Emerging Markets VC & Startups: MENA Startups Reach a New Funding Milestone

This month, MAGNiTT released a report covering the 2020 funding for the MENA (Middle East & North Africa) region. For context, MAGNiTT is the largest online community for startups across the MENA region. The firm is based out of Dubai and creates monthly research reports for subscribers to track industry trends and access insights on the MENA startup ecosystem. This most recent report, titled the 2021 Emerging Markets Report, is the first to include Pakistan and Turkey. In this post, I want to cover some of the high-end takeaways in the region.

The big headline is that startups in the MENA region have raised over $1B in funding for 2020, a +13% increase from 2019. The record-breaking funding may be surprising, occurring during a volatile year in financial systems from Covid-19 when expectations were for funding to decrease. Other trends show Covid’s impact, such as the decrease of -13% in deal count to 496 total transactions. Like we have seen in other regions, much of the deal flow occurred in late-stage financing rounds ($500K — $3M), such as the $150M investment into EMPG’s Series E. Late-stage financings increased by +52%. Pre-Seed rounds (<$100K) halved YoY and led to a decrease in total deals. As we saw in other regions in 2020, as financial markets tightened during the year, money transferred into less risky bets with later-stage, more established businesses.

The FY data shows that funding was driven by a record H1 2020, with $725M raised in H1 2020 vs. $563M in H1 2019, a +29% increase. Funding in H2 decreased as increased uncertainty around Covid sent shockwaves through the market. The second half of 2020 saw $306M (-13%) invested in 198 deals (-35%). Technologies that received the most funding also reflected the effect of the pandemic in the region. E-Commerce & FinTech retained top spots by the number of deals, with the two sectors representing 24% of individual financings. The amount invested in Healthcare startups increased +280% to $72M, more than tripling 2019’s numbers.

When looking at individual countries, three main innovation hubs in UAE, Egypt, and Saudi Arabia accounted for 68% of total deals. The UAE remained 1st, representing 56% of all capital deployed ($579M) and 26% of all transactions ( 129) across the region. Egypt ranked 2nd for total funding of $179M (+31%) and the number of deals (-10%). Saudi Arabia ranked 3rd for total funding with $152M (+55%).

Okay, that was a lot of numbers, but it’s essential to show that there are emerging markets hitting record levels of startup funding even in a volatile year like 2020. This report is exciting news, and there’s plenty more to be excited about in the MENA region in the future. I already wrote how Israel’s recent peace deals with surrounding nations would increase the available capital invested in cross-nation startups (you can read the piece here). There has already been some movement on that front. In other parts of the region, innovation is happening as well. Saudi Arabia just announced the Saudi Central Bank would issue open banking policies in 2022, an initiative that will help grow the FinTech sector in the country. Also, Israel just announced a program for underrepresented Seed-Stage founders to receive funding. These programs will continue to increase innovation and access to venture capital and will likely push MENA funding past the current $1B levels.

If you are interested in reading the full MAGNiTT report, you may do so here.

Regional News

Africa

• South Africa’s Knife Capital launches 2nd 12J Venture Capital Fund — Link
• Jua Kickstarter Fund for African entrepreneurs doubles in size to $2M — Link
• Kenya InsurTech startup Pula closes a $6M Series A round — Link
• Nigerian FinTech startup, Cowrywise, raises $3M Pre-Series A funding led by Quona Capital — Link
• Nigerian EdTech startup, uLesson, raises $7.5M Series A led by Owl Ventures — Link

Asia-Pacific

• GGV Capital raises $2.5B across 4 funds — Link
• Venture Debt firm, Stride Ventures, to raise $48M for its first India fund — Link
• Chinese VC firm Qiming raises $433M in the final close of its yuan-denominated fund — Link
• India-based Fireside Ventures closes its second fund for consumer brands at $118M — Link
• Ula closes $20M Series A to assist Indonesia’s small retailers with procurement, logistics solutions — Link

Latin America

• Nubank raises $400M Series G — Link
• Superfüds raises $3.3M Series A — Link
• Dondo raises $2.1M for exchange marketplace — Link
• Cargamos raises $4M for last-mile delivery — Link
• La Haus raises $35M Series B — Link

Middle East

• Abu Dhabi FinTech NymCard raises $7.6M Series A to democratize card issuance in Middle East & Africa — Link
• Saudi Arabia’s Foodics raises $20M Series B to grow its all-in-one restaurant management platform — Link
• UAE-based Zbooni raises $5M in Series A — Link
• Pakistan-based eCommerce firm Bazaar lands $6.5M in Seed round — Link

Originally published at https://vagabondvc.substack.com.