MENA on the cusp of $1 billion in funding of startups in 2016
MAGNiTT, the online platform connecting entrepreneurs to investors, released its latest statistics on the state of MENA funding based on proprietary data and publicly disclosed transactions, barely more than a month since the launch of the MAGNiTT’s MENA State of Startups.
Investment in MENA startups in 2016 was around $870million, an increase of 424% since 2015. MAGNiTT Founder, Philip Bahoshy, estimated that startups should reach over a $1 billion in funding within the next two years. While $625 million of funding in 2016 comes from transactions in SOUQ, at $275 million, and CAREEM at $350 million, it highlights the emergence of unicorns in the region, despite a flattening in the number of publicly disclosed transactions.
With startups spanning Lebanon, Iran, Egypt, Morocco, the UAE and KSA amongst others the data shows that 54% of startup funding comes from businesses in the UAE. Lebanese startups were at 13%, Egyptian at eight per cent, and Saudi startups have seen a flattening in investment at four per cent, while there has been a decrease in Jordanian startup funding, which was at 10 per cent, which is likely due to a migration towards the UAE ecosystem.
The data also shows an increase in the average ticket size of disclosed funding from $800,000in 2014 to $3.1 million. The data also highlights that 49% of registered startups on MAGNiTT seek $250,000 in funding, along with support and mentorship. This begs the question whether there is a mismatch between who is being funded and what is needed to grow the ecosystem, with a preference towards more mature later stage investments.
Successful startups in the region however continue to flourish. The aggregated amount from the top five rounds of funding continues to grow year on year with a 462% increase from 2015. CAREEM has seen incredible growth and is the only startup to be featured in the top five list of transactions for the last three years.
WAMDA Capital, Middle East Venture Partners, and BECO Capital were noted as the most active VC funds in the region by total number of transactions. The data also shows a growing VC community supporting MENA transactions with Investors from not only the region but international participation as well.