VC Investments in MENA Experience Significant Decline, Yet Signs of Recovery Emerge
Venture capital (VC) investments in emerging markets like the Middle East and North Africa (MENA) have seen a dramatic drop, decreasing by over 40% compared to 2023. This decline aligns with a global trend of reduced VC funding over the past two years, particularly impacting non-AI companies. The latest report reveals that these markets collectively raised $9.1 billion in 2024, marking a substantial 41% year-on-year (YoY) decrease. Additionally, deal activity saw a 20% YoY reduction, with the number of deals dropping to 1,527.
- Interest rates are declining globally, potentially signaling economic recovery.
- Early-stage investing displayed resilience amid overall funding challenges.
“We anticipate rate cuts to begin boosting capital availability within the next 6-9 months,” commented Philip Bahoshy, CEO at MAGNiTT, suggesting a stronger funding environment ahead in 2025.
{MAGNiTT’s 2024 Venture Investment Report}
The report from MENA-based research group MAGNiTT analyzes VC investments across Aggregate Emerging Venture Markets (EVMs), including the Middle East, Africa, Southeast Asia, Türkiye, and Pakistan. Within MENA, startups secured $1.9 billion in 2024—a 29% annual decline. However, when compared to Southeast Asia’s 45% and Africa’s 44% declines, MENA’s decrease appears relatively modest. Encouragingly, funding levels in 2024 remained higher than those of 2020, indicating ongoing regional growth in the venture space.
- MENA saw a 7% YoY increase in deal count (571 deals).
- The number of investors rose by 18% to a total of 475.
- 47% of all investments were within the $1-5M range, highlighting a move towards early-stage ventures.
Despite these positives, MENA experienced a notable decline in late-stage deal activity. Across MENA, Africa, Southeast Asia, Türkiye, and Pakistan, the FinTech sector continues to thrive robustly. It secured $3.9 billion in funding in 2024—demonstrating FinTech’s success in emerging markets where traditional financial services are less developed. This trend presents lucrative opportunities for mergers and acquisitions across geographies within the region.
While international investors focused more on late-stage deals—such as Insider’s $500M round and Tyme’s $250M Series D—comprising 53% of the investors backing regional startups, local investors showed a preference for early-stage investments. Globally, exits have decreased by 32% YoY to just 94 in 2024 as late-stage capital becomes scarcer due to closed public markets.
“Overall, 2024 was probably the bottom of the curve in terms of the funding downturn,” Bahoshy adds. Despite this downturn, countries like UAE, Saudi Arabia, and Qatar experienced increased deal activity year on year.
{Philip Bahoshy}
The total number of investors has significantly risen in MENA—a sign that investor confidence may be growing, particularly among international players who see potential in the region’s burgeoning startups.
