The H1 2023 MENA Industry Venture Investment Premium Report examines the continued impact of the economic challenges on the top industries of the region.
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The MENA region's tech ecosystem faced numerous challenges amid global economic conditions, marked by inflation and commodity shocks due to geopolitical events like the Russia-Ukraine war. The region saw half-yearly funding and deals decline for the third consecutive time as it raised 1,075M with 193 deals. Analyzing the quarterly breakdown, it is evident that the second quarter was significantly affected by the economic slowdown, exacerbated by the lull in activity during Ramadan and two Eids. With only $168M invested across 73 deals, Q2 recorded the lowest funding since the pandemic summer of Q3'20, while the number of deals declined to levels not seen since Q2 of 2017. The slowdown was reflected on the industry level too. Different industries experienced varying impacts, with FinTech and Transport & Logistics witnessing a decline in deal flow activity, while E-commerce/Retail saw funding levels boosted only by MEGA deals.
FinTech, the leading industry of MENA, faced a significant retreat in activity as deals in Q2 retreated to the low levels seen during the pandemic and funding was at its lowest point in two years. However, FinTech's future in MENA looks promising, with McKinsey predicting an increase in its penetration in the financial services revenue. Notably, Payment Solutions and Lending garnered investor interest in deals, and neo-banking emerged as a funding leader. While M&A activity remained subdued in the region, FinTech saw the most exits of all the industries, driven by depreciated valuations that attracted late-stage startups and corporates.
E-commerce/Retail in MENA maintained robustness, but the economic downturn led to a drastic decline in deals, with funding levels propped up only by MEGA deals. Investor focus remained on deals in the $1M-$5M range. Saudi Arabia topped the funding and deals charts in the sector accounting for more than 90% of the total funding, followed by the UAE.
Transport and Logistics tech initially gained traction during the pandemic but faced challenges as demand stabilized. Oversaturation and regulatory complexities hindered scaling and profitability, leading investors to adopt caution. Funding in the sector declined by 90% compared to the previous year, and last-mile delivery saw declining interest due to safety and cost-effectiveness concerns. Despite the challenges, investor interest in the last-mile delivery sub-sector persisted, with Vehicle Management & Services remaining the only one to maintain last year's deal activity. However, double-digit declines were observed in the industry's overall activity in MENA.
Overall, the MENA industries navigated through the complexities of the global economic landscape, facing varying impacts across industries. The challenges have led to cautious investor practices and a reevaluation of the promise of certain tech sectors in the region. Nevertheless, the future holds promise for FinTech and E-commerce/Retail, with opportunities for growth and innovation.
What is in the report?
The latest half-yearly report offers strategic insights into the performance of the top industries of the MENA VC ecosystem. This report covers a 5-year analysis of the MENA's venture funding evolution, with a specific focus on the country comparison and industry performance in 2023. You will get access to precious information such as:
MENA Venture Funding Evolution in the top three industries: Get a detailed analysis of the past five years, highlighting the growth and development of venture funding in MENA with a focus on performance in H1 2023.
Key rankings such as the Top Industries, Top Sub-Industries, Exits, and 5-Year exit evolution of MENA's industries.
Who is it for?
Whether you’re a private investor, a VC, an investment company, a CVC, or working in corporate, this report gives an overview of the ecosystem and caters to a diverse audience including any curious minds who want to use the yearly, quarterly and monthly charts in this report to track investment activity.
You can also see in which country and industry the investment activity focused in terms of deals and capital deployed, allowing you to leverage insights and make wise choices.
The report can also be used by consultants looking to identify technology innovation trends and who will find it valuable to look at the evolution of M&A activity and concentration of acquirers/acquired startups.
Last but not least, government entities searching for investment opportunities will also find valuable information to make informed decisions.
Where is this information from?
The report was 100% created using data from MAGNiTT. MAGNiTT is the leading VC verified data platform and offers a comprehensive directory of technology innovation trends. Our unique SaaS solution includes investment directories listing startup venture funding across the Middle East, Africa, Pakistan, and Turkey, and now Singapore. By using MAGNiTT, you will also get access to market sizing tools to visualize investment growth and trends across various industries, geographies, and stages, as well as comparison tools for benchmarking geographies, industries, and investor performance. Furthermore, MAGNiTT offers exit comparisons by examining mergers and acquisitions.
Learn more about MAGNiTT's Data Methodology.