DUBAI, UAE — Venture funding into Middle East and North Africa (MENA) region startups witnessed a strong recovery in May 2023, with startups amassing $445 million across 39 deals, the latest report from Wamda and Digital Digest suggested.
It’s a substantial surge from $7 million raised over 11 deals in the previous month, the report titled “May 2023 Investment in MENA” said, adding that this increase in funding represents a 153 percent year-on-year increase in deal value, though deal volume dipped slightly by 7 percent.
This increase came after a period of slowed investment in 2022 due to economic volatility, inflation, and high interest rates2. International investors became more cautious, often reserving their capital for follow-on investments in their existing portfolios or for later-stage deals at discounted prices.
However, despite this slowdown, certain sectors fared well, including healthcare, climate tech, energy, and transportation. This was driven by factors such as high oil and food prices and government policies to curb emissions.
Other highlights * Fintech remained the favorite sector for VC funding, irrespective of a significant deal by Tabby, followed by e-commerce and superapps. * Startups with all-male founding teams claimed the lion’s share of funding, garnering 92.8% of the total. * Five acquisition deals took place in the UAE, including ZainTech's purchase of Adfolks and EDGE’s acquisition of Jordan's MARS Robotics. * A $10 million Web3 accelerator programme was launched by REEF and a fintech incubator in Jordan by JoPACC.
The UAE emerged as the frontrunner, securing $422 million across 14 deals, equivalent to 90 percent of the total funds raised during the month. This upswing was mainly driven by Tabby, a BNLP startup that raised $350 million in a debt round. If Tabby’s round is excluded, the total funding in the region drops to $95 million, with the UAE accounting for $71.6 million of that.
Saudi Arabia led the count in terms of deals, with 15, largely due to the graduation of seven startups from the Flat6labs Riyadh accelerator program.
Fintech maintained its position as the favorite sector for VC funding, irrespective of Tabby’s deal, followed by e-commerce, bolstered by Squatwolf’s $30 million round in the UAE. Qatar’s superapp Snoonu, which raised $12 million, propelled its sector to the third rank.
The report also notes that late-stage deal-making has shown signs of recovery after facing turbulence due to shaky market conditions. Seed and pre-Seed startups, however, continue to dominate in terms of deal volume.
Interestingly, startups with all-male founding teams claimed the lion’s share of funding, garnering 92.8 percent of the total, whereas those with mixed-gender co-founders raised 7.2 percent. Only one female-founded startup, Egyptian healthtech firm Chefaa, raised investment in May, amounting to a $10,000 grant.
In instances where exact funding amounts were undisclosed, the report attributed $1,000,000 to startups like Balad, Twig, Chari, and the Open Network, and $100,000 to smaller fundraisers like Bayotina, Cargoz, Helpoo, Thirty Sleeps, Sa7lyy, Lisan, and Sinterex.
Further highlighting the UAE’s dominance, it was home to five acquisition deals, including ZainTech’s purchase of Adfolks and EDGE’s acquisition of Jordan’s MARS Robotics.
Also of significance was the launch of a $10 million Web3 accelerator programme by REEF and a fintech incubator in Jordan by JoPACC, marking promising developments for the region’s startup ecosystem.
This resurgence in May follows an inconsistent first quarter for MENA startups, where February saw a staggering $760 million raised – a 638 percent increase from January – predominantly in the super apps, e-commerce, and foodtech sectors, according to an earlier Wamda report.
However, March witnessed a decrease, with startups raising $247 million, a 67 percent decline from February, the report said.