Ranking MENA’s Investors: The role of digitization and shifts in preference
Despite the challenges of the COVID-19 pandemic, the region’s technology startups received the required capital support from investors last year; a record high 256 active investors took part in the $1B invested across MENA startups in 2020.
COVID-19 had a far-reaching impact on the MENA region. The unexpected shock of the pandemic and subsequent shutdown measures plunged the economy into a severe contraction. Simultaneously, the pandemic was also an accelerant of digital transformation - especially in industries that saw surges in demand, such as E-Commerce, EdTech, and Healthcare. This forced digitization was mainly in the hands of technology startups that had to pivot their business models and adjust cashflow burns to the new reality: the COVID-19 crisis could truly be called the period of the ‘survival of the fittest’.
In this time of increased uncertainty, investors played an important role in supporting MENA tech ventures by allocating funds towards the companies with a high potential to scale. The shifts of investors’ preferences in terms of industries, investment stages, or geographies, highlighted in MAGNiTT’s 2021 MENA Venture Investor Ranking Report, help to understand the changes in the region’s technology innovation landscape... but what were the key findings?
1. International appetite towards MENA-based startups was high in 2020
In 2020, 26% of institutional firms that made an investment in at least one MENA-based startup were based outside of the region: 11% were headquartered in the US and 7% in the European Economic Area. In comparison, only 39% of all active investors in the region were registered in the UAE (20%), and KSA (19%), the two largest countries in terms of investors’ HQ. Only 9% of investment firms who actively participated in funding rounds were registered in another largest regional innovation hub, Egypt, which is 2PP (percentage points) less than US-based investors.
500 Startups, a US firm investing in the region via its Bahrain-based 500 Falcons fund, topped the MAGNiTT 2021 Investor Ranking. The fund participated in 42 deals across various industries in the region, including E-Commerce fulfillment startup Salasa’s $8.6M Series A round and FinTech NowPay’s $2.1M Seed funding.
2. Shifts towards later-stage startups
The largest number of active investors in the MENA region made investments in the $500K-$3M funding stage bracket, while the number of investors that were active in the $0K-$100K and $100K-$500K dropped.
500 Startups and KSA-based OQAL Angel Investors topped the ranking in the $500K-$3M bracket, accounting for 7 and 5 investments, accordingly.
3. FinTech was the most attractive sector for investors across MENA
While the number of active investors in E-Commerce dropped 36%, compared to 2019, FinTech ranked 1st with 63 firms investing in the sector in 2020, specifically in mobile and online payment solutions.
The most active investors in FinTech ventures were 500 Startups (8 deals), Startup Bootcamp FinTech Dubai (6 deals), and Shorooq Partners (5 deals).
To get the full list of top international and local investors across MENA in 2020, download MAGNiTT’s 2021 MENA Venture Investor Ranking Report.
Download the Investor Ranking Report
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