Start-ups in the Middle East and North Africa (Mena) region raised $176 million in May from 42 deals, according to data from venture capital platform Wamda.
The amount raised is 40 per cent less month-on-month in investment value, but about 63 per cent higher year on year, Wamda said in a statement on Thursday.
Start-ups in the Mena region raised $299m and $297m in March and April this year, respectively. Despite a decline in funding value, May’s deal count saw a 31 per cent uptick versus the previous month.
Egypt, Saudi Arabia and the UAE continued to dominate venture capital (VC) inflow in Mena.
“Egypt-based start-ups led the pack in terms of deal value and volume, raising $81m across 11 deals,” Wamda said.
“Saudi Arabia-based start-ups were second with $46m raised across nine deals, followed closely by UAE-based start-ups with $45m raised across eight deals.”
Gulf countries are investing in growing an entrepreneurship ecosystem as they look to diversify their economies and fuel post-pandemic growth.
Despite the Covid-19 pandemic, regional start-ups keep booming as they attract financing to support their operations.
Total financing from venture capital funds in the Middle East surged 132 per cent to almost $2 billion last year, with the total number of deals up 5 per cent to 410, according to data platform Magnitt.
The total funding value in the Mena region was driven by mega funding rounds such as Egypt’s Paymob and Saudi Arabia’s Hyperpay, whose rounds combined accounted for almost half of the amount raised in May, Wamda said.
Cairo-based digital payments service provider Paymob raised $50m in a series B round last month, while Saudi Arabia’s FinTech start-up Hyperpay raised $36.7m in a round led by Mastercard this month.
The value of investments raised by Egyptian start-ups rose by 135 per cent year on year, Wamda said.
The deal volume and value for later stage start-ups in Mena witnessed a sharp decline in May, “a sign that investors are pulling back on writing larger cheques”, according to the statement.
“Early-stage start-ups mopped up the maximum number of deals with 21 pre-seed and seed stage start-ups raising $50m, accounting for 28 per cent of the total amount raised, a 10 per cent uptick month on month,” it added.
Sector-wise, FinTech and marketplaces were equal in terms of deal count. However, FinTech bagged the most investment with $112m, followed by marketplaces and logistics, both attracting $24m and $15m, respectively, Wamda said.
The B2B software sector saw the maximum number of deals with 24 deals worth $117m, followed by the B2C sector, which attracted $57m cutting across 17 deals.
Foreign investors participated in 21 funding rounds in May, with US-based investors participating in nine deals, according to the statement. Regionally, UAE-based investors were the most active, taking part in seven deals.
Start-ups with all-male founding teams attracted $154m across 25 deals, while those with both male and female co-founders raised $22m across four deals, Wamda said.
Female-led start-ups accounted for 0.04 per cent of the total funds raised, amounting to $64,000 across four deals, it added.