Recent data from the platform Digital Digest reveals that the Middle East and North Africa (MENA) region saw a substantial inflow of venture capital, with startups receiving a total of $2.25 billion over 414 deals in 2023. This represents a significant spike in entrepreneurial activity and investor confidence within the region.
The investment momentum was particularly strong in the fourth quarter of the year, where startups secured $1.06 billion, marking the highest level for the year. In contrast, the third quarter investments were $184.45 million, followed by $181.14 million in the second quarter, and $826.78 million in the first quarter.
Saudi Arabia-based companies captured a lion’s share of 56.8% of the startup investments in the Arab region for 2023, amassing $1.28 billion across 118 deals, which equates to 28.5% of the total deals. The United Arab Emirates’ startups also had a significant share, with 25.3% of the funding, totaling $569 million through 156 deals, or 37.7% of the year’s transactions.
Egyptian companies followed, clinching 14.6% of the funding value and accounting for 14.5% of the deal count.
The distribution of investments throughout the year varied, with 130 deals in Q1, 79 deals in Q2, 76 deals in Q3, and 129 investments in Q4.
In December alone, startups in the Arab region benefited from $457.7 million in funding, with Saudi companies dominating the investment landscape with 95.5%. During this month, 50 startups received funding, with 60% of these in Saudi Arabia, 30% in the UAE, and 10% in Egypt.
Furthermore, startups in the Arab region had previously raised $379 million in November, compared to $147.4 million in October, showing a significant monthly increase of 157.1% in investment value.
In 2022, the UAE, Saudi Arabia, and Egypt maintained their positions as the top three countries for venture capital investment in the MENA region. The Saudi venture capital ecosystem experienced unprecedented growth in 2022, with investments reaching a record $987 million, a 72% increase from the previous year.
The report by MAGNiTT highlighted that despite the record-setting year of 2021, the following year saw even more substantial growth. Saudi Arabia recorded the highest growth rate for venture investments in 2022 among MENA countries, securing 31% of the total capital invested in the region, up from 21% in 2021. The kingdom also saw a record participation of 104 investors, a 30% increase from the previous year, and doubled the number of startup exit deals with 10 successful exits in 2022.
