Lebanon received only $21 million in venture capital (VC) funding in 2020, a drop of 34 percent compared to the previous year, according to online investment platform Magnitt.
Venture capital funding in Lebanon accounted for 2 percent of more than $1 billion in VC investments in start-ups in the Middle East & North Africa (MENA), halving since 2019.
Start-ups in Lebanon attracted the fifth largest share of VC investments in the MENA region, after the UAE with 56 percent of total investments, Egypt (17 percent), Saudi Arabia (15 percent), and Kuwait (3 percent).
According to Magnitt, Lebanon registered 16 VC investment deals in start-ups in Lebanon in 2020, down by 64 percent from 45 deals in the preceding year, and compared to a 1 percent decrease in the number of transactions in 2019.
As a result, the average VC investment in start-ups based in Lebanon was about $1.3 million in 2020 compared to an average of $2.1 million per deal in the MENA region.
The three main innovation hubs of the UAE, Egypt and Saudi Arabia, accounted for 68 percent of total deals disclosed in 2020, with Saudi Arabia registering the highest increase in deal flow, up 35 percent.
While the UAE maintained its leading position in funding, Bahrain (+200 percent), Saudi Arabia (+55 percent) and Egypt (+31 percent) registered the highest increases in 2020.
With a 5 percent uptick, total funding in UAE start-ups went up to $579 million in 2020.
2020 saw the number of exits plummet 58 percent in the MENA region, with a total disclosed value of $361 million.
Magnitt said this drop may have been a symptom of the negative effect of the Covid-19 crisis. Start-ups may have been unwilling to get acquired at lower valuations, while others had to readjust strategies to a new operational landscape, it added.
The report also said that Covid-19 has had a clear impact on industry focus with e-commerce, fintech, healthcare and delivery and logistics all seeing increased demand in 2020.
Magnitt predicted that Saudi Arabia will surpass Egypt in total number of investments and total capital deployed in 2021 in venture funding. It also ruled out any mega deals surpassing $100 million across the MENA region in 2021.
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