The MENA region’s startup ecosystem is growing, with a 66 percent increase in total funding across all MENA-based startups since H1 2018, according to the H1 2019 MENA Venture Investment Report published by MENA-based startup platform MAGNiTT.
The first six months of the year have been positive overall for the startup sector. “The MENA region is hitting its inflection point. The acceleration of funding we saw in the latter half of 2018 has continued into 2019,” said MAGNiTT’s founder and CEO Philip Bahoshy.
This positive start was reflected in an acceleration in exits in the region. MENA saw its first unicorn (a privately held startup company valued at over $1 billion) exit the region this year as UAE-based Careem was acquired by Uber for $3.1 billion.
“H1 2019 has seen 15 startup exits take place, an increase of five compared to H1 2018 – we expect this to continue, and for 2019 to be a record year in startup exits,” said Bahoshy.
Careem’s sale is likely to have a positive impact on the region’s startup economy, added Bahoshy. Ex-Careem staff are now empowered with the knowledge, expertise and, crucially, the financial means to launch their own startups.
H1 2019 saw a total of 238 investments in MENA based startups – amounting to $471 million in total funding. Compared to H1 2018, in dollar-terms this represents a 66 percent increase from $238 million and a 28 percent increase in number of deals.
“The growth in the startup and tech ecosystem in the region is phenomenal, and yet, we are just at the beginning of a trajectory that will see technology-driven companies grow significantly and incredibly quickly over the coming years,” said General Partner of Global Ventures Noor Sweid. “These numbers illustrate the momentum and successes that the underlying companies and founders are achieving, and the growth in the investment ecosystem and opportunities alongside them.”
The UAE has continued to remain the most active startup ecosystem, recording 26 percent of all deals and 66 percent of all funding. Saudi Arabia was recognized as one of the fastest growing ecosystems, recording 26 investments for H1 2019 – up one percent from H1 2018.
Fintech was the most active industry, recording the highest number of deals and accounting for 17 percent of all deals, an increase of nine percent on H1 2018. Ecommerce accounted for the second highest number of deals, with delivery and transport as the third most popular industry for H1 2019.
Thirty percent of the 130 institutions that invested in MENA startups were from outside the region. This percentage is consistent with 2018 but the total number of outside investors has increased, representing increased outside interest.