Fintech startups attracted the majority of VC activity, with Saudi Arabia topping the list in terms of regional investment.
Startups in the Middle East and North Africa (MENA) region raised a total of USD 247 million in March 2023, marking a 67% decline from the previous month and a 17% fall year-on-year, according to reporting by Digital Digest and Wamda. Saudi Arabia emerged as the leading destination for startup investment, accounting for more than half of the total deal value in the region.
Startups – Funding down in March, up in Q1 2023
Despite a 17% increase in funding raised by startups in Q1 2023 compared to the previous quarter, the total funding raised in March witnessed a significant decline from the previous month. Funding raised by startups in the earliest stages accounted for the majority of transactions, while later stages of funding saw a lull in activity. The difficulty in raising capital has led investors to slow the pace of funding.
Saudi Arabia tops destination for investment
Saudi Arabia attracted the most investment in March 2023, accounting for more than half of the total deal value in the region with USD 175 million across 20 deals. This rise was largely attributed to the USD 150 million raised by buy now pay later (BNPL) startup Tamara in a debt financing round from Goldman Sachs, which alone represented 64% of the total funding value recorded last month. UAE came in second with USD 59 million raised across 18 deals. Debt financing across Africa doubled in 2022 compared to the previous year due to the difficulty in raising funds.
Notable deals from March include Qlub‘s USD 25 million Seed round and COFE‘s USD 15 million round led by Wa’ed Ventures as well as Almentor‘s USD 10 million pre-Series C round.
Bahrain, Kuwait and Morocco ranked third, fourth and fifth respectively.
Fintech dominates VC activity
Fintech was the most preferred sector for investors, attracting 73% of VC activity in March. Foodtech and edtech came in second and third with USD 19 million and USD 14 million respectively, together accounting for 86% of the capital raised. The remaining investments were allocated to startups in proptech, contech, e-commerce, Web3, traveltech, agritech, and logistics, among others. Fintech’s dominance is an ongoing trend.
Male-led startups attracted the most capital
Male-led startups continued to attract the most capital, accounting for 98.8% of the total amount raised, while female founders and gender-mixed teams took the remaining 1.2%.
Amazon Web Services recently launched a pitch competition, the Femintech Innovation Challenge, aimed at African female founders to spur investment in female-founded companies.
Overall, while the funding raised by startups in the MENA region saw a decline in March 2023, the increase in funding in Q1 2023 indicates the potential for growth and investment opportunities in the region.