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Magnitt Report: Investments in MENA Startups Have Reached $659 Million in H1 2020

Despite the consequences brought on by the COVID-19 pandemic, the MENA startup ecosystem has continued to thrive.

According to a report by MAGNiTT, total funding of MENA-based startups in the first six months of 2020 has already reached 95% of 2019’s full year. The funding in H1 2020 so far is totaled at $659 million spread across 251 startups, which is down 8% from 2019.

The dip in the amount of startups invested in can be attributed to investors focusing more on later-stage startups, a consequence brought on by the Coronavirus crisis which caused the record-breaking investment in Q1 2020 to drop 32% in Q2.

Leading the amount of investment deals so far is Egypt (25% of total funding), UAE (25%) and Saudi (18%). Some of the notable investments deals that happened before the COVID-19 outbreak UAE-based food delivery service Kitopi ($60M), Egyptian healthtech startup Vezeeta ($40M), while other sizable funding rounds that happened during the pandemic are Dubai-based solutions company EMPG ($150M) and Saudi food delivery app Jahez ($36.5M). 

"We are seeing a shift in investor appetite when it comes to startup development stages,” explains Philip Bahoshy, MAGNiTT’s founder and CEO. “There are two key factors at play. First, the full impact of COVID-19 is likely to hit later in the year. As we know, it takes an average of 6 months to fundraise. Many deals in Q1 2020 will have already been in the works for a period of time. Second, what we see is that more later-stage investments with larger round sizes have been taking place. This highlights an approach of larger bets on more established companies, which can provide them a longer runway to weather the challenging times ahead."

In addition to the behavioural shift in investors gravitating towards later-stage startups, there’s also a glaring increase in demand for e-commerce, fintech, edtech and healthtech startups - four industries that have proven to be highly lucrative and sought after during the pandemic by users, and in turn, investors.




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