January 8 at 9:30 a.m. Dubai VC investment in emerging markets such as the Middle East and North Africa (MENA) will drop by more than 40% compared to 2023, according to a new report. The data reflects a global trend of declining VC funding over the past two years, particularly for non-AI companies. The amount raised in the market under study is $9.1 billion in 2024, down 41% year-on-year (YoY). Furthermore, there was a 20% decline in transaction activity YoY, with the number of transactions falling to 1,527. However, there may be signs of recovery as interest rates fall globally, bringing lower inflation, while early-stage investments show resilience. These trends are outlined in the 2024 Venture Investment Report from MENA-based research group MAGNiTT. The report includes Aggregate Emerging Venture Markets (EVMs), looking at VC investments in the Middle East, Africa, Southeast Asia, Türkiye, and Pakistan. In the MENA region, startups will raise $1.9 billion in 2024, a decrease of 29% year-on-year, but this is a small decrease when compared to Southeast Asia (45%) and Africa (44%). In addition, the level of funding in 2024 is still higher than the level of 2020, before the boom years of 2021 and 2022, which means that the region continues to grow in the venture space. There was a 7% YoY increase in the number of deals (571) and the number of investors increased by 18% (to 475). And 47% of all investments are in the $1-5M range, signaling a shift toward early-stage investing. However, MENA has seen significant declines in late-stage deals. Across MENA, Africa, Southeast Asia, Türkiye, and Pakistan, Fintech continues to perform well, garnering $3.9 billion in funding by 2024, indicating that FinTech is thriving in emerging markets where financial services are more advanced and thin on the ground. . The report notes that this presents opportunities for M&A activity across geographies in the region. There is a predictable split where international investors are more focused on late-stage deals, such as Insider’s $500M round and Tyme’s $250M Series D. This type of investor makes up 53% of the 475 investors who support startups in the region. Meanwhile, local investors tend to remain at an early stage. This is all in the context of global exits falling 32% YoY to just 94 in 2024, and late-stage capital becoming harder to come by as public markets remain closed. Philip Bahoshy, CEO at MAGNiTT, commented in a statement: “We expect rate cuts to start increasing capital availability in the next 6-9 months, paving the way for a stronger funding environment in 2025. He said that overall, 2024 “probably the bottom of the curve” in terms of declining funding. He added that the UAE, Saudi Arabia, and Qatar saw “an increase in deal activity every year” despite a decline in the number of capital deployments. The total number of investors also increased in MENA, indicating that investors, especially international ones, may have increased confidence in the region’s startups.
