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MAGNiTT has announced the launch of its first quarter of 2021 reports, which cuts across the eCommerce, food and beverage, fintech, delivery and logistics and healthcare sectors.
MAGNiTT is a community and data platform for startups, investors, corporates and enablers, that provide insights and reports across emerging venture markets in the Middle East, North Africa, Pakistan and Turkey.
Speaking on the launch of the report, Philip Bahoshy, the founder and CEO of MAGNiTT, explained that the main focus of the research is to clear out obstacles faced by emerging markets.
“Our aim with these reports is to break down barriers between emerging markets that have traditionally operated in silos – we’ve recently expanded our remit into Turkey and Pakistan, with the view of expanding into Africa by the end of 2021. The idea is to give investors across the globe visibility into opaque, comparable markets, in order to stimulate greater deal flow across the board. An increasing number of venture capital funds, consultants and government entities are seeking more granular data when it comes to individual sectors within these fast-growing markets, which encouraged us to take a deeper look into each ecosystem’s venture space.”
VC investment into all emerging venture markets so far
Across the board, the report revealed various records of Venture Capital (VC) investment into the Middle East and North Africa (MENA) region, Pakistan and Turkey. $3.47 billion has been invested into emerging markets in these regions in the first half of 2021.
While the last six months have been the most active for startups in Turkey and Pakistan in terms of investment funding raised to date, with 124 deals closed, resulting in $1.4 billion, and 27 deals valued at a total of $87 million, startups in the MENA region received $1.2 billion in funding, a 64% year-on-year growth and a 12% increase from $1 billion raised in 2020.
The UAE, Egypt, and Saudi Arabia are the top three MENA regions with the highest startup investment rates
Accounting for 26% of total deals within the MENA region, the UAE secured the largest share of transactions in H1 2021, valued at $755 million. Egypt was next with 24% of the share and $166 million in investment. Following this value was Saudi Arabia with 21% and $168million in investment.
The difference between the UAE and third-ranked Saudi Arabia went from 41 deals in the entire 2020, to 11 deals in the first half of 2021, closing the gap between the top three markets.
A larger number of global venture capitalists invested in the MENA region. Investors based outside the region made 31% of MENA-based transactions in H1’21, a 4% increase from the fiscal year 2020.
The drive behind this was the maturing ecosystem, which has led to a significant increase in the number of VC firms setting up regional offices and investing in MENA startups.
Commenting on the surge in MENA investments, Bahoshy said: “While the overall investment figures have risen, we saw a dip in the number of deals secured by early-stage startups. This is due, in part, to the inactivity caused by covid-19 restrictions in regional accelerator programmes that proved to be essential in facilitating ecosystem growth and interaction. Without the same level of support from incubators and accelerators over the last year, early-stage startups haven’t been able to gain enough exposure to potential investors, and the majority of the capital is now being raised by growth-stage startups.”
The fintech sector received the highest investments in terms of industrial deal activity
The fintech sector received a $222 million investment in H1 2021 across MENA, Pakistan and Turkey. So far in 2021, the sector has attracted a higher investment rate in Turkey and Pakistan compared to 2020. With no deals closed in the first half of 2020 and seven deals, valued at $32 million, closed in the first six months in 2021, the fintech sector in Pakistan has really improved.
Also, the fintech sector received the most amount of funding raised within the first half of 2021 in the MENA region. The UAE and Saudi Arabia accounted for 60% of total MENA funding into fintech during the period.
“Fintech was the hero sector in the overall emerging markets, demonstrating the most investment activity to date within the first half of the year. Investor appetite has shifted towards bigger opportunities in the Financial Services space, which put Fintech ahead of other industries, such as Food and Beverage, E-Commerce and Delivery and Logistics that thrived in previous years. However, while the sector was poised to take the lead within MENA, Kitopi’s mega-deal of $415million within the Food and Beverage sector pushed Fintech into second place, ” said Bahoshy.
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