MENA Startups Continue to Demonstrate Growth

Startups in the Middle East and North Africa region continue to attract robust investor interest, showcasing sustained vitality in entrepreneurial activity. In August 2023, MENA startups raised over US$76 million through 18 deals which fares well against the broader Middle East, Africa, and Pakistan region, which raised US$139 million across 46 deals in the same period, according to venture data research firm MAGNiTT.

Notably, the MENA region accounted for two of the three exits recorded in the Middle East, Africa, and Pakistan in August, highlighting its growing role in the global startup ecosystem. However, these promising figures come on the heels of a challenging first half of 2023. In the initial six months, the region attracted US$1.1 billion in capital across 193 deals, reflecting a year-on-year decline of 41%. Nevertheless, this decline is notably better than the average global funding drop of 52%.

While MENA’s deals declined by 49%, it was a steeper drop compared to the 25% decline in international deals. The report also delves into sectoral performance, revealing that despite a 51% year-on-year fall in deal numbers, fintech continues to dominate. E-commerce and retail followed suit, boosted by significant investments in Saudi Arabia’s Nana and Floward, which accounted for 80% of the sector’s total funding in the first half of the year.

In contrast, the transport and logistics sector faced significant challenges, with funding shrinking by almost 90 %, and deal numbers halved compared to the first half of 2022. Overall, MENA’s startup ecosystem shows resilience and potential, especially in sectors like fintech and e-commerce. The two notable exits in August provide optimistic indicators for the region’s investment landscape moving forward.