Supervisor Elham AbolFateh
Editor in Chief Mohamed Wadie

Egypt Ranks 2nd in MENA Venture Investment Funding


Thu 14 Jan 2021 | 01:24 AM
Taarek Refaat

Despite the COVID-19 impact, Egypt ranked second in venture capital investments in the Middle East and North Africa (MENA) during H1 of 2020, according to a report issued by MAGNiTT.

The report indicated that Egypt witnessed a 31% year-on-year increase in capital inflows during 2020, which contributed to an increase in its share of total flows in the region by two percentage points to reach 17%.

The increase was driven by investments in the first half of the year, as investments slowed by 58% during the second half due to the economic impact of the corona pandemic.

Meantime, COVID-19 has severely impacted startups and investors in the region, The world has changed, and MENA’s entrepreneurship is seeing new opportunities and challenges.

The pandemic has been hard in the face of many founders in MENA, where 72% of founders reported a monthly revenue drop of 25% or more, according to MAGNiTT & INSEAD report -

The report added that the pandemic has serious implications for their fundraising plans, as well as decisions to layoffs.

Egypt accounted for about 24% of venture capital deals in the region, directly behind the Emirates, which accounted for 26%, while Saudi Arabia came in third place with 18%.

Funding for the food and beverage industry tripled to reach $ 122 million, and likewise, healthcare financing tripled to $72 million, while e-commerce financing rose by 24% to $ 162 million.

Startups in the Middle East and North Africa attracted a record number of more than $1 billion in 2020, although capital was distributed through fewer deals essentially concluded in the first half.

The report pointed out that the UAE, Egypt and Saudi Arabia each accounted for about 68% of the total deals during 2020.

The Kingdom came in third place with a 15% share of venture capital investments in the regional market, up from 11% in 2019.

COVID-19 has been a rapid accelerant of digital transformation in the region, especially tech-based businesses, which have been ‘positively’ impacted by the pandemic.

The most clear example is the UAE, which has the highest concentration of startups across MENA. The UAE continued to receive the lion’s share of total funding in H1 2020, accounting to 59%.

In contrast, the more nascent ecosystems of Egypt and Saudi Arabia both saw over a 100% increase in funding year-on-year.

Egypt maintained its first rank by number of deals, accounting for 25% of all transactions in MENA in H1 2020. Saudi Arabia saw the largest percentage increase in total funding. The continued growth of these two, despite the crisis, considerably contributed to a strong start to 2020.

A research revealed that the capital available to deploy in startup investments in 2020 across MENA remains at a respectable level of $560 million.

The UAE maintained the largest share of total funding as a result of several later-stage investments. Egypt continued to rank first by number of deals, maintaining its position obtained in 2019, while, Saudi Arabia saw the largest percentage increase of 101% in their total funding year-on-year, and Lebanon dropped out of the top 5 ranking for the first time with a 78% decrease in number of deals compared to H1 2019.

Finally, Egypt and Saudi Arabia were the only 2 MENA countries to see an increase in their share of total funding, while Jordan saw the largest decline in share of total funding from H1 2019 to H1 2020.