The Middle East and Africa (MEA) region has seen a strong upsurge in funding activities this year, with the total investments reaching $2.1 billion by mid-August – double than the total funding raised during the whole of last year, new research shows.
Series B fundraising by start-ups in the region accounted for the highest share in value terms, cornering 40 percent of the total investment pie this year, while early stage ventures topped the table in terms of the number of funding deals closed so far, the research by consultancy major RedSeer revealed.
Funding activities in the MEA region remained almost static during 2018-2020, falling in the range of $1.03-$1.08bn.
Ventures in the financial technology (fintech) sector saw strong investor interest this year, bagging the highest number of deals with sizable tickets, followed by foodtech ventures, the report said.
Software-as-a-Service (SaaS), healthtech, vertical play in e-tailing, edutech and eB2B are also emerging as the sectors in the region offering strong medium to long term growth potential, attracting investor interest, the market study revealed.
“The digital economy has been driving this upsurge, with players across sectors and stages of evolution closing strong funding rounds this year till mid-August,” Sandeep Ganediwalla, Dubai-based managing partner of RedSeer Consulting, told Arabian Business.
“Early stage and Series A funding continued to dominate the mix in terms of the number of deals closed so far this year, in line with the trend in the past three-four years. This would manifest itself in some interesting models scaling up and coming into the radar among emerging sectors,” Ganediwalla said.
The total number of funding deals struck in the MEA region till mid-August this year reached 220, as against 310 investment deals closed in the whole of 2020, the report said.
Of this, early stage and Series A fundraising by ventures together accounted for the lion’s share – 83 percent of the deals, with the former bagging 65 percent of the investment deals.
Sandeep Ganediwalla, Dubai-based managing partner of RedSeer Consulting.
RedSeer said the average deal value also witnessewd strong jumps across stages this year, indicating more sizable funding inflow which will enable robust growth over the medium term.
“The average deal value compared across the past two years brings out an interesting trend. The average ticket sizes have increased significantly across all stages of investments. This is reflective of the increased confidence investors have in upcoming players and would augur well to provide a stronger growth runway for these platforms,” the report said.
The average funding in Series B posted the highest jump of 157 percent this year to $46.3 million, followed by a 75 percent increase in average early stage funding to $1.4m and 39 percent hike in Series A average funding to $12.1m, the report said.
The average debt funding of ventures in the MEA region also saw a big jump of 148 percent to $32.3m through to mid-August 2021, according to the report.
The market research revealed the interesting trend of a shrinking timeline between fundraising rounds of ventures in the MEA region, indicating that players are scaling up fast with strong and timely investor backing.
The market research revealed the interesting trend of a shrinking timeline between fundraising rounds of ventures in the MEA region.
“The average time between subsequent rounds has been decreasing consistently over the years, falling below the one-year mark in 2021, as compared to 24 to 29 months in 2019,” the report said.
“Investors were also reinvesting in companies which faced a headwind due to the pandemic to ensure the firms have a good enough runway to come out stronger,” RedSeer said.
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