According to the most recent data, startups in the Middle East and North Africa raised $1.3 billion in the first nine months of this year, a 13 percent decrease from the same period last year.

MAGNiTT, a venture capital data platform for emerging venture markets, reported this in its third-quarter report, studying investment trends throughout the Middle East, Africa, Southeast Asia, Pakistan, and Turkiye for the first nine months of 2024.

The region outperformed other emerging venture markets, or EVMs, demonstrating resilience in the face of a general slowdown in global venture capital activity.

Philip Bahoshy, CEO of MAGNiTT, emphasized the region’s increasing attraction to international investors, especially for early-stage enterprises.

“MENA’s performance in the nine months of 2024 underlines the region’s increasing appeal to global investors, particularly at the early stages. The number of investors has grown by 34 percent year-on-year, driven by a 69 percent increase in international investors,” he said.

In addition, Bahoshy noted that the fourth quarter usually has a great performance. She also mentioned that occasions such as the Future Investment Initiative Forum and Expand North Star are anticipated to increase financial activity in the Middle East and North Africa.

Investment overview

EVMs as a whole had a considerable fall, raising $4.9 billion, a 45 percent decrease from the previous year. With two quarters of year-over-year funding growth, the Middle East and North America saw the least loss, while Southeast Asia and Africa saw the highest drops.

There were 974 deals altogether across all EVMs, a 29% decrease from the previous year. Total investors witnessed a minor 4 percent fall to 1,250, while total departures dropped by 39 percent.

With 178 agreements, 15 exits, and $1.64 billion in funding, Singapore was the top-ranked nation for EVMs. With 198 transactions totaling $1.77 billion, fintech emerged as the most popular industry among investors.

With $234 million in funding, Alibaba Group was the most active investor, while with 60 transactions, Antler lead the deal count.

Funding across EVMs declined from $1.9 billion in the second quarter to $1.4 billion in the third quarter. Additionally, deal counts fell from 296 to 281.

The lack of Southeast Asia’s major agreements, which dropped from $670 million to zero, was the main factor for this quarter-over-quarter decline. This resulted in a 54% reduction in funding for the area and had a substantial effect on the overall performance of EVMs.

MENA in-depth

MENA companies closed 352 deals for $1.3 billion, a very small 6 percent decrease in deals over the same time last year.

MENA saw a 34% growth in total investors, highlighting the region’s appeal to EVMs. But in the first nine months, there were only 17 exits, a 50% decrease from the previous year.

In MENA, fintech continued to be the leading industry, drawing $480 million from 72 deals. Sanabil Investments, a division of the Saudi Public Investment Fund, was the most active financier, contributing $59 million, while Flat6Labs topped the deal count with 37 deals.

The UAE, Saudi Arabia, and Egypt were the three MENA nations with the highest growth in deal volume. With a 12 percent increase in transactions, mostly driven by a 40 percent increase in seed and pre-series A rounds, the UAE accounted for 38 percent of all MENA deals.

Saudi Arabia came in second with a 7% year-over-year growth in the number of agreements, helped along by a 46% increase in seed deals from firms including Moyasar, SiFi, and Anabolic.

Egypt witnessed a 17 percent reduction in pre-seed activity, indicating a trend toward more mature companies, while it registered a 45 percent increase in seed and series A investments.

With $509 million invested in companies, Saudi Arabia placed first in terms of funding, indicating an 8 percent yearly fall. The UAE came next with $380 million, a drop of 18%.

Southeast Asia and Africa

Conversely, there were significant declines in venture capital activity in Southeast Asia and Africa.

With deal volumes down 42% to 202, African entrepreneurs raised $839 million, a 38 percent year-over-year reduction. An 81 percent decrease in accelerator investments was a major contributing factor to this decline.

The total number of investors in Africa fell by 16 percent to 310, while the total number of exits fell by 36 percent to 14.

In Africa, fintech continued to be the most popular industry, bringing in $557 million from 49 acquisitions. Renew Capital topped the deal count with 15, while Norrsken22 was the most active investor in terms of money, with $54 million.

Africa’s best-performing nation was Egypt, which closed 56 deals and received $304 million in capital. The biggest deal was the $157.5 million fundraising for Halan. Lead in exits was South Africa.

With funding dropping to $2.77 billion, a 51 percent year-over-year loss, Southeast Asia saw the greatest decline across all EVMs. This decline was mostly caused by a notable decline in deals over $100 million.

There were 349 transactions in Southeast Asia overall, a 28% decrease from the previous year. There was a 9% reduction in total investors and a 26% decline in departures.

Due in large part to Halan’s $157.5 million mega deal and a boom in series A and B deals, notably among fintech firms, Africa’s investment increased by 168 percent in the third quarter.

In the third quarter, deal volume in Southeast Asia fell by 35 percent on a quarter-over-quarter basis, while deal count in Africa increased by 59 percent. The volume of deals in South Africa, Nigeria, and Egypt increased by over 100%.

The fourth quarter, according to Bahoshy, will be crucial going forward, especially in light of global trends that suggest falling interest rates and possible increases in investment activity.

“The fourth quarter of 2023 set a high benchmark with two mega deals in Saudi Arabia and the year’s highest quarterly funding in MENA. With global trends pointing toward lower interest rates and an uptick in investment activity, the fourth quarter of 2024 will be a crucial period. All eyes are on whether we can exceed last year’s performance,” he added.