A Sharp Decline in Investment Activity
The Middle East and North Africa (MENA) startup ecosystem experienced a significant cooling down in August 2024. Total investments in startups plummeted to $83 million across 30 rounds, marking a 76% month-on-month (MoM) decrease from July's $355 million.
This downturn also represented a 24% year-on-year (YoY) decline.
No Mega Deals and Limited Debt Financing
The absence of any megadeals in August was a notable trend. The largest single investment was a $30 million allocation to Yuze. Debt financing accounted for only a small portion of the total investment, representing approximately 3%.
UAE Dominates, Egypt Struggles
The United Arab Emirates (UAE) continued its dominance in the MENA startup landscape, securing the majority of investment in August. UAE-based startups raised $55.7 million across 13 deals. Saudi Arabia followed in second place with $16 million raised through nine deals.
Egyptian startups, which had been at the forefront of MENA investment in July, witnessed a dramatic decline in August, raising only $7.6 million across four deals. Kuwait also made the top four thanks to a single deal worth $3 million.
Fintech and Web3 Remain Attractive
Despite the overall slowdown, investor appetite for fintech remained strong. For the third consecutive month, fintech maintained its position as the most funded sector in MENA, raising $54 million across eight deals. Web3 also regained its appeal, securing second place with $13.5 million in funding.
Early-Stage Focus and Undisclosed Stages
The majority of August's investment was directed towards early-stage startups. Two startups managed to raise $19 million for their Series A rounds, while five startups received a total of $15.6 million in seed funding.
Notably, a significant portion of the investment went to undisclosed stages, as seven startups did not disclose their funding round, accounting for $35.4 million.
B2B Remains Popular, Female-Led Startups Struggle
The business-to-business (B2B) model continued to attract investor interest, with 13 startups raising $46 million. Business-to-consumer (B2C) startups garnered $15 million across five rounds.
Female-led startups faced ongoing challenges, comprising a mere 0.3% of the total investment. Only one female-founded startup, Powder Beauty, secured an undisclosed pre-Series A round. Another startup with a female co-founder received a $150,000 accelerator grant.
August Highlights
Despite the overall downturn, the MENA entrepreneurial ecosystem witnessed several notable developments in August. A coalition of GCC-based family offices launched the "Waad Investment" firm with a target value of $200 million.
A $100 million fund was also established in collaboration between Gate Ventures and the Blockchain Centre in Abu Dhabi to support Web3 innovation.
In Egypt, T-Vencubator launched its inaugural initiative, "Where's the Problem?" to support the Egyptian ecosystem.
In the mergers and acquisitions (M&A) domain, the UAE-based property crowdfunding platform Maisour was acquired by Meteora Developers. Kuwait-based proptech Sakan also acquired the Qatari company Hapondo.
Entlaq, in collaboration with Wamda, released its biannual report on the Egyptian entrepreneurship sector for the first half of 2024, highlighting the challenges and opportunities faced by Egyptian startups.
