Start-ups across Middle East, Africa, Pakistan and Turkey raised more than $5 billion in record funding in the first half of 2022, accounting for 70 per cent of the total investment raised in the full year 2021, according to data provider Magnitt.
Start-ups in Mena neared the record $2bn mark over 300 transactions in the first half of 2022, growing by 46 per cent year on year, Magnitt said on Saturday. This accounted for 62 per cent of total funds raised last year.
In the first six months of the year there was a preponderance of larger-sized rounds with more than 40 per cent ($2bn) of the capital raised in mega deals, which are valued at more than $100 million, Magnitt said.
“Prevalence of larger-sized rounds led to a sizeable increase in the value of average fund rounds across emerging venture markets [EVMs],” Philip Bahoshy, founder and chief executive of Magnitt, said.
As economies in the Middle East and North Africa continue to recover from the effects of the Covid-19 pandemic, investors are allocating more cash to promising start-ups, which in turn is helping the ecosystem grow and mature further.
Total funding secured by Mena start-ups more than doubled to about $864m in the first quarter of 2022, with the number of deals rising by 16 per cent, according to Magnitt.
Start-ups in the UAE accounted for 27.3 per cent of all deals closed across the Mena region and 34.4 per cent of all funding raised.
Dubai alone is home to nearly 39 per cent of the fastest-growing start-ups in the region, the Dubai Chamber of Digital Economy said in a recent report.
Turkey recorded an average fund round of $13.9m, while the mean fund size in Mena went up to $8.2m with three mega deals closed by cryptocurrency platform Rain, F&B start-up Foodics and Pure Harvest and more than 20 deals of more than $20m.
The FinTech sector remained the highest funded and most transacted industry across EVMs, raising $1.6bn across 210 deals in the first half
While the first three months of this year proved to be a record quarter for EVMs, the second quarter showed the first signs of a slowdown in market activity, Magnitt said.
Average fund rounds also adjusted in the second quarter after peaking in the first quarter across all markets except the Middle East, which observed a reverse effect, the company said.
Africa was the only EVM to cross the 50 per cent mark of last year’s total transactions, while Turkey raised north of $1bn in H1 with more than 80 per cent of the funds invested over mega rounds.
While Turkey had a phenomenal first quarter owing to the mega deals, Q2 has been the lowest quarter for Turkey since the third quarter of 2020, according to Magnitt.
“The funding activity in Q2 across MENAPT has been a signal towards a more reserved VC activity for the rest of the year. It remains to be seen if EVMs are able to cross last year’s numbers,” Mr Bahoshy said.