Startup Investments: The evolution of the MENA ecosystem in 2016 [Report]
2016 was a booming year for investing in startups, with early stage companies raising over $815 million (Source: WRL Data). Two regional companies, Careem and Souq.com, achieved the coveted ‘unicorn’ valuation, making them the first companies in the region to do so.
Fintech emerged as a key sector in the MENA region this past year with one in five investments targeting a fintech startup, and one in ten new startups are working in fintech. (Source: WRL Data)
Notably, international private equity firms began making larger investments in regional tech companies in 2016 (some examples are: Samena Capital in Anghami, Tiger Global Management & Standard Chartered Private Equity in Souq.com), a sign of investor confidence in the potential for growth of these startups.
Financial support to startups has dramatically increased as well. Funds raised were up 287 percent from 2015, with corporations playing a more active role in investing, having been involved in 29 percent of all investment transactions.
A prominent trend of last year’s funds is that the majority were seeking to provide funding past the seed stage (only 4 out of the 11 are seed-focused). In addition, 40 percent of investments made in 2016 were Series A/B/C, signalling the beginning of a shift in capital allocation to growth-focused, later stage investments.
Acquisitions in the tech sector also increased last year, the most prominent of which was the acquisition of Emerging Markets Payments by Network International for $340 million.
The acquisitions of Savaree by Careem, and Selektimmo by Sarouty.ma (the Moroccan arm of Propertyfinder.ae) also marked the the beginning of regional technology companies acquiring smaller companies in a bid to expand their geographical footprint.
Looking at the wider ecosystem, support to startups was boosted through various private initiatives. Four of the 15 newly launched accelerators were dedicated to fintech, again highlighting the positive outlook on this industry. Around 30 major events were organized in 2016. Attendance at the top three events by size (BDL Accelerate, RiseUp Summit, and STEP Conference) grew 2.4 times their 2015 figures, reaching 30,000 attendees at these conferences in 2016.
In conclusion, despite globally decreasing VC investments, the MENA region remains on a steady upward trajectory supported by various private initiatives and increasing governmental support.