MENA Startups Raise $156 Million in October 2023
The Middle East and North Africa (MENA) region is experiencing a resurgence in startup funding, as October 2023 saw a remarkable turnaround in investment trends. Startups in the MENA region raised a total of $156 million in funding, representing a substantial 333 percent increase from September’s figures. This surge in investment has provided a glimmer of hope after four consecutive months of declining funding.
In this article, we will delve into the key highlights of the MENA startup ecosystem’s performance in October 2023. We will explore the sectors that attracted the most investment, the countries that emerged as leaders in startup funding, and the changing dynamics in gender diversity among founding teams. We’ll also discuss the impact of foreign and regional investors on the region’s startup landscape.
MENA Startups Raise $36 Million in September 2023
In September 2023, startups in the Middle East and North Africa (MENA) managed to secure a total of $36 million in funding, marking a significant milestone in the ever-evolving landscape of the region’s entrepreneurial ecosystem. This article will delve into the details of this funding surge, highlighting key trends and insights while exploring the challenges faced by the startups and their incredible resilience.
October 2023: A Funding Revival
October 2023 marked a significant turning point for the MENA startup ecosystem, with $156 million in funding raised, a stark contrast to the previous month’s $63 million. This extraordinary 333 percent month-on-month increase is a promising sign of the region’s resilience and potential. However, it’s important to note that this figure represents a 76 percent drop compared to the previous year.
Over the first ten months of 2023, MENA startups have collectively raised $1.9 billion, indicating a decline of 36.6 percent from the same period in 2022 when they secured $3 billion in funding.
Key Players: UAE, Saudi Arabia, and Egypt
The lion’s share of funding in October 2023 was concentrated in the United Arab Emirates (UAE), Saudi Arabia, and Egypt. UAE startups took the lead, securing $90 million across 24 deals. XPANCEO, a UAE-based deeptech startup specializing in weightless smart contact lenses, led the way with a $40 million Seed round.
Saudi Arabia-based startups followed closely, raising $51 million in October, primarily due to HR-tech company Jisr’s $30 million Series A round. Egyptian startups secured $13 million in funding, with Pearl Semiconductor, a deeptech company, leading the charge. Both Saudi Arabia and Egypt attracted nine deals each.
Funding Distribution: Seed and Pre-Series A Dominance
October’s funding was primarily driven by Seed and pre-Series A activities, accounting for approximately 93 percent of the capital raised. Seed-stage startups secured 17 rounds, amassing $72 million, while Series A funding totaled $63 million, distributed over four rounds. This shift in investor appetite towards early-stage startups suggests a growing interest in long-term risk-adjusted returns.
Surprisingly, there was an absence of financing for growth or later-stage startups in October, indicating a potential area for improvement in the future.
Sectors of Interest: Deeptech Leads the Way
In terms of sectors, deeptech emerged as the frontrunner in venture capital inflows, with $45 million raised across four deals, including XPANCEO’s significant funding. HR-tech secured the second spot, largely thanks to Jisr’s substantial Series A round.
Proptech and logistics took third and fourth positions, securing $23 million and $20 million, respectively. Notable names in these categories were Nomad Homes and Neo Mobility.
Other sectors that drew substantial investor interest include insurtech, media, traveltech, and edtech. However, fintech witnessed a 56 percent drop in funding, totaling $7 million, compared to the previous month.
Attracting Foreign Investment
A positive development in October was the increase in the number of deals that attracted foreign investment. Out of the 51 deals, 20 featured at least one foreign investor, signifying growing international interest in the MENA startup scene.
Regional investors played a significant role, with UAE-based investors being the most active, participating in 14 deals. Saudi Arabian investors closely followed, with 11 deals. This cross-border collaboration reflects the growing confidence in the potential of MENA startups.
A Shift in Gender Dynamics
In terms of gender diversity, mixed-gender founding teams outperformed, securing 22 percent of the funding. Male founders continued to capture the lion’s share of the capital, representing 75 percent of the total, while female-led startups accounted for the remaining three percent. This suggests that while progress is being made, there is still room for improvement in promoting diversity within the startup ecosystem.
Notable Acquisitions and Investments
October 2023 also witnessed several notable developments in the MENA startup landscape. UAE’s Shipsy acquired India’s Stockbone, and Saudi CashIN acquired Cardless. Saudi venture capital firm SVC invested $10 million in Ruya Private Capital I, supporting local small businesses. Anava invested $5 million in Titan Seed Fund I to empower Tunisian startups.
Additionally, 500 Global and ITIDA launched the Scale Up Programme for Egyptian startups, providing further opportunities for growth and development.
Conclusion: A Promising Path Ahead
In summary, October 2023 marked a promising turnaround for the MENA startup ecosystem. With $156 million raised, the region showed its resilience and potential, despite the challenges faced in the past year. While challenges remain, there is optimism that the momentum will continue to build.
The dominance of sectors like deeptech, increased foreign investment, and the growing role of gender diversity in startup teams are all positive signs. As the MENA region’s startup scene continues to evolve, it is crucial for investors, founders, and policymakers to support this growth and work together to ensure a thriving and diverse entrepreneurial ecosystem.
This is an exciting time for startups in the MENA region, and with continued support and innovation, the future looks brighter than ever. As we move forward, let’s seize the opportunities and work towards a prosperous and inclusive startup landscape.
So, keep your eyes on MENA startups – the next big thing might just be around the corner!
If you’re interested in the MENA startup ecosystem, stay updated with the latest developments and opportunities. Whether you’re an investor, entrepreneur, or simply curious about the region’s innovation, there’s a world of potential waiting to be explored. Join us in supporting the growth of these promising startups and the vibrant entrepreneurial spirit in the Middle East and North Africa.
November 8, 2023