DUBAI, UAE — Funding for startups in the Middle East and North Africa (MENA) region has decreased significantly in April 2023, dropping 97 percent from the previous month and 99 percent compared to April 2022, according to a report by Wamda.
The report revealed that only US$7 million was raised across 11 deals, bringing investment levels back to those of 2018-2019.
Of the US$7 million raised, just over US$3 million went to three UAE-based startups, while another US$3 million was invested in three Saudi Arabian startups. Investment announcements were expected to decline during Ramadan, but the sharp drop caught many by surprise.
Several factors contributed to the slowdown, including the aftermath of the Silicon Valley Bank crisis, Eid and Easter holidays, and the global decrease in investment in tech startups since the onset of the crisis in Ukraine.
Despite the decline, there were still two deals worth US$35 million each announced in May, indicating a potential slowdown rather than a complete lack of investment in the region.
Meanwhile, e& Capital, the venture capital arm of Etisalat, recently acquired a controlling interest in ride-hailing service Careem for US$400 million.
Although Uber purchased Careem in 2019 for US$3.1 billion, it will retain full ownership of the ride-hailing business, which will be offered alongside Uber’s other services on the Careem app.
Careem’s “super app,” launched in 2020 with US$50 million in funding, offers a range of services similar to those of Chinese digital giants WeChat and Alipay, as well as Indonesia’s Gojek.
The app’s unified ecosystem has proven popular with users, who make three times as many monthly purchases as users of single-service apps.
Smiles, e&’s customer reward program, has been expanding into various sectors, including media, home services, and regional finance, through investments and acquisitions. However, it remains to be seen how Smiles will be integrated into the Careem app.
