The Middle East and North Africa (MENA) startup ecosystem experienced a remarkable resurgence in July 2024, with a staggering $355 million invested across 38 startups.
This represents a monumental 206% month-on-month (MoM) increase and a more than 260% year-on-year (YoY) growth, signaling a robust rebound from the earlier investment slump.
This surge is particularly noteworthy given the backdrop of a global economic downturn and escalating geopolitical tensions in the region. However, the looming prospect of a Fed rate cut in September appears to have injected renewed optimism into the market, driving investor confidence.
A notable shift in investment trends emerged in July. Debt financing, which had previously gained traction, took a backseat, accounting for less than 1% of total investments. This indicates a growing preference for equity-based funding, suggesting a healthier investment climate.
Egypt emerged as the undisputed leader in July, securing a substantial $185 million across seven deals. A single transaction, involving MNT-Halan, accounted for a significant portion of this amount.
While the UAE retained its position as the second-largest recipient of investment with $96 million, Saudi Arabia experienced a downturn, securing only $31 million. Surprisingly, Oman claimed the third spot, thanks to a substantial $37 million investment in 44.01.
Fintech continued its dominance as the most favored sector, attracting $181 million across 16 startups. The Web3 sector followed closely with $85 million invested in just two startups, highlighting the growing interest in decentralized technologies.
Deeptech and cleantech gained prominence, securing significant investments in 44.01 and Intelmatix, respectively. Although e-commerce witnessed a decline in terms of investment, it remained active with six deals securing $15.7 million.
The investment landscape tilted towards early-stage startups, with seed-stage companies receiving $96 million across eight deals, closely followed by Series A with $91.7 million across eight deals. Pre-seed startups secured a modest $1.8 million across five deals.
B2B models continued to dominate investor interest, capturing $345 million across 27 businesses. In contrast, B2C startups received a comparatively smaller amount of $8 million across nine deals.
While the overall investment landscape showed signs of recovery, the gender disparity persisted. Only two female-led startups secured a combined $270,000, highlighting the ongoing challenges faced by women entrepreneurs in the MENA region.
The M&A landscape witnessed some activity, primarily centered in the UAE. Notable deals included the acquisition of BitOasis by CoinDCX, Power League Gaming by Muller & Phipps Middle East Group, and Lableb by Majarra.
Overall, July 2024 marked a significant turning point for the MENA startup ecosystem. The substantial increase in investment, coupled with a shift towards early-stage funding and a renewed focus on equity-based deals, indicates a promising outlook for the region's tech sector.
However, addressing the gender gap in investment and fostering a more inclusive ecosystem remains crucial for the sustainable growth of the MENA startup landscape.
