Startups in MENA raise a record $1BN+ of investment in 2020 despite a drop in deals, according to MAGNiTT’s 2021 report

Avatar

Press Release.

13 JAN, DUBAI – MAGNiTT, the largest venture data platform tracking startup investments across emerging markets, released its annual 2021 Emerging Venture Markets Report today. For the first time, this report analyses and compares investments in technology startups headquartered in MENA, Pakistan, and Turkey, as the Dubai-based data platform expands its coverage beyond MENA and into emerging venture markets (EVMs). 

“2020 was a rollercoaster year that highlighted the importance of leveraging data to make opportunities visible across borders,” comments Philip Bahoshy, MAGNiTT’s CEO. “COVID-19 rapidly accelerated the adoption of technology across emerging markets, creating larger markets and more opportunities to scale. By tracking and analyzing startup investments in 19 countries and counting, we have been able to provide real-time intel to governments, founders, and investors to support them in making informed decisions and policies.” 

The Big Picture Story – What happened in 2020? 

In a sign of continued growth for MENA, 2020 saw a record of just over $1BN invested in MENA-based startups, a +13% increase year-over-year (YoY): 

● This amount of capital, however, was deployed across fewer deals in 2020, with the total number of transactions down by -13% YoY to 496 registered transactions; ● In comparison, Pakistan recorded $77M in 48 deals, and Turkey recorded $383M in 140 deals; 

● The full-year’s data illustrates that the $1BN figure was mostly driven by a record H1 2020, with $725M raised in H1 2020 versus $563M in H1 2019 (+29% increase YoY). 

The Impact of COVID-19 & Recovery 

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 -13%) invested in 198 deals (down -35%): 

● Another clear effect has been the relocation of capital away from early stage ventures: There has been a marked shift away from pre-seed investments (deal sizes up to $100K) towards bigger-ticket Seed & Series A investments (between $100K – $3M). In 2019, 47% of all deals were less than $100K, in 2020, this number dropped to 27%; 

● Industries that saw increased demand as a result of the pandemic, like E-Commerce & FinTech, retained top spots by the number of deals, with the two sectors together representing 24% of all deals in 2020. Similarly, the amount invested in Healthcare startups more than tripled, increasing by +280% to $72M;

● Noting that it takes an average of 9 – 12 months for startups in MENA to fundraise, we can begin to measure the entrepreneurship ecosystem’s “come-back” in the quarterly funding evolution in 2020: We saw a very strong Q1 & Q2, a very low Q3 (one of the lowest on record as we felt the full effects of the pandemic), and a stronger Q4 as MENA’s venture markets begin to show signs of recovery. 

MENA Country Deep-Dive 

The three main innovation hubs of the UAE, Egypt and Saudi Arabia, accounted for 68% of total deals disclosed in 2020: 

See Also

● Once again, the UAE ranked 1st and accounted for the lion’s share of total funding and the highest number of deals in MENA, representing 56% of all capital deployed and more than ¼ of all transactions across MENA (26%), with 129 deals and $579M in funding in 2020; 

● Egypt ranked 2nd for both total funding with $179M (up +31%) and number of deals (down -10%); 

● The fast-growing KSA ranked 3rd for total funding with $152M (up +55%), with the number of deals seeing the highest increase in MENA, up by +35%, which is made more remarkable when compared with the slow-down in the rest of MENA; 

● Lebanon and Bahrain also saw dramatic changes in 2020. Lebanon witnessed a steep 64% drop in the number of deals down to 16 registered transactions, while Bahrain saw 200% increase in total funding up to $20M

Looking forward, seasoned global investors remain optimistic. “2021 will be the tipping point for entrepreneurship in MENA,” says Courtney Powell, Chief Operating Officer at 500 Startups. “It’s the culmination of years of work throughout the ecosystem by key stakeholders, most especially the Founders. Deal flow is healthy and getting stronger every day, there’s more capital available than ever, and there’s an intense hunger to see the region diversify away from historical GDP drivers and become a leading knowledge economy.” 

The data underpinning the report is sourced from the MAGNiTT platform. You can find a full list of all startups, investors, funding rounds, and exits included in this report on MAGNiTT. 

MAGNiTT’s annual 2021 Emerging Venture Markets Report, which highlights the venture capital trends in MENA, Pakistan, and Turkey is available online to download for free, with a full 100+ page report diving deeper by industry, country, investors, exits, and more, which is available for purchase. 

Bahrain-based digital platform and publication for startups in the Middle East. Exclusive events, in-depth workshops, insightful content, and informative news. In strategic partnership with Tamkeen Bahrain, Zain Bahrain, National Bank of Bahrain, Zoho, Tenmou, and StartUp Bahrain.

Startup MGZN © 2020. All Rights Reserved.