Magnitt Releases Q3 Funding Report Card
With GITEX Future Stars opening GITEX yesterday, MAGNiTT has taken the opportunity to provide an update on MENA funding activity in the first three Quarters of 2017. Here are some key takeaways from the report:
Deals continued to flow throughout the summer, especially in September. This proved to be the strongest Q3 on record based on MAGNiTT data:
- 169 deals in the first 9 months of 2017 now surpass the 164 deals invested throughout 2016
- Total investment to date now stands at $404m including the $150m invested in Careem earlier this year.
- Total investment in the first 9 months of 2017, excluding Souq & Careem, stands at $254m, only $28m short of full year 2016 with three months still left to the end of the year
MAGNiTT’s founder, Philip Bahoshy, noted that it is “positive to see that the region has now surpassed total disclosed deals in 2017. This highlights the increased appetite in the startup space from existing as well as new regional and international investors.” He also commented there is still a gap to 2016’s record total funding figure which he attributes in part to Amazon’s acquisition of Souq.com and the 20% of 2017 deals which have remained undisclosed.
For the first time, MAGNiTT compared trends across Quarters starting with industry and geography with the Fintech industry being the biggest winner of investment and KSA seeing increased activity.
- Fintech maintained its pace as the hottest industry in the region gaining 2% Quarter-on-Quarter
- Fintech startups also make up 3 of the 5 largest investments in Q3 - Paytabs ($20m), Souqalmal ($10m) and Beehive ($5m). The remaining two startups are AlTibbi ($6.5m) and Foodics ($4m).
- E-commerce investment saw the biggest drop with a 4.5% fall in deal flow.
- The UAE still continues to be the dominant market with 50% of all deals and 37% of all funding even excluding CAREEM’s investment of $150m
- Notably there was an increase in activity seen in KSA with 10% more deal flow YTD than Q2 YTD
- SEED funding remained the dominant ticket size for regional investors at 46% of deal flow despite only making up 19% of the total investment in regional startups
VC Activity and Exits
VCs continue to be active in the region participating in the investment of multiple startups.
- 500 Startups have been the most active VC by number of deals following the launch of their Falcon Fund with 16 disclosed deals. This was followed by MEVP with 10 deals and Turn8 with 8 deals.
- KSA funding institutions have made their presence known with Riyad Taqnia participating in 3 out of the 5 largest investment deals in Q3 and Saudi Aramco Ventures leading the investment of Paytabs with $20m, the largest investment in Q3.
- MEVP, following their announcement of investment with Mr. Allabbar, continued to be active in the MENA startup space with 10 investments YTD
- There was no slowing down in exits either, with 5 notable acquisitions including Amazon’s purchase of Wing.ae as well as Yaoota’s purchase of Mobi Hall and Mobilesgate in Egypt
Go Compare’s involvement in Souqalmal’s Series B funding round also follows a trend emerging in MENA where large international Startups are taking strategic investments in comparable regional players to further expand their footprint. This is similar to Amazon’s acquisition of Souq and Didi’s investment in CAREEM. Bahoshy anticipates that this will be a continuing trend as the market matures.
In conclusion, the report shows continued strengthening of the ecosystem to provide optimism for decision makers. MAGNiTT caveats that by highlighting the continued requirement for new funds to fuel the ecosystem. This will be further supported as multiple regional investors close their second funds creating much needed liquidity to fuel new and existing startups’ growth.
Download the full report here.