MAGNiTT’s MENA Venture Investment Summary for 2023 reports that this year has been a phenomenal year for Saudi Arabia, with notable surges in funding and capital deployment from the region. However, the past year was not the most successful for other neighboring countries, with many experiencing a ‘funding winter’ with slow investments and reduced capital deployment.
In this article, we will explore and analyze the top 5 MENA countries in terms of funding in 2023. Along with providing statistical insights, we will also discuss potential factors contributing to each nation’s economic growth. Read on to find out more.
1. Kingdom of Saudi Arabia - $1.383B
This year, Saudi Arabia has reached record heights, ranking #1 in terms of funding across MENA for the first time. Capital deployed from the country amounted to a whopping $1.383 Billion, almost double that of the United Arab Emirates. This number is a 33% increase from last year and marks the first time that any capital deployment in the Middle East has been in the billions.
This huge amount of funding is attributed in part to the four Mega deals that Saudi Arabia secured in 2023. Primarily spanning the FinTech and E-Commerce sectors, these ventures had a combined worth of over $100 million and included unicorn-sealing deals of top startups Tabby and Tamara during 2023’s final quarter. With such growth, industry experts have predicted that next year Saudi Arabia will be number one in the number of deals.
These investments not only secured Saudi Arabia’s as a powerhouse startup ecosystem in the Middle East but also put the country on the map internationally. Saudi Arabia is now the only MENA country to be among the top five Emerging Venture Markets in terms of funding, capturing 12% of all deployed capital. This is a remarkable achievement and a nod to the Kingdom’s growing appetite for investment and startup growth.
2. United Arab Emirates - $691M
A force to be reckoned with in the world of entrepreneurship is the rapidly growing United Arab Emirates. This year, UAE has secured the second place spot in the MENA Country Funding Comparison, bringing in an annual funding amount of $691 million.
However, this is a drastic drop for the coastal nation’s economy, as just last year the UAE acquired 45% more funding and secured the top rank out of all MENA countries. This makes 2023 the least funded post-pandemic year for the United Arab Emirates.
On the other hand, the country maintained its status as the most transacted geography in MENA acquiring 158 deals in 2023, despite a 9% drop compared to last year. Emirati investor Mubadala Ventures was also the top-ranked investor in terms of capital, deploying an estimated $547 million in 2023. This shows that although the ‘funding winter’ has not spared the UAE, they have still enjoyed success in other financial metrics.
3. Egypt- $378M
Rich in culture and innovative in spirit, Egypt is home to a thriving and active startup ecosystem. Over the past few years, the North African country has seen many highs and lows in terms of funding and deals. 2023, unfortunately, was a less successful year than others.
The startups of Egypt experienced a great reduction in their amount of deployed capital, raising just $378 million in the whole year. Reports indicate that this is a whopping 30% drop since previous years. In fact, reports show that Egypt has seen a 59% decline in the number of deal transactions compared to last year, with the country securing just 69 deals in 2023. WAMDA also reports a drop of almost 40% in debt-free investment, a further indication of the country’s declining startup performance.
Despite these numbers, Egypt did have some winning moments in 2023. Egyptian fintech and e-commerce company Halan raised up to $400 million in equity and debt financing from local and global investors in 2023. This includes a $260 million deal with Chimera Capital, which is the second-highest of all disclosed deals in the MENA region. In addition, Egyptian investor Flat6Labs secured the highest number of investments in MENA-based startups.
4. Morocco - $81M
In recent years, North African country Morocco has seen steady growth in its startup ecosystem, with many promising companies rising from the region each year. However, it is still in its early stages with smaller-sized companies than neighboring countries.
In 2023, Morocco was the fourth-ranked country in the MENA region in terms of capital deployed, raising $81 million in funds. This is a remarkable achievement for the Maghrebi nation, as it is 193% more than the previous year and caused a rank jump of four spaces.
Moroccan B2B food distribution platform Terraa’s $1.5 million deal can be cited as a contributing factor to this boost in funding. In early 2023, the food tech startup managed to bag this large amount in pre-seed funding during a round led by FoodLabs. Other notable local startups that raised million-dollar deals are CloudFret and Agenz.ma, which further helped put Morocco on the map.
5. Bahrain- $44M
Another core player in the Middle East’s startup scene is Bahrain. This small but mighty nation is known for its penchant for entrepreneurship, releasing many successful startups in the realms of FinTech, eCommerce, and more. Bahrain managed to secure $44 million in investment in 2023, according to MAGNiTT’s MENA Venture Investment Summary of this year.
Bahrain, with its society consisting of mainly expatriates, has become a hub for entrepreneurship over the past decade. Lower operational costs, zero corporate tax, and startup initiatives like Tamkeen and StartUp Bahrain are factors that make it all the more attractive to business owners.
Notable deals made by Bahrain-based startups include Tarabut Gateway closing a $32 million Series A round, Estater raising a $5 million Series A round, and Procural raising a $1.2 million Seed round.
Final Thoughts
The entrepreneurial ecosystem of the Middle East and North Africa region is one of the most burgeoning landscapes of the world. Although all mentioned countries have had considerable achievements, Saudi Arabia saw multiple wins across the board. This has only further cemented the Kingdom as a top contender in the world of capital deployment.
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