To the New World: MENA Impact Investment in 2021
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Last week we announced an exceptional funding round by Dubai-based XR Tech startup Hyperspace, which was backed by major investors including Introsight and Dubai Financier Mohammed Afkhami, GoPuff (US) Founder/CEOs Yakir Gola and Rafael Ilishayev, Bolur Capital, and Scott Ross of HillPath Capital Partners. The UAE-based startup raised $11M to open the region’s first fully immersive Metaverse experience, 3 amusement parks which will pioneer the merging of digital and physical through fully integrated Tech.
This announcement comes at the cusp of an unprecedented year for VC investment across all Emerging Venture Markets; at a time when governments across MENAPT have taken big leaps in Legislation and Tech facilitation, and private and public ecosystems have been forced to rethink and reassess their venture structures amidst a global pandemic. Among the many pivotal moments we’ve recorded at MAGNiTT this year, was a first-ever VC investment in Sudan backed by Egypt’s Fawry, a first of its kind acquisition of Qatari Healthtech Meddy by leading Nigerian player Helium Health, and the launch of the first VC fund in Oman by Phaze Ventures set to influence the regional economy.
These drivers are shaping our leap into the new world of integrated Tech, cashless societies, and transborder ecosystems. To this effect, we measure MENA’s readiness for sustainability and eagerness for progressive investing. Brought to you by Wa’ed, the entrepreneurship arm of Saudi Aramco, 2021 MENA VC Impact Investment Report exhibits the role of VC in a sustainable new world:
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Impact investments, intended to generate positive, measurable social and environmental impact, have become a critical feature of the MENA VC dealmaking landscape. With the onset of the COVID-19 pandemic and its impact on education and healthcare, the EdTech and HealthTech sectors continue to be a big draw for impact investors closing 40% of the 403 transactions between 2016 and Q3 2021. As recorded in the Wa’ed sponsored 2021 MENA VC Impact Investment Repor, $444M was invested in impact-driven startups across the region since 2016, accounting for 7% of all venture capital (VC) deployed in MENA startups by the third quarter of the year.
Championing EdTech, KSA’s Noon Academy has received $22M to date, and Jordan’s EdTech Abwaab has secured $8m in funding in Q3 of this year before announcing its $20M round in Q4. While in the Healthcare sector, the UAE-based telemedicine company Altibbi also featured in the top ten most-funded impact startups raising a total of $11M in venture funds. Across all industries, the report shows how the growth of the impact-focused sector was driven in part by large investments in Yellow Door Energy (UAE)($65M), KarmSolar (EGY)($25M), Noon Academy (KSA), and Red Sea Farms (KSA)($18M).
On the onset of yet another record year for VC Impact Investment, with the $107M invested in 2021 by the third quarter of the year, representing 82% of the record high in 2019 ($131M), of which the single investment in Yellow Door Energy raised 50%. By Q3 2021, Impact Investing is following record investments seen across the wider venture capital asset class in 2021. “In Saudi Arabia, and more widely across the region, VCs are acutely aware of the need to ensure sustainable solutions to the challenges this generation and future ones must address. The data in this report is key to understanding the current social and environmental performance behind leading startups and venture investments, and as the world around us is changing and it is imperative we are at the forefront of driving solutions that facilitate meaningful change,” highlighted Fahad Alidi, the Managing Director at Wa’ed.
As recorded in our report, Saudi-based startups accounted for the most impact deals between 2016 and Q3 2021, while UAE ventures raised the most impact funding. A raft of government initiatives and impact enablers is strengthening the Saudi Arabian impact investing ecosystem and is helping create a robust investment and business development environment to drive diversification of the economy. Entities such as Aramco Lab7, ACT, the investment arm of the FII Institute, and Wa’ed’s business incubation program, are facilitating Saudi startups in developing technologies and solutions to address the most pressing global social and environmental challenges that are faced today.
This support is ensuring the Kingdom’s impact entrepreneurs can turn groundbreaking ideas into reality and purpose them as a vehicle for social change.
“The MAGNiTT 2021 MENA VC Impact Investment Report charts the evolution of venture capital impact investing funding in the region. Emerging Venture Markets are often under-served from a data perspective, but our in-depth report offers deep, localized, and relevant insights into the MENA region and what is driving investment,” commented Philip Bahoshy, CEO & Founder of MAGNiTT. “While the report highlights growth in the area of impact investing for the region, it also highlights the lack of investment in the sector to date. Accounting for only 7% of all funding across Venture Investment in the region, the report highlights the importance of shining a spotlight on the sector and the opportunity that exists in the years ahead.”
By attempting to compile original data and stakeholder insights, the report aims to shed some light on the VC impact investment ecosystem for which data is fairly limited, and sector categorization for startups is generally subjective. As more impact-driven and impact-adjacent startups start to emerge in the region, the need increases for greater investment, support, and collaboration across the ecosystem.
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