Walid Mansour on Q3 2020: The aftermath of COVID-19 and beyond

“Although Q3’20 was clearly the victim in terms of venture capital activity as the aftermath of COVID-19, it was also a period of seeding new success stories of tomorrow” - Walid Mansour, Managing Partner & Chief Investment Officer at MEVP

Read the full Q3 MENA Venture Investment Report to empower your investment decisions with data. 

Q3 2020 analysis: the number of deals dropped 50%, while the top 5 deals accounted for more than half of the total capital raised

According to MAGNiTT’s data, in Q3’20 the number of deals dropped YoY by more than 50% to 70 investment rounds, compared to Q3’19.

Walid Mansour: "The decline in the number of deals (slashed by half) across the MENA region indicates that smaller companies did not receive enough funding in Q3’20. Moreover, we noticed that the top 5 transactions made up to 50% of the money raised during the same quarter, the quarter was clearly the biggest victim of the COVID-19 pandemic. Having 5% of deals account for more than $50M of invested capital indicates investors’ preference to deploy capital towards larger/more stable businesses."

Top 5 investment rounds in Q3’2020

1. Sehteq

Sehteq, a Dubai-based Health Insurance startup recently secured a $20M Series A funding to set up a reinsurance vertical, led by their anchor investor 971 Capital.

2. Fetchr

Dubai-based international express, mail delivery, and logistics services company, Fetchr secured $15M back in July, to accelerate its expansion plans in Saudi Arabia as part of its turnaround plan to save the company from the brink of collapse.

3. Mawaad Environmental Services

The UAE startup which provides critical services for the global steel industry with a focus on slag processing and metal recovery, closed a $6.5M Series A funding in early July. 

4. iKcon

The Dubai-based tech-enabled cloud kitchen operator that procures, cooks, and delivers food on behalf of restaurants and brand owners, successfully raised a $5M Pre-Series A funding round, to fuel their regional expansion.

5. Lean Technologies

Lean Technologies, a Riyadh-based FinTech platform that builds developer-friendly APIs, secured a $3.5M Seed funding round, to provide a secure, reliable, and consistent way to access data.

Beyond Q3 2020: are we in the period of seeding of new stories for the future?

As MAGNiTT’s data indicates, the average ticket size in Q3’20 reached the lowest yearly level of $1.1M, decreasing by 39% since the peak in Q1’20.

Walid Mansour: “The average ticket size during Q3’20 was around $1M per investment. These $1M (Seed) tickets are actually starting to fuel the post-pandemic startup stories. The fact that the 50% of total funding in Q3’20 was split across smaller Seed tickets clearly indicates that new post-COVID stories are being financed now.  

"On a positive note, we look forward to a more normalized Q4’20, with both investment activity and deals pipeline picking up. Clearly, some of the Seed and Series A companies that are funded today will be the new success stories of tomorrow."

What are the top-funded early-stage startups? Purchase the full Q3 MENA Venture Investment Report to empower your investment decisions with data.