Philip Bahoshy, Founder of Magnitt.

(Photo by Reem Mohammed/The National)

Reporter: Alice Haine
Section: BZ
Philip Bahoshy, the founder of Magnitt, says the increase in funding activity this year "highlights the growing appetite in the startup space from existing as well as new regional and international inShow more

Regional start-ups on track for record year of funding

The Middle East's start-up ecosystem is on track for a record year of funding thanks to a fintech-fuelled third quarter, with the number of funding deals for the first nine months of the year now exceeding the total number of deals struck in 2016, a according to new research from new report from online start-up community Magnitt.

According to Magnitt's analysis, the three months to the end of September saw 62 new deals and over US$76 million of investment in Mena startups, with the total deal tally of 169 for the year's first nine months now higher than the 164 recorded last year.

The total investment in regional start-ups for the year to date now sits at $404m, a figure that includes the $150m invested in Careem earlier this year by regional VCs including Kingdom Holdings.

Philip Bahoshy, Magnitt's founder and chief executive, said it was "extremely positive to see continued investment in Mena startups".

“The summer is generally perceived as a quieter period in the region. However, we saw a flurry of announcements in September and we expect this trend to continue through to year end,” he said.

The Magnitt data is a measure of the inflow of venture capital funding into the region's start-ups, hence why Amazon’s acquisition of in March this year is not included in the figures.


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Significant UAE funding rounds in the third quarter included a $10m injection into, announced on Tuesday, in a Series B round led by Saudi-based Riyad Taqnia Fund and shared with UAE Exchange Group and the UK financial comparison site GoCompare.

Another significant funding announcement of the quarter also came from Saudi investor RTF a week ago when it was announced as the lead investor in a $5m funding round for Dubai-based peer-to-peer lending platform Beehive.

“The increase in activity so far this year highlights the growing appetite in the startup space from existing as well as new regional and international investors,” said Mr Bahoshy.

GoCompare’s interest in, for example, was the company’s first overseas investment with Matthew Crummack, the company’s chief executive saying the potential for growth in the region “is huge” thanks to its “youthful and tech-savvy population”.

Not surprinsingly, Fintech remains the hottest industry for the region for VC activity, according to Magnitt, gaining 2 per cent quarter on quarter and the sector making up three of the five largest investments.

Promoth Manghat, the chief executive of UAE Exchange, which also took part in the funding round, said the UAE has “emerged as a hub for start-up innovation in the MENA region”. He told The National the exchange house is “constantly looking out for the right investment opportunities” and supports and partners various fintech incubation and accelerator programmes.

“We are also leveraging these programmes as avenues to identify and collaborate with the right innovators and start-ups, where we can add value to one another either via commercial partnerships or through strategic investment,” he added.

The UAE continues to be the dominant market for VC funding, receiving half of all the disclosed deals for the quarter. The most active VCs by number of deals was 500 Startups following the launch of their Falcon Fund with 16 disclosed deals. Next in line was Middle East Venture Partners with 10 deals and Turn8 with eight deals.

Total funding deals in 2016 topped $907m, thanks largely to’s funding round of $275m from investors such as New-York based Tiger Global Management and South Africa’s Naspers, and Careem’s $350m injection from Japenese e-commerce firm Rakuten and Saudi Telecom Company – a figure Mr Bahoshy conceded the region was unlikely to top in 2017.

"$625m of that investment went exclusively to Souq and Careem so we see them as outliers that skew the results," said Mr Bahoshy.

"Exclude Careem and Souq from the figures and total investment in the region in 2017 stands at $254m, only $28m short of the $282m figure achieved in 2016 with three months still left to go."

However, Mr Bahoshy also noted that 20 per cent of 2017 deals have remained undisclosed, which could close that figure more.


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The more serious side of specialty coffee

While the taste of beans and freshness of roast is paramount to the specialty coffee scene, so is sustainability and workers’ rights.

The bulk of genuine specialty coffee companies aim to improve on these elements in every stage of production via direct relationships with farmers. For instance, Mokha 1450 on Al Wasl Road strives to work predominantly with women-owned and -operated coffee organisations, including female farmers in the Sabree mountains of Yemen.

Because, as the boutique’s owner, Garfield Kerr, points out: “women represent over 90 per cent of the coffee value chain, but are woefully underrepresented in less than 10 per cent of ownership and management throughout the global coffee industry.”

One of the UAE’s largest suppliers of green (meaning not-yet-roasted) beans, Raw Coffee, is a founding member of the Partnership of Gender Equity, which aims to empower female coffee farmers and harvesters.

Also, globally, many companies have found the perfect way to recycle old coffee grounds: they create the perfect fertile soil in which to grow mushrooms. 

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