UAE startups top in funding, deals led by E-commerce in 2020
SOURCE: Khaleej Times
The UAE’s startup community will emerge stronger in 2021 as it gets ready to embrace new paths of growth. The nation displayed a unique ability to tackle challenges — be it global or regional — making it the most vibrant regional player both in terms of deals and funding.
Lessons of 2020 indeed impart a new meaning to resilience as the startup community received stronger government support in various forms of sops, with MENA startups raising over a record $1B of investment in 2020, indicating a 13 percent increase year-over-year.
Roberto Croci, Managing Director of Microsoft for Startups MEA said, “The UAE has all the ingredients to become a vibrant hub for startups, underpinned by effective public-private partnerships and fast regulatory decision-making. The UAE has long been synonymous with change and innovation. Much of this has been driven by SMEs and startups, which are often at the forefront of fresh ideas – in many ways they can be considered the lifeblood of the UAE commercial spirit. Microsoft has long provided the infrastructure and tools to support their work.”
The three main innovation hubs — the UAE, Egypt, and Saudi Arabia — accounted for 68 percent of total deals disclosed in 2020 and once again, the UAE ranked first and accounted for the lion’s share of total funding and the highest number of deals in MENA, representing 56 percent of all capital deployed across MENA (26 percent), with 129 deals and $579M in funding in 2020. Despite the challenges stemming from COVID-19, e-commerce and fintech, retained top spots by the number of deals, with the two sectors together representing 24 percent of all deals in 2020. Similarly, the amount invested in healthcare startups more than tripled, increasing by 280 percent to $72M.
Sajid Azmi, Founder and CEO, Yegertek said, “Pandemic induced restrictions accelerated the growth of e-commerce, but this should not be seen as a temporary transition. Not only has a much larger subset of customers become used to the convenience of e-commerce, but the services on offers have also been enhanced. Add to this the inherent advantages e-commerce offers businesses in terms of market penetration, and it’s clear that growth in the sector will only accelerate.”
However, in 2021, businesses will need to differentiate themselves in the e-commerce space as well, cautions Azmi. “Increased activity will translate into the increased competition, especially as contemporary customers are well aware of their choices. Businesses will need to adopt technology strategically and in a way that differentiates their offerings. This will mean implementing data-driven machine learning operations, enhanced omnichannel engagement, and personalised services that leverage customer data effectively,” added Azmi.
The MAGNiTT report ‘2021 Emerging Venture Markets Report’, released on Tuesday ranked Egypt second for both total funding with $179M (up +31 percent) and number of deals (down -10 percent) and fast-growing Saudi at third place for total funding with $152M (up +55 percent), with the number of deals seeing the highest increase in MENA, up by 35 percent, which is made more remarkable when compared with the slow-down in the rest of MENA.
“2020 was a rollercoaster year that highlighted the importance of leveraging data to make opportunities visible across borders,” said Philip Bahoshy, MAGNiTT's CEO. “COVID-19 rapidly accelerated the adoption of technology across emerging markets, creating larger markets and more opportunities to scale. By tracking and analysing startup investments in 19 countries and counting, we have been able to provide real-time intel to governments, founders and investors to support them in making informed decisions and policies,” added Bahoshy.
MAGNiTT's latest report analyses and compares investments in technology startups headquartered in MENA, Pakistan, and Turkey, as the Dubai-based data platform expands its coverage beyond MENA and into Emerging Venture Markets (EVMs). Last year, Pakistan recorded $77M in 48 deals, and Turkey recorded $383M in 140 deals.
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