An Unexpected Surge in Startup Investment in the Middle East in July 2024

Pioneer Investors – In July 2024, the startup sector in the Middle East and North Africa (MENA) region saw a strong resurgence in investment. A total of 38 startups successfully raised $355 million in funding, marking a 206% increase compared to the previous month and a 260% rise compared to the same period last year.

Despite global economic challenges and regional geopolitical tensions, such as the mounting tensions between Israel and Iran, technology startups in the region demonstrated remarkable resilience. Optimism is on the rise with the upcoming decision by the U.S. Federal Reserve to cut interest rates in September, a move expected to boost liquidity and investment flows into global markets.

In terms of financing, the proportion of debt funding remained below 1% of the total funds raised over the past month, indicating a clear recovery in investment within the MENA technology ecosystem after a notable decline at the beginning of the year.

Egyptian Startups Lead the Way

Egyptian startups secured the highest amount of funding in July, raising $185 million across 7 deals, including a major $157.5 million deal by “MNT-Halan.” This represents a significant increase compared to the previous month, which saw $15 million raised through 4 deals. The UAE came in second, with 12 startups raising a total of $96 million.

Despite a relative drop, Oman secured the third spot thanks to a significant funding round of $37 million by “44.01.” Meanwhile, Saudi Arabia fell to fourth place as investment in its startups decreased to $31 million across 7 deals.

Fintech Sector Attracts Investors

The fintech sector continues to be highly attractive, drawing in $181 million in funding for 16 startups. The Web 3 technology sector followed in second place, with two startups raising $85 million. The deep tech and clean tech sectors also saw a significant leap, thanks to major deals involving “Intellimatics” and “44.01.” The e-commerce sector maintained its presence, with six startups securing $15.7 million in funding.

Investments in July were primarily focused on early-stage startups, with a substantial portion going to seed-stage companies, where eight startups raised $96 million. Additionally, eight Series A funding rounds were closed, amounting to $91.7 million, while five pre-seed companies secured a modest $1.8 million in funding.

In terms of business models, the business-to-business (B2B) model continued to dominate, with 27 companies utilizing this model raising $345 million. In contrast, nine companies following the business-to-consumer (B2C) model raised a total of $8 million.

Challenges Persist for Women-Led Startups

Despite progress in various areas, funding for women-led startups remains limited, totaling only $270,000 for two companies. In contrast, four startups founded by both men and women secured $20.5 million in funding, while male-founded startups captured the majority of the remaining funding.

Mergers and Acquisitions in July

July witnessed a flurry of mergers and acquisitions, particularly in the UAE. Notable deals included the acquisition of “BitOasis” by “CoinDCX,” India’s largest cryptocurrency exchange, the acquisition of “Power League Gaming” by “Müller & Phipps Middle East,” and the acquisition of “Lablab AI” by the Arabic content company “Majarra.”