you want to know the exact valuations by stage in the UAE, along other key trends? Access our full UAE Venture Investment report!