UAE start-ups raise 86% of funds raised in MENA in June

Start-ups in the Middle East and North Africa region (MENA) raised $323.7 million across 66 deals in June 2022, an 84% increase in value and 57% in deal volume month-on-month. Deal volume was pushed up due to the graduation of cohorts from three different accelerator programmes.

A report published by Wamda in collaboration with Digital Digest said that like in the past, early-stage companies led in terms of deal count but, the overall funding value was largely driven by late-stage and high-growth companies such as UAE-based agritech Pureharvest, whose $180.5 million round solely made up 55.7% of the funding value.

The agritech company smoothly perched UAE into the top spot. Collectively, UAE start-ups raised $278.8 million across 16 deals, accounting for 86% of the total amount raised.

Other large rounds included proptech Huspy with a $37 million round led by Sequoia Capital India; NymCard, a neo banking start-up that raised $22.5 million and logistics start-up Cartlow with an $18 million round from AlSulaiman Group.

Lebanon broke into the top three for the first time thanks to super app toters’ $18 million led by the International Finance Corporation (IFC), March Holding and B&Y Ventures. Egypt came in third with $8.6 million raised across 15 deals, followed closely by Tunisia with $8.5 million raised across nine deals, thanks primarily to Flat6Lab’s accelerator graduates.

The four countries together accounted for 97% of the total funding value while Saudi Arabia, Qatar, Palestine and Morocco start-ups secured the remaining $9.5 million.

Hot Sectors

In terms of sectors, agritech, proptech and fintech were the hot sectors in June, together representing 75.6% of the deal activity.

Substantial funding was also invested in healthtech start-ups, benefitting from the rise in popularity of fitness and nutrition apps among consumers. UAE-based Vamstar was the largest recipient of funding in the healthtech sector, securing a $14 million round.

While US investors remain the most active foreign investor in the region’s start-ups, the global involvement has seen a drastic fall. Of the 66 deals, only 16 drew direct foreign investors. Meanwhile, investors based in Saudi Arabia were the most active, investing in 21 deals, followed by their counterparts from the UAE, who participated in nine deals. Accelerators were the most active investors in June, investing in 33 start-ups across the region. They include Flat6labs Tunisia, Sanabil 500 and QBIC.

Start-ups with all-male founding teams received the majority of funding with 92.65%, while female-founded start-ups raised 1.3% of the financing, up from 0.04% recorded last month. Start-ups with male and female co-founders raised 5.9% of the total.

ADVA, Mr Mandoob and School of Humanity, and Vetwork did not disclose the exact amount they raised last month.

VC Funding Activity in Q2

In Q1 of 2022, the MENA start-ups raised $ 796.7 million, a decrease of 14.7 in value quarter over quarter but a 56% increase from Q1 of 2021. The amount recorded in Q2 pushed the total raised in the first half of this year to $1.73 billion across 354 deals.

The deal count also witnessed a 36% decrease from the previous quarter and a 12% increase compared to the same period last year. Sector-wise, fintech remained the most sought-after segment among investors in Q2, followed by e-commerce.