By Bernd Debusmann Jr
The UAE accounted for 60% of total funding across the Middle East and North Africa
A total of 565 start-up investments were made in 2019, with total deals valued at $704 million, according to new statistics from start-up data platform Magnitt.
In its 2019 Mena Venture Investment Summary, Magnitt found that while the total number of deals represented a 31 percent increase, the total value dropped 15 percent, partly due to a $200 million funding deal for Careem made in late 2018.
Among the key trends it expects in 2020, the report predicts that more than $1 billion will be invested in start-ups this year, in what it says will be a record year for exits, particularly in the e-commerce and transport, which it says are "heavily fragmented".
The report also says 2020 will also see further international interest in "more established start-ups".
For the first time, Egypt accounted for the largest number of deals across the region – 25 percent – while the UAE accounted for the majority (60 percent) of funding.
“However, the landscape continues to evolve and other ecosystems are beginning to emerge,” the report added. “Examples are Saudi Arabia, the fastest growing ecosystem across MENA, which now ranks third in both number of deals and total funding in the region.”
2019 was also found to be a record year for exits, at 27, with Careem’s $3.1 billion acquisition by Uber being the first unicorn exit in the region.
“We hope that our efforts have set the way forward for other tech start-ups to approach expansion across the greater Middle East, and that our deal with Uber will act as a catalyst for further investment into the ecosystem,” Careem co-founder and chief experience officer Magnus Olsson was quoted as saying in the report.
A total of 212 institutions invested in MENA-based start-ups over the course of the year, with institutional investors representing 25 percent of the total. Governments were also very active in the VC sector, the report noted.
“Many governments in the region have been playing an active role in growing ecosystems conducive to entrepreneurs, including technical and financial support programmes and policy reforms,” said Ali Abu Kumail, senior private sector specialist at the World Bank.
“There is a direct correlation between a business-friendly environment and increased entrepreneurial activity,” he added.
Fintech retained its top spot when it came to number of MENA deals in 201 with 13 percent, while delivery and transport accounted for the highest amount of any sector at 19 percent.