Dubai on January 8th at 9:30 AM
VC investment in emerging markets such as the Middle East and North Africa (MENA) has declined by more than 40% by 2023, According to a new report. The data reflects a broader global trend of declining VC funding over the past two years, particularly for non-AI companies
Total raised across the surveyed markets was $9.1 billion in 2024, a 41% year-over-year (YoY) decline. Moreover, with a 20% drop in activity YoY, the number of deals fell to 1,527. However, signs of recovery may soon be seen as global interest rates have fallen, bringing with it lower inflation, while early-stage investment has shown resilience.
There are trend outlines 2024 Venture Investment Report From MENA-based research group MAGNiTT. The report covers the overall Emerging Venture Markets (EVM), looking at VC investments in the Middle East, Africa, Southeast Asia, Turkey and Pakistan.
In the MENA region, startups raised $1.9 billion in 2024, a 29% year-on-year decline, but a smaller decline compared to Southeast Asia (45%) and Africa (44%).
Also, before the 2021 and 2022 boom years, funding levels in 2024 were still higher than 2020 levels, meaning the region continues to grow in venture space.
The number of transactions increased by 7% YoY (571) and the number of investors increased by 18% (at 475).
And 47% of all investments were in the $1-5M range, indicating a shift to early-stage investments. However, MENA experienced a significant decline in late-stage transactions.
Across MENA, Africa, Southeast Asia, Türkiye and Pakistan, Fintech continued a strong showing, raising $3.9 billion in funding in 2024, reflecting that FinTech is doing well in emerging markets where more advanced financial services are thin on the ground. .
The report notes that this presents an opportunity for M&A activity across the region's geography.
There was a predictable split where international investors focused more on late-stage deals, such as Insider's $500M round and Tyme's $250M Series D. Such investors made up 53% of the 475 investors backing startups in the region. Meanwhile, local investors tend to stick to the early stages.
All this against a backdrop of global exits down 32% YoY to just 94 in 2024 and late-stage capital becoming harder to come by as public markets remain closed.
Philippe Bahoshi, CEO of MAGNiTT, commented in a statement: “We expect capital availability to begin to increase over the next 6-9 months, paving the way for a stronger funding environment in 2025. He said that overall, 2024 is “probably below the curve” in terms of funding slowdowns.
He added that “deal activity increased during the year” despite the UAE, Saudi Arabia and Qatar being slow in total capital deployment. The total number of investors in MENA also increased significantly, indicating that investors, especially international ones, may have increased confidence in startups in the region.