UAE Start-Ups Bag Over 50% Investments Made In MENA Region In 2021

The UAE was followed by Saudi Arabia ($647 million, 138 deals) and Egypt ($445 million, 146 deals). The ecosystems in these three countries alone accounted for 75% of the number of deals and 87% per cent of the total investment value during the calendar year 2021.

Coming to other countries, Jordan’s start-ups raised $109 million in 45 deals),and was followed by Bahrain ($43 million, 15 deals), Lebanon and Kuwait ($42 million each, four and seven deals respectively), Algeria ($38 million, four deals), Morocco ($21 million and 19 deals) and Qatar ($10 million, 24 deals).

According to Wamda, which accelerates entrepreneurship ecosystems across the Mena region, last year was a turning point for Mena’s startup as many records were broken. Soft Bank and Sequoia Capital entered the region which helped the region’s stat-ups raise $2.8 billion last year.

The potential and importance of the start-ups was realized due to the pandemic-led growth of the digital sector, Wamda said.

“Investors, who would have felt more comfortable allocating their capital to traditional sectors like real estate, also shifted their attention to start-ups, helping to fuel the rise in investment. We saw more family-owned businesses, corporates and angels invest in start-ups, particularly in fintech, e-commerce, logistics and foodtech – the sectors that benefitted the most from the pandemic,” Wamda said.

Of the six mega-rounds valued at over $100 million, three were based in the UAE, two were based in Saudi Arabia and one in Egypt.

Other countries also saw a pick-up in activity, among them Bahrain, Tunisia and Qatar, all of which benefitted from the incubators and accelerators in their ecosystems.

In fact, the most active investor last year was Egypt’s Flat6Labs, thanks to the 59 startups that graduated from its programmes and raised investment. Accelerators, pre-Seed and Seed rounds accounted for the bulk of the deals, demonstrating a rise in the number of startups that have entered the market.

Sector-wise, e-commerce and marketplace, fintech and foodtech raised $40 million (99 deals), $519 million (92 deals) and $596 million (54 deals) respectively. Mobility, SaaS, Superapp, Logistics, Agritec and Media and social network also secured over $100 million each.

Foodtech was driven primarily by Kitopi’s $415 million Series C round. Super apps were also beginning to capture investor attention, as logistics, mobility and fintech apps incorporate more services onto their platforms to offer a one-stop solution for their customers.

 Overall however, there is growing maturity in the MENA ecosystem, there were 117 pre-Series A to Series C rounds worth $1.7 billion in total. 

“While more consumer-focused start-ups raised investment, it was the B2B startups that raised the majority of funding with $1.5 billion or 52% of the total amount raised,” Wamda said.

Of the startups that disclosed their investors, Wamda found that MENA-based investors took part in 485 deals.

Investors based in Saudi Arabia were the most active, taking part in 214 deals, followed by the UAE with 148 deals and Egypt with 114 deals. Qatari investors led by Qatar Fintech Hub and Qatar Business Incubation Centre, came next with 22 deals.

US-based 500 Global was the most active foreign investor with 35 deals across the region. The UK investors took part in 32 deals followed by German investors with 22 and Chinese investors in 12 respectively. Of the 639 startups that raised investment, 154 did not raise money from regional investors.