$2.1 billion in 12 years: Magnitt crunches the region’s startups funding stats

CEO and founder of Magnitt Philip Bahoshy sharing the insights of the MENA funding report at RiseUp Summit. (Courtesy of RiseUp Summit)

In the past 12 years, the regional funding landscape has evolved and matured, with a total of $2.1 billion in aggregate funding as well as six exits, according to research by the Magnitt insights platform.

Egypt only saw 6.2 percent of total MENA investments at $131 million, of which 4.8 percent were pumped into late-stage startups.

The regional funding landscape in the MENA region has been witnessing an evolution, according to Dubai-based Magnitt, a platform and startup directory that aims to connect the MENA startup scene and make it more transparent.

The company reviewed 200 startups and 388 founders covering the 12 years from 2005 through 2017, focusing on the funding trends in a report entitled “MENA Funding Evolution: How has the MENA investment landscape evolved?”

The UAE fared best in the region throughout all stages and in terms of investment volume at $1.56 billion in total funding.

The most attractive sector across the region was e-commerce, collecting 33.4 percent of the total funding at $703 million, while the transportation sector saw most late-stage investment rounds.

From the $2.1 billion in aggregate funding, the minimum amount was $400,000 for a round and a median total investment of $1.9 million. The region also saw six exits and 326 disclosed deals, most of which took place during the seed stage (147 deals). In terms of volume, however, the funding rounds were largest in the Series D stage ($775 million).

Magnitt’s research revealed that 39 percent of the examined startups have only one founder, followed by two founders with 34 percent, three at 19 percent and four at only 8 percent. Of those founders, 89 percent are male.

Presenting the findings at last weekend’s RiseUp Summit, CEO and founder of Magnitt Philip Bahoshy said that sharing the insights at the summit has “created interesting dialogues between startup founders, investors, corporates and anybody who is interested in the ecosystem…[with] conversations between attendees based on facts and figures.”

Different rounds, different appetite
Magnitt showcased a steady growth in early-stage funds, primarily kicking off in 2013 with a total of 37 deals worth $34 million, up from 10 deals just a year before. So far, 2017 saw investments worth $43 million in early-stage startups through 35 deals.

Series A rounds have become popular amongst investors, especially in 2015 throughout which $74 million were pumped into 27 startups. This number dropped significantly in 2017 with $46 million and merely 16 deals.

The most-funded stage in 2017 is Series B at a whopping $180 million in 11 disclosed deals, growing 185 percent in volume from the year before, while late-stage funding has been labelled as a “recent phenomenon,” enjoying prime-time in 2016 with $795 million through three deals, but dropping sharply to $15 million this year with just one deal.

While the average investment round reached about $300,000 in the pre-seed stage, Series D saw $387.5 million, showcasing a massive gap to Series C rounds at $48.9 million.

Investing with consortiums
The more advanced the funding round, the more institutions joined forces to support deals, showing that they tend to scout opportunities in groups. Pre-seed investments saw the participation of an average of 1.2 institutions per deal, while Series D rounds reached 9.5 institutions.

The most active players on the scene in the region are Middle East Venture Partners (MEVP), a Middle East-focused venture capital firm, and 500 Startups, a global early-stage venture fund and seed accelerator. Both entities have backed over 30 startups each, as angel fund Mena Venture Investments and regional venture capital firm Wamda Capital have invested in 16-30 startups.

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