Startup growth in the Middle East and Africa

In May 2024, the Middle East and North Africa (MENA) region saw an unprecedented surge in startup investment, with 40 startups raising a total of $282 million. This remarkable achievement represents a 413% increase from April’s $55 million. This significant increase in funding underlines the growing importance of the region in the global startup ecosystem and signals strong investor confidence. However, it is important to note that despite this impressive month-on-month growth, the deal value has declined significantly year-over-year by 58% from $445 million in May 2023.

Record deals and dominance of debt financing

May’s investment landscape was dominated by large deals and debt financing. Leading Property Finder landed its biggest deal ever, worth $90 million. Other notable transactions include Huspy’s significant funding round, which topped $37 million in Series A funding since 2022, as well as Keyper’s $34 million pre-Series A funding, of which $30 million came from debt financing.

The overwhelming impact of debt financing has been a key driver of this growth, bringing the total amount raised in May to nearly $140 million. The trend highlights a strategic shift in the region’s funding landscape, with startups increasingly using debt to fuel their growth and expansion.

UAE leads investment in the Middle East and North Africa
In May 2024, the United Arab Emirates (UAE) became the undisputed leader in startup investment in the Middle East and North Africa region. UAE startups have amassed a staggering $189 million through 23 transactions, eclipsing other countries in the region. Saudi Arabia followed, raising $56 million across 10 deals, while Egyptian startups raised $24.5 million across four deals. A significant portion of Egypt’s total came from OneOrder’s $16 million Series A round, which combined both debt and equity financing.

Sector breakdown

The industrial technology sector topped the funding charts in May, even excluding Property Finder’s big deal, raising $167.2 million across seven rounds. The dominance of this sector highlights the growing importance of technology solutions in real estate in the region. Fintech also performed strongly, raising $32.7 million from 12 startups, making it the second-largest funded sector.

Logistics startups also received significant attention, with three companies raising a total of $25.3 million. The agritech sector has shown signs of recovery, raising US$23 million from three startups, including US$16 million for iyris’ Series A round. Additionally, the SaaS sector saw remarkable growth, with $27 million raised across three transactions.

Focus on later stage rounds

In May 2024, there was a clear emphasis on later rounds of funding. Five startups raised $59.3 million in the Series A round, and four startups raised $44 million in the pre-Series A round. However, the seed round led the way in terms of deal volume, with seven deals totaling $11 million.

UAE-based GrubTech was the only startup to close a Series B round, raising $15 million, while Saudi Arabian SaaS startup Merit recorded $12 million in its pre-Series B round. Interestingly, the $42 million raised by seven startups did not have been allocated to a particular stage, indicating a certain level of confidentiality or strategic prudence.

Dynamics of B2C and B2B financing

The business-to-consumer (B2C) model dominated May’s funding landscape, accounting for 62% of total funding, with $174 million raised across 13 deals. On the other hand, business-to-business (B2B) startups have raised nearly US$100 million, demonstrating the region’s diverse investment appetite and robust demand for consumer-facing innovation.

Gender dynamics in startup financing

Despite the continued dominance of male founders in attracting the majority of investment (they account for 89% of total investment raised), May saw a positive trend in gender diversity. The number of deals by startups co-founded by men and women has doubled since April, reaching eight deals and bringing in US$28.6 million. In contrast, startups founded by women received just $800,000 in funding from four companies, highlighting the significant gender disparity that persists in the region’s startup ecosystem.

Active venture activity

May 2024 saw significant activity in the venture capital (VC) space, with several funds launched across the region’s major ecosystems. Saudi Arabia has seen a significant influx of new funds, including a US$100 million fund co-founded by BIM Ventures and Japan’s SBI Holdings, the US$250 million Afiyah Fund LP from UAE-based TVM Capital Healthcare and the 1957 Ventures fund worth US$195 million from Riyad Capital. Saudi Venture Capital (SVC) has also pledged to invest $30 million in US investment firm General Atlantic to invest in Saudi startups.

Bahrain’s Investcorp closed its Investcorp Technology Partners V (ITP V) fund at $570 million, while Shorooq Partners and Korea’s IMM Investment Global (IMMG) launched a $100 million fund. Singapore-based venture capital firm Golden Gate Ventures has also launched a $100 million MENA fund, while Saudi Arabia-based HRtech Qsalary has partnered with Itqan Capital to launch an $80 million investment fund.

In Egypt, the startup ecosystem has been supported by two new funds: a $2.4 million project launched by Beltone and Microfinanza Italia to support startups, and the $3 million Glint Fund II.

Highlighting major investments and partnerships

One of the standout investments in May was Saudi Arabia’s Kingdom Holding‘s participation in Elon Musk’s artificial intelligence startup xAI’s Series B round, which valued the company at $24 billion. This significant investment underscores the strategic importance of artificial intelligence and technology in the future growth plans of leading MENA investors.

Kingdom Holding Company ranked 4288 by Crunchbase

Golden Gate Ventures ranked 6988 by Crunchbase

Golden Gate Ventures managers
  • Vinnie Lauria Founding Partner Golden Gate Ventures | Tsinghua EMBA Candidate | Kauffman Fellow | Endeavor Mentor
  • Jeffrey Paine Managing Partner & Cofounder, Golden Gate Ventures, interested in using Machine Learning to select investments
  • Jeffrey Chua Principal at Golden Gate Ventures
  • Justin Hall Partner at Golden Gate Ventures
  • Michael Lints Partner at Golden Gate Ventures
  • Paul Bragiel enjoys working with creative people

The impressive surge in MENA startup investment in May 2024 underscores the region’s growing influence on the global entrepreneurial landscape. Despite the year-on-year decline, monthly growth and large deals indicate a robust and vibrant startup ecosystem.

For startups and investors looking to tap into this dynamic market, now is the time to act. Capitalize on this momentum, explore opportunities and join MENA’s thriving startup community. Stay one step ahead by staying on top of new trends, sectors and funding opportunities.

June 28, 2024


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