MENA’s Exit Evolution: Signs of a maturing ecosystem

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The MENA VC ecosystem just concluded one of its most exciting months in the year so far. November proved a break-through month on several fronts: it saw MENA startups garner $2Bn in funding, wrapped up the highest number of deals in 2021, and boasted the most exits in a single month in the year.

And while the region’s VC ecosystem has already reached record level of venture investment in 2021, it has inched closer to hitting a new high in terms of yearly exits. With six announced in November alone, MENA now stands just one exit short of equaling the 31 exits achieved in 2019.

1. Exits and acquisitions

The exits in November included the acquisition of iKcon by US-based firm Reef, and that of E-commerce startup El Grocer by local firm Etisalat. Two of the six startups that exited in the month were acquired by foreign companies. A look upon exits over the previous year revealed a slight but sustained increase in acquisitions of MENA-based startups by international firms. The proportion of foreign companies assisting exits of local startups has stayed north of 30% since 2020, demonstrating rising global confidence in the region’s home-grown businesses.

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2. International investors

Acquisitions haven’t been the only indicator of the rising eyeballs on MENA’s VC space. The participation of international investors in funding rounds raised by MENA-based startups has been a shining positive this year. By the end of August, 38% of the 276 active investors in MENA ventures in 2021 were headquartered outside the region. The number of investors financing local startups has also been at an all-time high this year.

3. Rising industries

The final glaring indication of MENA’s growing VC ecosystem is the rapid progress of a new cohort of industries. E-commerce, although still going strong, has been overtaken in terms of funding by the likes of Fintech, Food & Beverage and Transport & Logistics. In November 2021, the latter three industries accounted for two-third of all venture capital deployed in MENA. Over the year, funding into Fintech, Food & Beverage and Transport & Logistics startups represented more than half (56%) the capital invested into MENA’s startups.

Such emergence of fresh industries indicates demand for innovation across various spheres of life, as the ecosystem continues to digitize rapidly. This, combined with the growing confidence MENA’s startups are able to command, speaks volumes on the progress of the VC and startup ecosystems in the region.

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