Venture capital investments in startups in the MENA region have steadily increased over the last few years, with 2021 finishing having the most outstanding investor spending.
The epidemic has become an entryway to technological innovation, resulting in unprecedented capital infusion into tech startups and businesses. Still, according to the most recent MAGNiTT report, the first quarter of 2023 shows a gradual fall and a change in the tide trajectory.
The downturn results from incomplete post-pandemic fallout and the impact of the Russian-Ukrainian conflict, which has resulted in higher interest rates and more significant inflation.
While the statistics from 2022 cannot fully reflect the impact of the economic slowdown, according to the MAGNiTT analysis, the first three months of 2023 corroborate the persistent uncertainty in the global macro economy, casting a shadow over the performance of the MENA venture capital market.
During the first quarter of this year, startups in the MENA region raised more than a billion dollars. However, over half of all capital came from three mega deals signed by regional startups.
When the influence of the mega deals, $100+ million rounds of total agreements, is removed, it is evident that venture capital funding in the region is on the slide in the first quarter of 2023, continuing its decline for the fourth consecutive quarter!
The first quarter of 2020 saw the highest investor participation, with more than 600 investors supporting startups based in the MENA region during the first three months. Still, due to deteriorating economic conditions caused by the pandemic, the number of investors gradually declined. The first quarter of 2023 saw half the number of investors in the same period last year.
Given the global economy, the likelihood of a decline in venture capital flows cannot be reduced; at the very least, investors should be more cautious about where their money will be invested; however, there are always opportunities for promising ideas and startups to take advantage of critical periods to stand up and face challenges!
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