MAGNiTT, the data platform providing research and insights across emerging venture markets that encompass the Middle East, North Africa, Pakistan and Turkey, has announced the launch of its extensive suite of H1’21 reports, which take a deep dive into the Fintech, eCommerce, Food and Beverage, Delivery and Transport, and Healthcare sectors.
Philip Bahoshy, Founder & CEO of MAGNiTT said, “Our aim with these reports is to break down barriers between emerging markets that have traditionally operated in silos – we’ve recently expanded our remit into Turkey and Pakistan, with the view of expanding into Africa by the end of 2021. The idea is to give investors across the globe visibility into opaque, comparable markets, in order to stimulate greater deal flow across the board. An increasing number of venture capital funds, consultants and government entities are seeking more granular data when it comes to individual sectors within these fast-growing markets, which encouraged us to take a deeper look into each ecosystem’s venture space.”
A record half-year for VC investment into all emerging venture markets
The overall findings of the MAGNiTT reports showed record levels of Venture Capital (VC) investment into the Middle East and North Africa (MENA) region, as well as Pakistan and Turkey, with $3.47billion deployed into these emerging markets in the first half of 2021.
Startups in the MENA region attracted more than $1.2 billion in funding, a 64% YoY growth and a 12% increase from $1billion raised in all of 2020. Meanwhile, Turkey and Pakistan both saw their most active six months in funding to date, with 124 deals closed amounting to $1.4billion, and 27 deals valued at a total of $87million, respectively.
Investing gap between top three MENA begins to close
Within MENA, the UAE secured the largest share of transactions in H1’21, accounting for 26% of total deals in the region, valued at $755million. Egypt was a close second with 24% of the share and $166million in investment, followed by Saudi Arabia which stood at 21% and $168million in investment. The difference between the UAE and third ranked Saudi Arabia went from 41 deals in 2020, as a whole, to just 11 deals in the first half of 2021, closing the gap between the top three markets.
Interest from international investors also appeared to grow in the region, with MENA capturing the attention of a larger number of global VCs. 31% of MENA-based transactions were made by investors based outside of the region in H1’21, a 4% increase from FY 2020. This was primarily driven by a maturing ecosystem, which has led to a significantly larger number of VC firms setting up regional offices and deploying capital into MENA startups.
Commenting on the shift in MENA investments, Bahoshy said: “While the overall investment figures have risen, we saw a dip in the number of deals secured by early-stage startups. This is due, in part, to the inactivity caused by covid-19 restrictions in regional accelerator programmes that proved to be essential in facilitating ecosystem growth and interaction. Without the same level of support from incubators and accelerators over the last year, early-stage startups haven’t been able to gain enough exposure to potential investors, and the majority of capital is now being raised by growth-stage startups.”
Fintech takes lion’s share of emerging markets investment deals
In terms of industry deal activity, Fintech led the way with $222million invested into the sector in H1 2021 across MENA, Pakistan and Turkey. Both Turkey and Pakistan saw greater investment in Fintech in the first half of 2021 than in 2020 as a whole. The growth of Fintech in Pakistan has been particularly notable, with no deals closed in the first half of 2020, to seven deals valued at $32million secured in the first six months of 2021.
The first half of the 2021 also marked the highest amount of Fintech funding raised within a period of six months in the MENA region. The UAE and Saudi Arabia accounted for 60% of total MENA funding into Fintech during this time.
Bahoshy continued, “Fintech was the hero sector in the overall emerging markets, demonstrating the most investment activity to date within the first half of the year. Investor appetite has shifted towards bigger opportunities in the Financial Services space, which put Fintech ahead of other industries, such as Food and Beverage, E-Commerce and Delivery and Logistics that thrived in previous years. However, while the sector was poised to take the lead within MENA, Kitopi’s mega deal of $415million within the Food and Beverage sector pushed Fintech into second place.”