Start-up funding in the Middle East and North Africa, excluding the UAE, Saudi Arabia and Egypt, grew to $468 million in 2022, driven by the first mega deals in these countries, the latest study from Magnitt shows.
Funding in 2022 was nearly 37 per cent higher than the $342 million posted in 2021, showing the momentum being built in these relatively smaller markets, the start-up data platform said.
Of that amount, mega round funding — those that are $100 million and above — made their debut last year and accounted for $260 million, or more than half of total flows, it said.
The increase in funding in 2021, however, was still the biggest, as it surged about 136 per cent from $145 million in 2020, at the height of the Covid-19 pandemic, the study showed. Funding was $126 million in 2019, down from $155 million in 2018.
The number of deals in 2022, however, dropped 6 per cent to 183, from 195 in 2021 — a third straight year of declines after 206 in 2020 and a peak of 236 in 2019.
“If the impact of the $100 million-plus rounds is removed, the Mena region continues to be capital-positive,” Magnitt said.
Algeria attracted the highest funding last year with $151 million, which was a more than fivefold annual increase, followed by Bahrain with $133 million, the data showed.
Jordan and Tunisia each had $34 million, although the former was down by 72 per cent, followed by Qatar ($27 million) and Lebanon ($25 million).
Markets like Morocco, Tunisia, Kuwait and Qatar gave been winning investor interest, especially at the early stage, Magnitt said.
“In fact, Tunisia and Qatar were among the top five transacted markets of Mena in 2022,” it said.
The UAE, Saudi Arabia and Egypt collectively have the lion's share of VC funding in Mena, accounting for about 74 per cent of investments in 2022. The countries attracted funding worth $1.19 billion, $987 million and $517 million, respectively, Magnitt data showed.
The role of start-ups has continuously grown over the past years as they are a driver of digital adoption and growth, enabling consumers to access services with convenience.
The Mena region, which has a sizeable population of tech-savvy users, has become an attractive market for global investors.
On a broader scale, start-ups across the Middle East, Africa, Pakistan and Turkey (MEAPT) raised $7.2 billion through 1,473 deals last year, despite macroeconomic and geopolitical uncertainty, Magnitt had previously reported.
Funding for Mena start-ups alone crossed the $3 billion mark last year, an annual increase of 8.3 per cent, the research showed.
FinTech led both funding and number of deals in the MEAPT region, with the sector's funding reaching $2.25 billion across 351 deals in 2022, Magnitt said.
Last year, Bahrain's Procural, a B2B tendering platform, raised $1.2 million in a seed funding round led by Flagship Holding and Canada-based BenchMatrix.
The country was already put on the map by cryptocurrency start-up Rain Financial, when it raised $110 million in a Series B funding round.
In Iraq, which has been facing a number political and socioeconomic challenges, venture capital investments were up at $16 million across six deals, a record high for the country.
Leading funding in Iraq last year were Baly, a “super app” similar to the UAE's Careem that raised $10.2 million in a seed round, and food delivery service TipTop, which raised $5 million also in a seed round.
Notably, while regional and international investors have supported start-ups in the country, Iraq-based initial investors, including Iraq Tech Ventures, Iraqi Angels Network and the Euphrates Iraq Fund, have ramped up their funding, which has been considered as the reason for building momentum for venture capital, Magnitt said.
Lebanon, which has similar challenges as Iraq, has been active for over a decade and raised almost $60 million in 2015, the data showed.
Among its most notable start-ups are cybersecurity platform Myki, which was acquired by US-based JumpCloud.
