UAE leads MENA region in VC funding in first half

Companies in the UAE raised $699 million in the first half of 2022, making the UAE the leading country in the Middle East and North Africa for venture capital financing, according to data platform Magnitt.

Emirates was also the leader in transaction volume, up 10 percent in six months from a year ago, Magnit said in a report on Tuesday.

UAE also hosts largest deal – $181 million convertible note mega-round for Abu Dhabi pure harvest In June, it marked the 10th year in a row that the UAE has hosted large-scale financings worth $100 million or more.

In 2021, the UAE attracted more than $1.47 billion in venture capital.

Saudi Arabia and Egypt came in second and third in terms of financing and closing deals, respectively. The kingdom attracted $584 million in 79 deals, more than tripling from the first half of 2022, while Egypt more than doubled its financing in 78 deals to $307 million.

Investments in Bahrain rose nearly eightfold to $116 million, placing it fourth, followed by Tunisia, which rose by a third to $36 million. In terms of deals, these countries have swapped places to maintain their top five rankings.

Ahmed Al Naqbi, chief executive of the UAE Development Bank, which sponsored the study, said that easy access to various financing channels and favourable legislative tools in the UAE “is helping to create the most favorable conditions for start-ups and entrepreneurs. One of the most attractive environments in the world”.

“Recognizing that today’s business environment is changing at a faster rate in a hyper-connected world, the UAE has made significant strides over the past decade in developing a business-friendly ecosystem that enables the nation’s vast talent pool to tap into It is easier than ever to find opportunities,” Mr Al Naqbi wrote.

The growth of startups is also accelerating as key industries such as retail, services, e-commerce and government become more digitized.

Globally, startups create about $3 trillion in value, nearly equal to the gross domestic product of G7 economies, according to consultancy Startup Genome. According to CB Insights, these companies have raised a record of $621 billion in 2021.

“Compared to the same period last year, the UAE continues to solidify its position as the region’s leading innovation hub. We have been witnessing the birth and growth of pioneering, UAE-born solutions in verticals in the region and around the world,” said Dubai Global Ventures’ CEO Managing partner Noor Sweid said in a Magnitt report.

The study showed that the fintech sector raised the most money in the first half of the year, up from second place a year ago, with investments more than tripling to $234 million.

Agriculture jumped to second place with $181 million. In third and fourth place, fashion and lifestyle ($50 million) and healthcare ($50 million) also grew exponentially. Transportation and logistics fell from No. 1 to No. 5 as funding fell 40% to $40 million.

In terms of deal count, fintech still leads with 28 deals, a 65% increase from the previous period. E-commerce got 9 deals, transportation and logistics got 8 deals, and education technology and healthcare got 5 deals each. EdTech deals surged 150%.

More than half of the capital deployed in the UAE in the first half was concentrated in the top five deals this year, compared to 77% in the same period last year. Pure Harvest alone drives more than a quarter of all venture capital.

Early-stage funding remains a major trend in the UAE, at 80%, at a similar level compared to the previous four years. Next is the A round of financing, accounting for 11%, followed by the B round of financing, accounting for 8%.

The UAE also posted a new half-year record for investment exits, with 10 in the first half of 2022, representing more than a quarter of all exits announced in the MENA region over a six-month period, Magnit said.

That number – double Saudi Arabia’s – has the UAE breaking 11 exports in 2018 and 2021, and 15 in 2019.

Fintech, e-commerce, enterprise software and real estate start-ups were among the most sought-after acquisitions in the UAE in the first half of 2022, the report added.

Updated: August 16, 2022 5:00 AM