The Middle East and North Africa (MENA) region saw yet another troubled quarter in venture financing, posting as much as 26 percent plunge in funding to startup ventures in the region to hit $1.4 billion in the second quarter of 2023 over the same year-ago period, latest market research showed.
The number of funding deals in the region also registered a decline for the second consecutive quarter to reach 206 during the April-June period, a 20 percent fall from the first quarter of this year, the latest CB Insights report revealed.
Despite the tightening funding environment, startups in the digital health sector in the region emerged as the star performers in the latest quarter, clocking a whopping 106 percent jump in funding over that in Q2, 2022.
Israeli ventures shine in Q2
Israel emerged as the top performer in the region, posting a 13 percent jump in startup funding in April-June this year, raising as much as $978 million – bagging a lion’s share of the $1.4 billion total funding to become the top-funded MENA country in Q2’23.
Two of the top five deals of the quarter went to Israel-based health tech companies, Magenta Medical and Healthy.io, raising $55 million and $50 million, respectively, in their Series D rounds.
The UAE and Turkey came in second and third, with $194 million and $172 million, respectively in the second quarter, the report said.
Startup valuations take further hit in Q2
The CB Insights report also showed further slide in startup valuations in MENA in Q2, with the average and median valuation down by 56 percent and 33 percent, respectively, from 2022 levels.
The second quarter, however, saw a spike in the share of venture capital (VC) deals to hit 39 percent – its highest share since Q3 ’21. Angel investors came in second with 13 percent of quarterly deals.
The report also showed a decline in investor exits across the board in Q2, 2023. Mergers and acquisitions (M&A) exits fell by 14 percent to 36, while IPOs dropped by 33 percent to 2.
The top-valued IPO for the quarter went to Saudi Arabia-based Jamjoom Pharma, which raised a whopping $1.1 billion amid the tough market conditions.
Q2 follows Q1 in funding slide
The slide in venture funding in the second quarter followed a 13 percent drop in funding values the CB Insights reported for the first quarter of the year globally, on a quarter-over-quarter (QoQ) basis, reflecting the continuing cool off in the global venture ecosystem.
Almost every region saw double-digit QoQ drops in funding in the first quarter of the year, with Latin America posting the largest drop in funding at 54 percent, raising a mere $600 million.
Asia saw funding fall by 27 percent to $12.5 billion, while funding to Europe-based companies fell by 12 percent to $10.4 billion in Q1 this year.
The funding in the US, however, was more stable in Q1 ’23, dropping by just one percent on QoQ to $32.5 billion, thanks to the $6.5 billion funding round by Stripe.
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