UAE Leads MENA as Top Funded Ecosystem in H1-2024

The UAE has retained its spot as the top funded ecosystem in the Middle East and North Africa (MENA) region with 91 UAE-based start-ups raising $455.5 million in H1 of 2024, as against $604 million during the corresponding period last year.

The UAE os followed by Saudi Arabia that attracted $300 million of the total funding, down from $554 million last year, according to a report from wamda, a platform which accelerates entrepreneurship ecosystems across the region, and Digital Digest.

Despite the heavy investment GCC countries are pouring into the Egyptian real estate and tourism sectors, the economic crisis in the country has deepened, weighed down by a national debt absorbing 96.4% of its gross domestic product (GDP), and a stubborn inflation rate standing at 32.5%, compounded by the energy crisis that has left the country’s households in darkness for up to six hours per day.

Consequently, the Egyptian start-up ecosystem drastically lost its traction in H1, with just 33 start-ups raising $83 million, an 80% decline from the same period last year.

Meanwhile, the investment activity in MENA’s start-up space slowed down in June 2024, as 38 tech start-ups raised $116 million, bringing the half-year total to $882 million. The amount raised in June declined 59% month-on-month, but rose 182% when compared to the same period last year.

The UAE-based start-ups led the region in funding last month, securing $82.5 million across 15 deals last month, followed by Egyptian start-ups followed with $15 million raised by four companies, marking the second-highest total.

Saudi Arabia dropped to third, with seven start-ups raising $13.5 million. Notable activity was also observed in Iraq, with six start-ups raising an estimated $1.2 million, though this amount could be higher as Orisdi, BonLili, and Alsaree3 did not disclose their investment values.

Sector wise, fintech reclaimed its position as the most funded sector in June, securing $38 million over 10 deals, closely followed by contech. Meanwhile, three proptech start-ups raised $19.6 million in June, reversing the lead it achieved in May.

The majority of June’s investment went to the pre-Series A stage, as four start-ups received $45 million, followed by the Seed stage, where five start-ups raised $27.3 million. However, when considering investment volume, early stage start-ups are still capturing the attention of investors, where eight start-ups at their pre-seed stage garnered $3 million, and eight others received $140,000 in grants.

Start-ups operating the business-to-business (B2B) model dominated most of the funding in June, raising $66.4 million across 18 deals, accounting for 74% of the total investment, while 20 business-to-consumer (B2C) start-ups raised $49.5 million.

As ever, male-founded start-ups attracted the overwhelming majority of funding, receiving $103.4 million or 89% of the total, while only two female-led start-ups raised $200,000.

Uncertainty Hits H1

The uncertainty that has prevailed due to the war in Gaza and the potential military escalation in the region, has cast its shadow on the start-up ecosystem, prompting regional and international venture capital firms (VC) to adopt a “wait-and-see” stance, which led to a 46% decrease in the total funding in the first half of the year, down from the $1.6 billion recorded in the same period in 2023, wamda said. However, when excluding the $644 million of debt financing in H1 2023, the decline drops to 12%.

Notably, the second quarter (Q2) of 2024 witnessed a slight surge in funding, where 98 start-ups raised $453 million, a 5% increase from Q1’s $429 million, and down by 9% when compared to the same period in 2023.