Last year saw $560 million investment made in 260 start-ups across the Mena region, said a report from MAGNiTT, a major start-up website for entrepreneurs, investors, corporates and founders in the Middle East.
2017 proved to be a record year for the Mena start-up ecosystem, continuing its signs of maturity and growth, added State of Mena funding report.
Key takeaways from MAGNiTT’s 2017 Mena State of Funding
1. Funding overview:
• Last year saw a 65 per cent rise in investments to $410 million (excl. Souq & Careem), which is a Mena record
• More deals were undertaken in 2017 than in any previous year across the Mena ecosystem
• 2017 saw a record Q2, Q3 and Q4 in terms of investment amounts and number of transactions
• Top 10 investments accounted for $349 million, which accounted for roughly 60 per cent of 2017 funding
• Top 5 investments included $150 million in Careem, $90 million in StarzPlay Arabia, $41 million in Fetchr, $20 million in Paytabs and $12 in Wego
MAGNiTT’s founder, Philip Bahoshy, said: “it was a great year for Mena start-ups, founders and investors across the board. Investment continues to grow at all stages across the funding cycle.” With regards to overall trends he noted that “2017 broke the record for number of deals and amount invested, when removing investments in Careem and Souq. This is positive news and should provide confidence across the market heading into 2018. We expect to see a continuation of this trend throughout the year.”
2. Investment Breakdown: MAGNiTT investigated the breakdown of industries and geographies comparing 2017 to the previous year:
• Last year saw E-commerce and Fintech maintain their positions at the top of the investment deal flow, both accounting for 11.9 per cent of all deals.
• Food and Beverage saw the largest increase of 3 per cent in deal flow across 2017.
• FinTech start-ups also make up 3 of the 10 largest investments in 2017 - Paytabs ($20 million), Souqalmal ($10 million) and Wahed ($7 million). Logistics and Transport also proved big winners with Careem ($150 million), Fetchr ($45 million) and Wego (12 million).
• The UAE continues to be the dominant market with 70 per cent of all investment amounts and 37 per cent of transaction (excluding CAREEM’s investment of $150 million).
• Notably, KSA observed the largest increase in investments, up 4 per cent from 2016, despite a 3 per cent fall in the number of deals.
• Lebanese start-ups saw the biggest drop in investment amount, down 12 per cent from 2016.
• Kuwait saw the biggest increase in deal transactions, up 3 per cent from 2016.
In the 2017 report, MAGNiTT noted that as part of their calculations this year, they removed investments made in Turkish and Iranian start-up, focusing purely on Mena countries. MAGNiTT looks to expand their proposition with further reports to be published in the coming months for additional geographies as the platform expands.
3. VC activity and Exits: 2017 saw both the continued activity of existing household investment institutions, as well as the emergence of new players into the Mena start-up scene:
• 500 Startups, following the launch of their Mena Falcon Fund, was the most active VC by number of deals, deploying investments in over 30 start-ups across the region. This was followed by Middle East Venture Partners with 14 deals, who also announced the launch of their new $250 million MEVF III fund in 2017
• KSA Funding Institutions came to the forefront with RAED Ventures (8), Saudi Aramco Ventures (WA’ED) (8), Riyad Taqnia Fund (5) and Vision Ventures (3) actively investing across the Mena landscape
• Looking at the top 10 investments, established VCs made notable participations with BECO Capital investing in 4 of the largest deals followed by Middle East Venture Partners in 3.
• There was no slowing down in exits in 2017 which saw 20+ deals including the landmark acquisition of Souq.com by Amazon, the 51 per cent acquisition of Namshi by Emaar Malls, as well as Delivery Hero’s acquisition of Carriage.
Bahoshy added: “It has been great to see the emergence of new investors both regional and international into the start-up arena, providing much needed capital injection to the region. We have even seen greater participation by family offices, individual Angels and Corporates, many of whom look to launch accelerators and incubators in 2017 as well as make Corporate Venture investments.”
“We anticipate existing VC’s to deploy new capital from freshly raised funds, we anticipate the continued emergence of new institutional players across the region and we foresee government and regulators continue to actively facilitate and promote innovation initiatives across the region,” Bahoshy said.
On MAGNiTT, he also said: “2018 is a big year for our platform. Accuracy of data is core to our proposition. MAGNiTT will continue to develop strong relationships with Investors and the ecosystem to ensure the information stays up to date and available. We are pleased to compliment this infographic with a detailed and in depth version of this report including analytics and insights made available for paid subscribers as well looking forward to launch of a new site later this month which will provide the tools and functionality to support users in the ecosystem.” – TradeArabia News Service
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