Start-ups in the Middle East and North Africa secured $277 million (Dh1 billion) in funding
during the first quarter of the year, up 2 per cent year on year, according to data platform Magnitt.
increase in funding in the quarter is “largely attributed to a strong start to 2020”, before Covid-19 became a
pandemic and brought the global economy to a standstill, Magnitt’s Q1 2020 Mena Venture Investment Report said.
Large funding rounds in January and February included $60m for Dubai cloud kitchen company Kitopi, $40m for Egyptian
health-tech start-up Vezeeta and $35m for Dubai’s SellAnyCar.com. The UAE still leads in the highest funding amount,
accounting for 51 per cent of the total investments.
While funding increased marginally, the number of
deals in the first three months of this year fell 22 per cent to 108. Egypt accounted for 37 per cent of all deals
in the Mena region while the UAE accounted for 25 per cent and Saudi Arabia 12 per cent.
The number of
start-up deals in the Mena region dropped 67 per cent in March compared to the same month last year.
businesses and investors will be hit by Covid-19, which may have an effect on their fundraising capabilities in the
coming months,” Philip Bahoshy, Magnitt’s founder and chief executive, told The National.
ramifications will most likely not be seen until a few months down the road as the fundraising exercise, on average,
takes six months for start-ups in the Mena region.”
In 2019, a record number of start-ups received venture
funding, with the number of deals increasing by 31 per cent to 564.
The total value of deals dropped about
15 per cent to $704m last year but that was partly because of a $200m funding deal for Careem in late
The platform had estimated that the region’s venture capital scene could witness $1bn worth of
investments this year but the worldwide coronavirus outbreak is expected to put a damper on both overall deal
numbers and funding, Mr Bahoshy said.
There were more than 1.85 million confirmed cases of Covid-19
globally as of Monday, according to Johns Hopkins University, with over 114,000 deaths.
More than 400,000
people have recovered.
Strict measures to contain the virus, such as stay-at-home directives and business
closures, have led to the greatest challenge to the global economy since the 2008 financial crisis.
“Reaching $1bn was based on a prediction where the venture capital landscape was in a growing and stable state. The
current crisis has led to a change in investment behaviour,” Mr Bahoshy said.
“While we anticipate that
overall deal numbers may be flat, if not negatively [affected] to year-end, total funding will very much be
[affected] by investors’ risk appetite,” he said.