The Middle East and North Africa (MENA) region venture funding is expected to see a surge in the fourth quarter of 2024, despite the headwinds impacting investment deals globally, industry insiders revealed.
Works on some mega venture capital (VC) investment deals are currently underway in the region, and their announcements are likely in the October-December 2023 quarter.
“We expect to see Q4 [2023] to be a strong quarter,” Philip Bahoshy, CEO of the leading venture capital data platform of MEAPT, told Arabian Business.
“We also expect to see some real pick up in funding activities – [read mega investment deals] – in Q4,” he added.
Senior executives at some of the Dubai-based startups also echoed the MAGNiTT chief executive’s optimism about the pickup in venture financing in the region in the forthcoming quarter of the year.
They, however, remained tight-lipped on their plans for capital raising in the coming months.
2023 overall funding to remain subdued
Bahoshy said despite the expected spike in fund raising activities in the last quarter, the overall funding levels in 2023 could see a decline from the funding levels of last year.
“Through our data and analysis, we created six outcomes ranging from the best-case scenarios and worst-case scenarios for the funding levels in the region [this year]. Each of these scenarios depicts a decline from the funding levels of last year,” said the top honcho of the VC data platform, whose report is considered the most credible one for the region.
Bahoshy said according to their platform’s predictions, the H2 2023 funding could range from $0.7 billion to $1.1 billion in terms of non-MEGA funding in MENA.
This would mean that the drought in venture financing in MENA could have worsened in the current quarter, though no data on this was available immediately.
H1 saw 41% plunge in investment deals
The region’s startup ecosystem registered a whopping 41 percent plunge in venture financing deals in the first half of 2023 to $1.1 billion, MAGNiTT’s report on first half venture financing showed.
Though that was better than the 52 percent fall in funding globally in the first half of this year, the improved statistics were thanks to the three mega-deals – over $100 million funding deals by Halan, Floward and Nana, the report said.
The report also showed a 49 percent decline in the number of investment deals in the January-June period of 2023 in the region to 193, which is nearly twice the 25 percent fall in the number of funding deals internationally.
The first six-month period of this year also saw a contraction in average funding deal size in MENA by 13 percent from the same year-ago period.
The drought in fresh capital deals impacted the top five startup sectors by deals such as fintech, e-commerce and retail, transport and logistics, enterprise software, and food and beverage the most, with an average decline of 50 percent in H1 ’23, compared to the same year-ago period, the report said.
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