Finance

Mena startup funding bounces back in November

December 14, 2023

42 deals to secure funding for startups were agreed in November

Investment hit $764m
74% increase year on year
‘Mega-rounds’ on the rise

Startup funding rose sharply in November, reflecting regional and global investors’ renewed confidence in the Middle East and North Africa.

Investment totalled $764 million from 42 deals, according to Dubai-based venture capital company Wamda.

It was the highest monthly figure in 2023, an increase of 390 percent from October’s figure and a year-on-year rise of 74 percent. Funding rose across all stages.

However, overall startup funding for January to November is still 28 percent down on the same period last year, at $2.75 billion.

Lucy Chow, general partner at the WBAF Angel Investment Fund and an AGBI columnist, attributed the November resurgence to two factors.

“Company valuations, especially at the seed stage, have been increasing in 2023 after a period of being relatively low,” she said. “Valuations for Mena companies at all stages are on the rise.

“Secondly, there is a noticeable growth in deal sizes, with Mena experiencing more ‘mega-rounds’. These indicate a maturing ecosystem in the region, though there is still progress to be made.”

Top investments in November included a $250 million debt round by Saudi buy-now-pay-later platform Tamara and $200 million for the rival platform Tabby. Egyptian microfinance company MNT-halan secured $130 million in securitised bonds.

Ryaan Sharif, general manager for venture capital firm Flat6Labs UAE, said the November total "underscores the region's resilience and attractiveness to investors".

Saudi Arabia and fintech lead the way

Saudi startups dominated in November, securing $338 million across nine deals. UAE businesses recorded $284 million across 22 deals.

Egypt was next with $131 million from five rounds, while Kuwait, Morocco, Oman and Tunisia accounted for the remaining $11 million.

In August Saudi Arabia set up a $200 million fund to invest in local and global high-tech companies, part of its strategy to transform its economy under Vision 2030.

“It’s paying off as startups flood into the kingdom to set up,” said Chow.

“Saudi's ability to foster an environment where technical founders can thrive speaks volumes about their determination and adaptability," said Eyad Albayouk, general manager for Flat6Labs Saudi Arabia.

Raymond Kisswany, a partner at law firm Davidson & Co in Dubai, pointed to the appeal of the UAE's business-friendly laws and regulations.

“Many startups come to us wanting to set up in the UAE after going through the maze of regulations in the US or Europe," he said.

Fintech, which includes money transfer apps and digital banks, was the dominant sector in terms of funding in November.

Super-apps – mobile or web applications that combine multiple services, such as Careem – was second.

Education technology ranked third with $41.4 million, with most of the funding from a single transaction involving Saudi Arabia's Noon.

Ten of the 42 deals attracted contributions from US investors. UAE funders participated in 21 deals, with venture platform Modus Capital investing $2.8 million across eight startups. Saudi investors were involved in 10 deals.

In 2022 the full-year total was $3.94 billion – and Kisswany expects a rebound next year.

“The surge of startups will continue and even expand in certain key sectors – specifically, in e-commerce as well as digital assets and payments."