With $560 Million in Investments, the Middle East's Startup Scene Broke Records in 2017

Middle Eastern startups saw a record year in investments in 2017, with a 65 percent increase from 2016, according to Magnitt's report on the State of MENA funding released today, which illustrates a total of $560 million invested in 260 startups throughout the year. The year's top 10 investments account for $349 million, roughly representing 60 percent of 2017 funding, including the $150 million in Careem, $90 million in StarzPlay Arabia, $41 million in Fetchr, $20 million in Paytabs and $12 million in Wego. 

“It was a great year for MENA startups, founders and investors across the board. Investment continues to grow at all stages across the funding cycle,” says Magnitt’s founder, Philip Bahoshy. “2017 broke the record for number of deals and amount invested, when removing investments in Careem and Souq. This is positive news and should provide confidence across the market heading into 2018."

While the UAE continues to see the majority of activity, - 70 percent of investments we closed in the Gulf country - the KSA saw the largest increase in deal transactions, up 4 percent from 2016. Lebanese startups saw the biggest drop in investment amount, down 12 percent from 2016, while Kuwait saw the biggest increase in deal transactions, up 3 percent from 2016.

When looking at the industries, e-commerce maintained their positions at the top of the investment deal flow, while FinTech continued to exponentially grow, accounting for 11.9% of all deals. FinTech startups also make up three of the 10 largest investments in 2017, marked by Paytabs ($20 million), Souqalmal ($10 million) and Wahed ($7 million). Food and Beverage saw the largest increase, 3 percent in deal flow across 2017, while Logistics and Transport also proved big winners, given the massive rounds raised by Careem ($150 million), Fetchr ($45 million) and Wego (12 million).

2017 also saw the emergence of new players into the MENA startup scene, including launches such as 500 Startups' MENA Falcon Fund, which was the most active VC by number of deals, with investments in over 30 startups across the region. This was followed by Middle East Venture Partners with 14 deals, who also announced the launch of their new $250 million MEVF III fund. Saudi Funding Institutions came to the forefront, with RAED Ventures, Saudi Aramco Ventures (WA’ED), Riyad Taqnia Fund, and Vision Ventures actively investing across the MENA landscape.

Looking at the top 10 investments, established VCs made notable participations with BECO Capital investing in foud of the largest deals followed by Middle East Venture Partners in three. There was no slowing down in exits in 2017 which saw more than 20 deals, including the landmark acquisition of Souq.com by Amazon, the 51 percent acquisition of Namshi by Emaar Malls, as well as Delivery Hero’s acquisition of Carriage.“We anticipate existing VC’s to deploy new capital from freshly raised funds, we anticipate the continued emergence of new institutional players across the region and we foresee government and regulators continue to actively facilitate and promote innovation initiatives,” Bahoshy says.

Having launched his platform, Magnitt, in 2014, Bahoshy has swiftly become a voice of authority in the region, with most of his investment reports and regional insights going viral across the Middle East and North Africa. This year, he says, the platform is taking it one step further, kicking off with the launch of a new site. “2018 is a big year for our platform. Accuracy of data is core to our proposition," he says. "We compliment this infographic with a detailed and in depth version of this report, including analytics and insights, available for paid subscribers as well as looking forward to launch of a new site later this month which will provide the tools and functionality to support users in the ecosystem.” 

Check out our exclusive interview with Philip Bahoshy here.

Main photo: Dubai at night. Licensed under Creative Commons.  

Data and infographs: Magnitt.