- June 2024 saw MENA startup funding at $116 million, marking a 59% drop from May but an 182% rise from June 2023.
- UAE led with $82.5 million raised across 15 deals, showcasing robust performance in the region.
- Fintech regained the top funding spot with $38 million, followed closely by contech and proptech.
- Male-led startups dominated funding with $103.4 million, overshadowing female-led startups’ $200,000.
Investment activity in the MENA region’s startup ecosystem experienced a slowdown in June 2024. A total of 38 tech startups collectively raised $116 million, bringing the half-year total to $882 million. This figure represented a 59% decline compared to the previous month but marked an 182% increase from June 2023.
Regional Performance
UAE: Leading the region in June, UAE-based startups secured $82.5 million across 15 deals. This robust performance positioned the UAE at the forefront of MENA’s startup funding landscape.
Egypt: Following the UAE, Egyptian startups raised $15 million through four deals, making Egypt the second-highest in terms of funds raised.
Saudi Arabia: Saudi startups secured $13.5 million across seven deals, placing the Kingdom third in the regional ranking.
Iraq: Six Iraqi startups garnered an estimated $1.2 million. Notably, the exact investment amounts for startups like Orisdi, BonLili, and Alsaree3 were not disclosed, suggesting that the actual total could be higher.
Sector Highlights
Fintech: Reclaiming its position as the most funded sector, fintech startups in MENA raised $38 million across 10 deals. This sector led the funding landscape due to its strong performance.
Contech: Close on the heels of fintech, contech benefited significantly from Tenderd’s $30 million deal, the largest single deal in June.
Proptech: Despite a notable performance in May, proptech startups raised $19.6 million in June, indicating a shift in investor interest.
Investment Stages
June saw a diverse distribution of funds across different stages of startup development:
- Pre-Series A: Four startups raised $45 million, making this the most significant stage in terms of investment.
- Seed Stage: Five startups attracted $27.3 million.
- Pre-Seed Stage: Eight startups garnered $3 million, while another eight received $140,000 in grants.
Business Models
Startups operating under the business-to-business (B2B) model dominated the funding scene, raising $66.4 million across 18 deals, which accounted for 74% of the total investment. In contrast, business-to-consumer (B2C) startups raised $49.5 million from 20 deals.
Gender Disparity in Funding
Male-founded startups overwhelmingly attracted the majority of funding, receiving $103.4 million, which constituted 89% of the total investment. In stark contrast, only two female-led startups raised a combined $200,000.
Analysis of the First Half of 2024
The first half of 2024 was marked by significant changes and challenges in the MENA startup ecosystem:
Impact of Regional Unrest: The war in Gaza and potential military escalations have introduced uncertainty, causing both regional and international venture capital firms to adopt a cautious “wait-and-see” approach.
This hesitancy resulted in a 46% decrease in total funding compared to H1 2023, dropping from $1.6 billion to $882 million. However, excluding the $644 million of debt financing in H1 2023, the decline is moderated to 12%.
Quarterly Performance
The second quarter (Q2) of 2024 showed a slight recovery with 98 startups raising $453 million, representing a 5% increase from Q1’s $429 million but a 9% decrease compared to Q2 2023.
Regional Funding Concentration
UAE: Retaining its position as the top-funded ecosystem, 91 UAE-based startups raised $455.5 million in H1 2024, a decrease from $604 million in H1 2023.
Saudi Arabia: Attracted $300 million in total funding, down from $554 million in the previous year.
Egypt: Despite significant investments from GCC countries into its real estate and tourism sectors, Egypt’s economic crisis—marked by a national debt consuming 96.4% of its GDP and a 32.5% inflation rate—severely impacted its startup ecosystem. Only 33 Egyptian startups raised $83 million in H1 2024, representing an 80% decline from the same period last year.
Morocco: Gaining momentum, six Moroccan startups raised $12.5 million.
Sectoral Shifts
Proptech: Emerged as the favorite sector for investors in H1 2024, attracting $200 million across 14 deals, surpassing fintech.
Fintech: Raised $156 million across 50 deals, a significant drop from its previous dominance.
SaaS: Ranked third, securing $164 million across 23 deals.
E-commerce: Witnessed a drastic decline, raising only $33.6 million across 19 transactions, down from $194 million in H1 2023.
Foodtech: Experienced a significant drop, falling from $183 million in H1 2023 to $24 million in 2024.
Early Stage Investments
Debt Financing: Formed 39% of total funding in H1 2023 but only accounted for 17% in 2024.
Series A: Attracted the majority of investments, with 17 startups raising $169 million.
Seed Stage: Continued to be favored by investors, with 52 seed rounds raising $131 million.
Pre-Series A: Startups raised $96 million across 17 deals.
Pre-IPO: Notably, Salla’s pre-IPO round alone raised $130 million.
B2B vs. B2C Models
B2C: Saw a significant decline, raising $356 million across 86 deals, a 64% drop from the previous year.
B2B: Experienced a remarkable surge, increasing by 153% from $186.6 million in H1 2023 to $473 million in 2024.
Gender Disparity
Investment in female-led startups decreased alarmingly, with only $1.8 million raised across 15 deals in H1 2024, compared to $6 million raised by 22 startups in the previous year. In contrast, male-led startups raised $760 million across 170 deals.
Leading Investors
Saudi VCs: Played a dominant role, contributing to 60 deals in H1 2024.
UAE VCs: Followed closely, participating in 41 deals.
Egyptian VCs: Involved in 24 deals.
International Investors: The US led as the top foreign investor with investments in 31 startups, followed by the UK with 19 rounds.
Active VCs: Saudi Arabia-based RZM Investment and Bahrain’s Hope Ventures were the most active, participating in seven deals each, followed by Flat6Labs with six deals and Disruptech with five.
Q3 Forecast
Despite the slowdown in H1 2024, the investment landscape is not necessarily indicative of the year’s overall performance.
The first half of the year can be seen as a period of consolidation, allowing venture capitalists to assess market sentiment and strategize.
Several VCs have launched new funds, pledging billions of dollars to tech investments in the MENA region, which is likely to reflect in Q3’s investment volumes.
The MENA startup ecosystem faced a challenging first half of 2024, influenced by regional instability and economic crises in key markets like Egypt.
However, the region continues to show resilience, with significant funding in sectors like proptech and fintech.
As venture capitalists consolidate and prepare for the second half of the year, there is cautious optimism that investment activities will rebound, driven by new funds and strategic investments in promising tech startups.
These insights are based on monthly reports created by Wamda and Digital Digest in collaboration. It provides valuable perspectives on the dynamic evolution of the MENA startup ecosystem.
Also Read:
- MENA Startups Secure $282M in May 2024: 413% MoM Growth
- MENA startups raised $55M in April 2024
- MENA startup funding hits $254 million in March 2024
- MENA Startup Funding Hits $88.7 Million in February 2024
- MENA Startups Secure $86.5M in January 2024 Funding Round
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