Start-ups in the UAE, Saudi Arabia, and Egypt secured the most funding in the first half in Mena as the region’s venture capital landscape witnessed a 33 percent increase in investor numbers, reflecting the thriving entrepreneur ecosystem in these countries. The UAE topped the list in terms of deal count with 83 transactions, followed by Saudi Arabia with 63 deals, Egypt with 28 deals, Morocco with 10, and Bahrain with 7. Saudi Arabian start-ups led in securing venture capital funds with $412 million, followed by the UAE with $225 million and Egypt with $86 million. However, all these markets saw a drop in funding compared to the previous year.
Morocco and Kuwait also joined the top five in venture capital funding with $17 million and $14 million, respectively. The Saudi venture investment market started the year in line with its performance in H1 2023, with non-mega deals accounting for 68 percent of the value of venture investment in H1 2024, up from 35 percent in H1 2023. Despite an increase in investors, only $768 million in funding was poured into regional start-ups, representing a 34 percent drop year-on-year.
E-commerce was the most funded sector with $244 million in funding, while fintech was the industry of choice in terms of deal count. The Public Investment Fund’s Sanabil Investments was the most active investor in the region with $57 million in capital deployed. Philip Bahoshy, CEO of MAGNiTT, predicts an uptick in VC activity in the second half of the year. He expects the wider Mena region, including the UAE and Egypt, to benefit from a strong fourth quarter, with a quieter third quarter.
From a macroeconomic perspective, political stability and interest rate declines to bring liquidity back into the markets are crucial. Conferences and events that highlight opportunities in the Middle East compared to other geographies will also play a significant role in the region’s strength. Despite the slowdown in venture and macroeconomic environment, both the UAE and Saudi Arabia are well-positioned to see continued strength in their ecosystems. Bahoshy believes that the UAE’s growth in transactions is extremely positive and expects both countries to attract international companies for early-stage investment across the broader Mena region.
