New academy to help Mena startups tap into Africa

Unsplash/Dylan Gillis

• DAI Magister Academy expects most demand from fintech sector
• Mena venture capital landscape dominated by Saudi, UAE and Egypt

As competition within the Middle East’s startup sector intensifies, a new academy is offering free advisory services, especially those looking to scale up in the African market.

The DAI Magister Academy, founded last summer by boutique investment bank DAI Magister, has already helped several startups in Africa.

It now hopes to develop across the Mena region where it has begun working with companies in both Saudi Arabia and Egypt. 

The typical profile of a company using the online service is one that has raised at least $2 million in funding rounds, and is looking to raise between $10 million to $20 million in another round within the next 12 to 18 months.

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“The academy is working in Africa where we’ve seen uptake from companies passing beyond the startup stage and becoming growth companies,” London-based Victor Basta, co-head of DAI Magister, told AGBI. 

“It gets harder to raise money when you approach the breakpoint of roughly $10 or $15 million. 

“There are also more companies trying to raise money in the region today. Over the last three to four years, I’d say there’s been a five to tenfold increase in the number of Mena companies looking to raise $10 to $20 million.”

The academy is helping Mena startups looking to expand and scale up in the untapped Africa market.

“Our focus in facilitating tie-ups will focus around transactions, and we see the pace of those transactions accelerating since the middle of last year, as companies face more investor demand to broaden geographically,” said Basta.

Mena startups raised $3.94 billion in 2022 across 795 deals, a rise of 24 percent in investment value and a 22 percent increase in deal volume when compared to 2021, according to data compiled by Wamda, the early-stage investment fund in the Middle East.

Last year saw growth in the number of small deals as well as an uptick in the value of the financing rounds allocated to startups at later stages of funding, which represented more than half of the venture capital activity last year, Wamda noted in its 2022 annual review. 

Basta said he expects a healthy pipeline of funding deals in the region given the current global financial backdrop. 

“In Mena today the supply-demand imbalance is the opposite of what it is in the rest of the world where many tech companies are desperate to raise funds but investors are cutting back. 

“By contrast African and Mena-based investors are becoming more active and often investing locally. Funds based out of Saudi and the UAE ideally want to invest in the region. The problem is they can’t find enough companies of scale to invest in.”

Basta expects that about 50 percent of the Mena companies at the DAI Magister Academy will be in the fintech sector. Tech-enabled commerce and climate sectors will constitute around 20 percent each while communications will account for 10 percent. 

Wamda’s 2022 report showed that fintech remains the crown jewel of the Mena startup world, attracting $1.1 billion in investment, nearly double 2021’s figure and almost a third of the total amount raised last year.

Cleantech was hot on fintech’s heels, registering a 101 percent rise from 2021. 

The venture capital landscape in the region was dominated by the UAE, Saudia Arabia and Egypt.

The UAE saw 250 deals worth $1.85 billion, representing a 5 percent rise in investment value. Saudi Arabia raised $907 million across 153 deals, representing a 40 percent rise. Egypt made 180 deals worth $736 million, a 70 percent rise.

Basta said Saudi Arabia and the UAE will likely constitute the lion’s share of companies enrolling at the academy, and believed companies need to work harder to raise funds due to the darkening global market outlook. 

“In 2021 money was flowing around pretty abundantly,” he said. “But now companies, whether raising $10 or $50 million, have to do more preparation and get different dimensions of the business in order.” 

Recent deals that DAI Magister has worked on include Twiga, M-Kopa, CloudFactory, Baxi, d.light and Cellulant.