MENA start-up funding increases by 13% to top $1bln

The highest funded company was EMPG, parent company of Dubai-based property portal bayut, which raised $150mln

  
Image used for illustrative purpose. Seed funding or seed stage funding is a very early investment which aims at helping a business grow and generating its own capital. Also referred to as seed money or seed capital, investors often get equity stake in exchange for the capital invested.

Image used for illustrative purpose. Seed funding or seed stage funding is a very early investment which aims at helping a business grow and generating its own capital. Also referred to as seed money or seed capital, investors often get equity stake in exchange for the capital invested.

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Total start-up investment in the MENA region reached $1.031 billion in 2020, an increase of 13 percent compared to the previous year, but the funds were spread across fewer deals.

MAGNiTT, a Dubai-based start-up platform, said the number of deals done in 2020 were down by 13 percent, to 496 registered transactions.

Three of the five highest funded companies in the Middle East and North Africa region (MENA) were UAE-based, starting with EMPG, owners of Dubai-based property portal bayut, which saw $150 million in funding, followed by Dubai and New York-based cloud kitchen company Kitopi at $60 million.

Vezeeta, a digital healthcare company founded in Egypt, was the third highest funded at $40 million, Saudi food delivery app Jahez was fourth with $36.5 million, and the UAE’s sellanycar.com was fifth with $35 million.

For the first time, the start-up platform’s 2021 Emerging Venture Markets Report compared funding data for the MENA region with Pakistan and Turkey, which saw deals signed worth $77 million and $383 million respectively, indicating the growth of Pakistan as a start-up location, and the burgeoning size of the Turkish market.

The majority of the $1 billion raised in the MENA region was for deals signed in the first half of the year, accounting for $725 million, compared with $563 million in the first half of 2019.

“The ‘COVID-effect’ was felt throughout the ecosystem, and is most clearly reflected when comparing H2 2020 with H2 2019. The second half of 2020 saw $306M (down by 13 percent) invested in 198 deals (down by 35 percent),” MAGNiTT said in a press release.

Data gathered by MAGNiTT showed a move away from early stage ventures and pre-seed investments of up to $100,000, towards larger seed and series A investments of up to $3 million.

“Industries that saw increased demand as a result of the pandemic, like e-commerce and fintech, retained top spots by the number of deals, with the two sectors together representing 24 percent of all deals in 2020.

“Similarly, the amount invested in healthcare startups more than tripled, increasing by 280 percent to $72 million,” MAGNiTT said.

The UAE is still the region’s key start-up hub

As in previous years, the UAE, Saudi Arabia and Egypt accounted for the bulk of start-up funding at 68 percent, with the UAE taking the lion’s share of funding at 58 percent.

Saudi Arabia saw dramatic growth, up 55 percent with $152 million of funding, with the biggest increase in the number of deals across the region, up by 35 percent.

Lebanon saw a steep decline in funding, with a 64 percent drop in the number of deals, down to 16 registered transactions, while Bahrain saw 200 percent increase in total funding, up to $200 million.

(Reporting by Imogen Lillywhite; editing by Daniel Luiz)

(imogen.lillywhite@refinitiv.com)

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