The Q1 2023 MEAPT Venture Investment Summary examines the impact of the ongoing global macroeconomic uncertainties on the performance of the Venture Capital market in the MEAPT region.
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The venture space had been on a steady upward march for the past few years and ended 2021 on a trailblazing high. Unparalleled venture investment was deployed in tech startups as the pandemic became a gateway for technological innovation. However, the post-pandemic impact, the aftermath of the Russia-Ukrain conflict, rising interest rates, and inflation changed the course of the tide. While 2022 data could not fully reflect the impact of the economic downturn, skewed as it was by a record Q1, 2023 shows the picture of a measured decline.
The Emerging Venture Markets (the Middle East, Africa, Pakistan, and Turkey) aggregated over $1Bn in funding in the first quarter of the year. However, almost half of this came from the three MEGA deals closed by MENA-based startups. If we strip the impact of the $100M+ rounds, it becomes evident that venture capital funding is on a downward trajectory in the region with Q1 2023 marking the fourth consecutive quarter of decline. On a global level, Fed raised interest rates again amid the recent banking turmoil and regional banks followed suit. Given the current economic climate, VCs are likely to be more cautious about where they choose to deploy investment despite all the talk of dry powder.
Funding at the country level has been kept afloat mostly by the $100M+ rounds. KSA and Egypt came at the top supported by MEGA rounds closed by E-commerce/Retail startups Floward and Nana, and FinTech Halan. Turkey which was the most funded geography of 2023, albeit, only because of one deal saw a significant decline where last year it crossed the $1Bn mark in the first quarter and raised only $60M this year. Despite not closing any $100M rounds, UAE saw the most non-mega deal funding and accounted for almost 25% of the total capital deployed in the MEAPT region. Mirroring the recent trend, FinTech continues to garner investor interest. Almost 40% of the funding in the EVMs went to FinTech startups including the $260M raised by Egypt’s Halan. The impact of the slowdown was evident as nine of the top ten industries in the region reported a year-on-year decline compared to the first quarter of last year.
Besides being a record quarter for funding and deals, Q1’2022 also saw the highest investor participation as over 600 investors backed MEAPT-based startups in the first three months. Owing to the dwindling economic conditions, the number of investors also receded gradually, and Q1 of this year saw only half of the investors as opposed to the same period last year. UAE’s Chimera Capital deployed the most capital although it has only participated in two deals so far. The equity funding in Halan’s debt and equity round came entirely from Chimera. In terms of the total number of deals, the Nigeria-based accelerator ARM Labs Lagos Techstars Accelerator had the highest number of deals with a focus on Africa.
What’s In The Report?
This summary provides an overview of the MEAPT venture capital and funding investment space and includes the following:
• A 5-year analysis of MEAPT venture funding evolution, with a focus on Q1 2023 country and industry performance
• A 9-quarter evolution of funding and deals in the region
• The percentage share of funding by countries and industries
• Top Five Funding Rounds
• Top Five Active Investors by Deals
This summary was created with data from MAGNiTT, a comprehensive directory of technology innovation trends. The platform provides the following analytics tools:
• Investment directories, a comprehensive list of all startup venture funding across the Middle East, Africa, Pakistan, and Turkey
• Market Sizing Tools to visualize investment growth and trends across industries, geographies, and stage
• Comparison Tools to benchmark geographies, industries, and investor performance
• Exit comparisons, looking at Mergers & Acquisitions from across the region
Learn more about MAGNiTT's Data Methodology.
*This summary aggregates and analyzes tech startup investments in the Middle East, North Africa, Pakistan, and Turkey.