Capijal | Jalouqa Capital Consultancy LTD.

As ever, the venture capital landscape was dominated by the top three markets in the region: the UAE, Saudi Arabia and Egypt. 

The UAE stood on top, fetching the most investments to the tune of $1.85 billion across 250 deals (a rise of 5 per cent in terms of investment value). Saudi Arabia came in second with $907 million raised across 153 deals (a 40 per cent rise in investment value), while Egypt secured the second highest number of deals totalling 180 worth $736 million, a whopping 70 per cent rise compared to 2021.

The uptick in funding and deal volume was felt in other countries including in Algeria, Bahrain, Palestine, Oman, Iraq, Qatar, Yemen, Sudan and Tunisia. 

Conversely, Kuwait, Lebanon and Morocco witnessed a downward trend in terms of deal value, with investment in Jordanian startups dropping by 76 per cent when compared to 2021. 

Sector-wise, fintech remains the darling of the startup world in Mena, attracting  $1.1 billion in investment, nearly double 2021's figure and almost a third of the total amount raised last year. The top sub-sectors that saw a rise in funding were neobanks, crowdfunding, open banking and corporate and personal lending.

Cleantech was hot on fintech's heels, registering a 101 per cent rise from 2021 thanks to Yellow Door Energy's $400 million raise in October 2022. Logistics was the third-highest funded sector, bringing in $362 million in funding, fuelled by the growth in e-commerce and the rise in the need for efficient warehousing and last-mile delivery solutions. 

Quarter-on-quarter, the investment activity has been erratic over the course of last year. From $1.04 billion recorded in Q1, the deal volume slid to $997 million in Q2. Meanwhile, Q3 suffered a sharp decline with $696 million raised, only to surge to $1.21 billion again in Q4.

Last year saw a noticeable growth in the number of small deals as well as a reasonable uptick in the value of the financing rounds allocated to startups at later stages of funding, which represented more than half of the VC activity last year. Debt financing has also become more popular, last year saw almost $500 million raised in debt, an increaes of 89 per cent when compared to 2021. 

Reflecting wider global trends, women-founded startups attracted a mere 1.3 per cent of the $3.94 billion raised last year. Startups co-founded by both men and women fared better, attracting $168 million in investment while startups founded by men attracted $3.7 billion, or 94 per cent of the total amount raised. 

Women-led startups that raised investment last year were based primarily in the UAE and Egypt and concentrated mostly in the healthtech, edtech and e-commerce sectors. Of the 62 female-founded startups that raised investment, 48 were solo founders.

Education and Experience

Last year saw 1,186 co-founders successfully raise investment. Among them, 694 were first time founders and 312 were second time founders, 124 were third time founders, 39 were fourth time founders, and 17 were fifth time founders.

In terms of educational background, 53 per cent of the VC-backed founders have their bachelors degree as their highest attained education while 34 per cent per cent have a Master's degree and 4 per cent have a PhD. Women founders tend to be more educated, a third of them have a Bachelor’s degree, 10 per cent have a PhD while 20 per cent are MBA graduates, the remainder hold a Master’s degree either in the sciences or the arts. About 36 per cent of the founders received their degrees from regional universities, among women, more than half studied abroad with the US and UK being the most popular destinations.  

This report was compiled from publicly disclosed investment deals. Where the investment amount was not disclosed, we assigned them a conservative estimate. It is likely that the total amount raised last year is significantly higher than $3.94 billion as many bridge rounds go unannounced. This report was created in collaboration with Digital Digest.

Source: Wamda.com