Dubai, UAE — The Middle East and North Africa (MENA) startup ecosystem witnessed a much-needed boost in March 2024, with total investment reaching US$254 million across 54 deals.
This represents a significant increase of 186 percent compared to February’s numbers and a slight 1.17 percent year-on-year growth from March 2023. However, despite the positive trend, the region is still far from fully recovering. Investment activity in Q1 2024 remains 62 percent lower than last year’s period.
Saudi Arabia takes the lead
The LEAP24 tech conference held in Riyadh proved to be a catalyst for Saudi startups. They secured the lion’s share of investments, totaling US$198 million across 25 transactions. Notably, e-commerce giant Salla’s pre-IPO round contributed a significant US$130 million to this figure.
This surge pushed the UAE, a traditional leader in regional investment, to second place with US$39 million raised by 12 startups. Egypt remained a distant third with US$7 million secured by eight startups.
The funding landscape saw a shift in focus, with Software-as-a-Service (SaaS) providers emerging as the top recipients, attracting US$130.6 million across nine deals. Fintech followed closely behind, with US$40 million spread across 12 transactions, while e-commerce startups secured US$18 million from investors.
Seed funding strong
While March showcased a positive uptick, it lacked large-scale investments and later-stage funding rounds. Seed rounds dominated the month, attracting US$49 million, with Series A startups securing US$38.5 million. Additionally, 16 startups received a total of US$1.75 million in grants.
B2B takes precedence
Another notable trend is the significant shift towards Business-to-Business (B2B) models. B2B startups received a staggering $188 million, representing 74 percent of the total investment. This starkly contrasts with Business-to-Consumer (B2C) models, which secured only US$48 million, or 19 percent of the total.
The gender gap in the MENA startup ecosystem remains a pressing issue. Male-founded startups secured nearly 90 percent of the deals, while female-led startups received a meager 0.21 percent. Mixed-gender founding teams accounted for the remaining share.
Mergers and acquisitions gather pace
March 2024 wasn’t just about investments. The month witnessed several noteworthy mergers and acquisitions (M&A) deals. The MBC Group acquired a significant 14 percent stake in music streaming platform Anghami, while Egypt’s MNT-Halan expanded its reach by acquiring Pakistan’s Advans Microfinance Bank. Additionally, the education technology sector saw consolidation with Classera acquiring Saudi Arabia’s Expert Solutions. Other notable M&A activities include RasMal acquiring Pentugram, Mitgo acquiring Embedded, and Saudi Arabia’s T2 acquiring Omani data analysis startup Promize.
Investment funds signal long-term commitment
The LEAP24 conference wasn’t just about showcasing existing startups but also a platform for announcing new investment funds. Significant commitments include the US$500 million KSA Logistics Fund III launched by Bahrain’s Arcapita Capital, the Saudi Arabian National Development Fund’s two VC funds valued at US$120 million, and the $100-million investment pledged by the UAE’s Gulf Capital and RDIA. These announcements signal a long-term commitment to fostering innovation and entrepreneurship in the MENA region.