UAE accounts for 59% of MENA start-up investment in H1

The UAE has emerged as the biggest market for start-ups in the MENA region, accounting for 32 per cent of the deals and 59 per cent of the investment during the first half of the year.

That’s according to a report released by MENA startup data provider MAGNiTT.

Egypt and Saudi Arabia also saw an increase in start-up funding of 12 per cent and 9 per cent respectively, and ranked among the top three countries across MENA following the UAE.

Overall, the report found that 141 investments were made in the MENA region in H1 2018, a 12 per cent increase compared to the same period in 2017.

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However, the total disclosed funding fell 43 per cent to $112m in H1, compared to the same period in 2017 (excluding Careem’s $150m investment in H1 2017).

In the first six months of the year, 23 per cent of the investments were shared with undisclosed figures, up 6 per cent from H1 2017.

Meanwhile MAGNiTT also included calculations to estimate the funding amounts of undisclosed deals during the period, using four years of historical data as a basis.

It found that total funding, including calculations for undisclosed deals, stood at $203m, only slightly lower than H1 2017’s calculation of $206m (excluding Careem’s $150m investment).

Some of the undisclosed deals in 2018 included Mumzworld’s Series B funding, Fadel Partners’ Series B funding round and Armada’s Series A funding.

The report also found that e-commerce remained the most active industry with regards to investment in H1 2018, accounting for 12 per cent of all transactions and 16 per cent of disclosed funding.

MAGNiTT’s founder, Philip Bahoshy said: “Governments across the region continue to focus on startup innovation. We have seen regional initiatives like visa regulation changes in the UAE, launch of the new Fund of Funds in Bahrain and changes to foreign ownership structures in Saudi Arabia as examples to further support entrepreneurs in the region.

“While challenges exist, similar to all emerging ecosystems, the public and private sector are working closely together to help solve for many founders pain points.”

In terms of investors, 500 Startups remained the most active venture capital investor, especially at the seed and pre-seed stage, accounting for 10 investments, followed by MEVP with eight deals and Arzan Capital with seven, the report found.

Accelerator programmes also remain a key stakeholder in supporting early-stage startups, with Flat6Labs in Cairo graduating 10 firms, and Oasis 500 and Flat6Labs Beirut graduating eight start-ups each.

Early stage investment accounted for 84 per cent of all transactions in H1 2018, up 6 per cent from H1 2017, while accounting for 27 per cent of the total funding amount, the report added.

“In a record start of the year in terms of transactions, much of this investment had been focused at the early stage,” said Bahoshy.

“Multiple governments have made announcements on the creation of funds to help fuel investments across all stages of startup growth. We are also seeing corporates play an active role in corporate venture capital activity and much of the MENA regulation is focused on supporting startups and investors connect.

“All these factors will help the acceleration of the MENA startup ecosystem,” he added.