Data published in the H1 2023 MENA Venture Investment Summary from MAGNiTT suggests the total volume and number of deals declined across the Middle East, Africa, Pakistan and Turkey (MEAPT) region compared to the same period last year.

Some $1.88trn across 530 deals represented a 64% decline in funding and 40% decline in the number of deals.

The second quarter of 2023 was the lowest funded quarter since Q4 2020, and the lowest number of deals since 2018.

"The majority of the funding for EVM geographies was accounted for by the MENA region which captured almost 60% of the total funding. Africa-based startups, on the other hand, contributed with a share of 51% of MEAPT's total funding," the MAGNiTT summary noted.

"The slower pace of the economy and the retreat in VC activity globally were reflected in the MENA region too. The top geographies of MENA recorded significant declines in deal flow activity of as high as 58% on a year-on-year basis. While funding was able to move past the $1Bn mark, almost half of it came from the MEGA rounds recorded by Saudi Arabia and Egypt. The latter, especially, went through a sharp decline in economic growth owing to the severe currency depreciation and soaring food prices brought on by the Russia-Ukraine conflict. If we remove the impact of Halan's $260M round, Egypt has seen a decline of over 80% in funding and over 70% when it comes to deals compared to H1 of last year." 

"Most of the sectors in MENA have seen their deal flow decline by almost 50% on a year-on-year basis. At a time like this, when the market is volatile, investors have maintained their focus on smaller-sized or early-stage investments. In the MENA region, the interest has been growing in the $1M-$5M bracket size, and investors continue to back deals at this stage, especially in startups with a track record of product market fit."

"Speaking of investors, the overall number has declined by almost half compared to H1 last year. However, the share of international investors has receded to 33% in H1 despite the attention that the MENA VC ecosystem has been receiving from international media. In line with the overall slowdown trend, exit activity has also been slower in the first half of the year with the total number of M&A transactions decreasing by almost 30% this year. We predicted exit activity to be at record levels in 2023 owing to depreciating valuation, however, data from H1 did not reflect that."

Philip Bahoshy, founder and CEO of MAGNiTT will be hosting a webinar at 11am London Time on 20 July to discuss the findings of the first half 2023 data in more depth. Registration for the webinar can be found here:

https://us02web.zoom.us/webinar/register/2616885577022/WN_Rl-h0edVReehgU5tBSpmGA#/registration