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MAGNiTT MENA’s H1 2017 (first half) funding report card for the MENA startup world is out, and it would be safe to say that the ecosystem has come through with flying colors. MAGNiTT’s analysis finds that following a subdued start in the first quarter of 2017, a flurry of investment activity in the second quarter of the year has resulted in H1 2017 surpassing both 2014 and 2015, and also already touching 70% of the number of deals of 2016. US$290 million worth of investments were made across 88 disclosed deals in the year so far, which notably includes $150 million investment in Careem, made by Kingdom Holding and other investors. Even after removing this large deal out of the equation, the report notes a “solid growth in startup investments, with more deals disclosed than any of the last three years.”
MAGNiTT founder Philip Bahoshy believes there are four main factors influencing the positive trend this year: more startups now coming into existence (what he calls “the base of the pyramid” growing), greater need and opportunity for follow-on funding as the existing enterprises grow, increased risk appetite among the region’s investor groups, and transparency in deal closures resulting in more success stories available as data. “These positive signs highlight a growing and healthy ecosystem with continued room for improvement,” says Bahoshy. A few notable investments during the period include those raised by Careem ($150 million), Fetchr ($41 million), Compareit4me.com ($3.5 million), and others.
In a sign of the evolution of the ecosystem, in terms of number of deals, 27% were angel investments in nature (deals up to $500,000) and 26% were investments at seed stage ($500,000 – $2 million) showing growing support for startups at the early stages. While MAGNiTT plans to undertake a more in-depth analysis of the investment stages as part of their year-end report, Bahoshy says, “Year-to-date figures show a gradual shift to later stage investment in the ecosystem. As expected more startups are seeking follow on funding at later stages and this has been complemented by new funds being created to service Series A and Series B investments.”
Sector-wise, e-commerce (16%) continues to lead as the most popular industry for investment with technology (13%) and fintech (10%) startups following closely. Though still in its infancy, the MENA region’s investor ecosystem is also maturing, and this is perhaps best reflected in the fact that H1 2017 has seen 14 venture capitalists (as per disclosed data) investing in more than one MENA startup during the period. BECO Capital leads the pack with five disclosed deals, with Wamda Capital, Middle East Venture Partners (MEVP), and others also part of the active VCs list.
To get the detailed insights about MENA startup ecosystem's performance in the year, access the MENA Funding Report Card H1 2017 here.