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Saturday, 16 January 2021

13% growth in MENA start-ups investments in 2020 driven by COVID-19: Report

The report also pointed out that the three main innovation hubs of the UAE, Egypt and Saudi Arabia accounted for 68 percent of total deals disclosed in 2020

Doaa A.Moneim , Tuesday 12 Jan 2021
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A record of $1 billion invested in MENA-based startups, a growth of 13 percent (YoY), in 2020 thanks to a record of venture funding witnessed in the first half of the year due to the COVID-19 crisis, according to Magnitt.

Magnitt is an UAE-based platform that tracks startups and venture investments across emerging venture markets.

In its report on start-ups outlook in MENA, Turkey and Pakistan, Magnitt said that these investments were deployed across fewer investments with the total number of deals down by 13 percent YoY in 2020.

While e-Commerce deals dropped by 23 percent in 2020, total funding into the sector went up by 24 percent taking it to $162 million, according to the report.

Both food and beverages (F&B) as well as healthcare more than tripled its total funding to reach $122 million and $72 million respectively, driven by COVID-19 and its related impacts.

According to the report, the third quarter of 2020 witnessed the impact of COVID-19 with an eight quarter low of 91 transactions, while the fourth quarter of the year showed slow signs of a recovery with a 57 percent uptick in total funding during the last three months of 2020.

It added that 2020’s record funding was driven by the first half of 2020, while the second half of the year witnessed 58 percent lower funding than the first six months of the year.

Deals in the first half of 2020 were down by 13 percent and fell by 35 percent in the second half of the year, according to the report.

The report also pointed out that the three main innovation hubs of the UAE, Egypt and Saudi Arabia accounted for 68 percent of total deals disclosed in 2020, with KSA registering the highest increase in deal flow, upped by 35 percent, while Jordan, Oman and Bahrain were the only three countries to see an increase in country rank.

For start-ups funding in the region, the UAE maintained its leading position in funding with 56 percent of venture capital, while Egypt witnessed an increase by 31 percent in 2020.

On investor ranking in the region, the report noted that a total of 243 investors participated in at least one funding round in MENA. The international funds accounted for 22 percent of all active investment institutions.

Meanwhile, the number of active investors remained relatively stable (3 percent increase) Y-o-Y in the region, while the number of international investors increased from 51 in 2019 to 54 in 2020.

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