The inaugural edition of the MAGNiTT Emerging Venture Markets Report has highlighted the rush towards the emerging venture markets of the Middle East, Africa, Pakistan and Turkey by growth-hungry venture capitalists.
“2021 has in fact been more than just a record-breaking year for VCs, rather it has been a defining year,” comments Philip Bahoshy, CEO and Founder of MAGNiTT. “While the global pandemic posed great pressures on governments, private sectors, and startup ecosystems alike; the year 2021 marked the resurgence of VC activity tenfold.”
The report reveals unprecedented regional and global investor participation across markets and a new record of funding crossing $6billion in Emerging Venture Markets, as well as the fact that fintech is the leading industry amidst an exceptional growth of T&L and E-commerce.
The five EVMs 2021 key trends are:
- A record-high funding volume of $6.8billion was raised across 1,329 deals, marking a growth of 228 per cent in funding and 267 per cent in deals when compared to 2020.
- Record year for mega-deals with a total of 12 ($100million+) closed, more than all mega-deals combined between 2016 and 2020. These deals accounted for 42 per cent of all capital raised across Emerging Venture Markets in 2021.
- Turkey and UAE together accounted for 44 per cent of total venture capital invested. Investments in Turkey were driven by mega-deals closed by Getir and Dream Games, amounting to $1.1billion, while MENA saw one mega-deal each closed by a UAE, Egyptian and Saudi startup.
- Fintech was the leading industry across all EVMs and the industry of choice for VC investments, indicating increased innovation and digitalisation of the financial services sector. These represent 21 per cent of all deals closed and 31 per cent of total funding raised. The five mega-deals in Africa, for example, were all fintech deals. It was the only industry with 100+ deals in MENA.
Exits across EVMs doubled between 2020 and 2021, indicating more liquidity events in the region, with 87 startups announcing exits in 2021, vs 41 startups in 2020.
“2021 has been an extraordinary year for the region’s venture capital industry. Between fundraising and deal-making, MENA’s ecosystem was in hyperdrive this year,” Basil Moftah, General Partner, Global Ventures commented. “Whether it is record-breaking amounts of funding, growing appetites for later-stage transactions, the rising occurrence of diversified deal types (from M&A to venture debt) or the increasing number of mega-rounds, the region is signalling maturity. Underpinning these quantitative metrics is a pool of increasingly sophisticated entrepreneurs building world-class tech solutions and proving, year in and year out, that some of the most exciting opportunities of tomorrow will originate from emerging markets.”
Bahoshy added: “It has become clearer than ever that the true potential for startups in Emerging Venture Markets lies in the cross-pollination across geographies. This scaling resulted in the creation of regional players which we’ve seen emerge organically through expansion or inorganically through cross-market acquisition. Success stories that highlight the latter include Nigerian HealthTech Helium Health acquiring Qatari Meddy, UAE-based Trukker acquiring Pakistan-based Trucksher, or UAE-based Fenix acquiring its Turkish counterpart Palm.
“Scale is the name of the game, and no doubt a big prediction for 2022 will be more companies in different areas expanding across geographical borders. In light of that, what we’re most excited about at MAGNiTT is ensuring the information transparency needed to break these silos and detail the landscapes of what were previously opaque markets,” he concluded.