The Mena-based startups are seeing more investment capital being deployed than ever before. The year 2019 marked another record year when tracking the number of investments, higher than any previous year, the region’s most powerful startup platform MAGNiTT revealed yesterday.
“The year 2019 was a record year by number of deals in Mena-based startups. The region surpassed 550 deals for the first time ever, a 31 percent increase compared to the previous year”, MAGNiTT’s 2019 MENA Venture Investment Report noted.
Mena deal flow hit a record of 163 investments in Q3 2019. The year saw a higher number of deals in each quarter compared to 2018. Q1 2019 was a record quarter for Mena investments. Average funding was at an all-time high in Mena. The average funding amount, excluding Souq & Careem, was $1.9m. This average funding increased by 7 percent in 2019.
“MENA had a record number of deals in 2019, following a pattern of exponential growth in a number of countries. Many governments in the region have been playing an active role in growing ecosystems conducive to entrepreneurs, including technical and financial support programs and policy reforms – there is a direct correlation between a business-friendly environment and increased entrepreneurial activity,” MAGNiTT quoted Ali AbuKumail Senior Private Sector Specialist MENA, World Bank as saying.
As the VC industry develops, a higher number of ventures will qualify for later-stage investments. The share of laterstage investments versus earlystage investments is still 80 percent in Mena, compared to 90 percent in Europe, 93 percent in the USA and 95 percent in China. Such benchmarks indicate that in Mena, a natural rebalance toward later-stage investments is possible as the VC industry will align to the mature market ratios, the MAGNiTT report that forecast a thriving startup ecosystem in the Mena region, noted.
“The establishment of new venture capital firms, as well as VCs launching follow-on funds, is a very positive step for the region. It increases the ability for regional funds to lead larger rounds as their portfolio companies grow, furthering self-reliance for the ecosystem. That said, the gap to global benchmarks of capital deployed into ventures is still significant”, the report said.
An industry breakdown shows FinTech ranks first by number of deals for the second year in a row. FinTech accounted for 13 percent of all deals in 2019. Accelerators and governments play a key role in supporting FinTech startups. “FinTech will continue to be a popular industry for investors and entrepreneurs as new FinTech startups emerge to enable financial services across the value chain. We’ll also see mature ones raise larger rounds as they look to become fully regulated, since there has been no traction in partnerships with traditional players,” the report noted.
Delivery & Transport still accounts for the highest amount of funding. Delivery & Transport accounted for 19 percent of total funding in 2019.
A total of 27 startup exits took place in the region, the highest on record. Total disclosed exit value amounted to $3.6bn, another all-time high.
“The primary reason for the acceleration in exits is that tech companies in the region are starting to have scale, becoming attractive for global strategic players. Secondly, the Gulf countries offer emerging market growth rates without the currency risk, as they’re mostly pegged to the Dollar. Finally, the average ticket size in the region has significantly increased in the last year, which allowed local players to make acquisitions,” said Michael Lahyani CEO and Founder, PropertyFinder.
