Investments in MENA Startups Hit a Record in 2017: $404 Million in 169 Deals So Far

In parallel to the mammoth Gitex Tech Week, Magnitt released today its quarterly report on the state of MENA funding, unveiling a record Q3, with more deals announced in the first months of 2017 than throughout the whole of 2016: during the summer, 62 deals were closed for over $76 million across the Middle East.

In the first nine months of 2017, a total $404 million were invested, including the $150 million invested in Careem earlier this year, with the UAE continuing to see the lions share of activity, claiming 50 percent of deals - which makes up 37 percent of total disclosed funding in the first nine months of 2017. Notably there was an increase in activity seen in KSA with 10 percent more deal flow than in the second quarter of the year. The most active VC, however, is global giant 500 Startups, which, following the launch of their Falcon Fund, closed 16 deals. MEVP follows closely, with 10 deals, and Turn8 with 8. 

“It is extremely positive to see continued investment in MENA startups. The summer is generally perceived as a quieter period in the region. However, we saw a flurry of announcements in September and we expect this trend to continue through to year end,” says Magnitt's founder, Philip Bahoshy, says. However, he comments that there is still a gap to 2016’s record total funding figure, which he attributes in part to Amazon’s acquisition of Souq.com and the 20 percent of 2017 deals which have remained undisclosed.

The report shows an interesting shift in sectors: e-commerce continues to be the biggest focus of all disclosed investment deals, (13,3 per cent), FinTech dominated the top funded deals in the third quarter, making up three of the top five investments including Paytabs ($20 million), Souqalmal ($10 million) and Beehive ($5 million). Claiming 10.9 percent of the investment deals, FinTech thus maintains its pace as the hottest industry in the region, gaining 2 percent quarter on quarter. E-commerce investment, on the other hand, saw the biggest drop with a 4.5 percent fall in deal flow. 

VCs continue to be active in the region participating in the investment of multiple startups and Saudi funding institutions are increasing their presence, with Riyad Taqnia participating in three out of the five largest investment deals in Q3, and Saudi Aramco Ventures leading the largest investment in this period, injecting $20 million into Paytabs. Dubai-based MEVP, following their announcement of investment with Mr. Allabbar, continued to be active in the MENA startup space with 10 investments YTD

“It is interesting to note the emergence of new investment players in the MENA region,” Bahoshy says. "Go Compare’s involvement in Souqalmal’s Series B funding round also follows a trend emerging in MENA where large international startups are taking strategic investments in comparable regional players to further expand their footprint. This is similar to Amazon’s acquisition of Souq and Didi’s investment in Careem," he adds, anticipating this will be a continuing trend as the market matures.

Check out the full investment report card on Magnitt.