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Funding Plummets by 64% for MEAPT Startups
Startups in the Middle East, Africa, Turkey, and Pakistan (MEAPT) region experienced a sharp decline in funding during the first half of 2023, according to a comprehensive report by MAGNiTT, a leading specialist in venture investment and entrepreneurship research. The report revealed a significant 64% drop in funds raised compared to the same period last year, indicating challenging economic conditions for startups in the region.
$1.8 Billion Raised Amidst a Challenging Landscape
In the first half of 2023, MEAPT startups managed to raise a total of $1.8 billion, marking a considerable decline of 64% in comparison to the funding raised during the corresponding period in the previous year. Moreover, the number of deals closed also saw a substantial decrease of 40% compared to 2022, with a total of 530 deals recorded.
Second Quarter of 2023 Witnesses Lowest Funding Levels
Quarterly data analysis from the report highlighted that the second quarter of 2023 witnessed the lowest level of funding since the fourth quarter of 2020. Additionally, the number of deals reverted to levels last seen in 2018, indicating a challenging environment for startups seeking investments.
MENA Region Dominates Funding Landscape
The Middle East and North Africa (MENA) region dominated the funding landscape, accounting for nearly 60% of the total funding in the MEAPT region. Notably, African startups secured 51% of the total funding, showcasing the region’s growing potential as an emerging market for startups.
Impact of Global Economic Slowdown on MENA Region
The report also shed light on the impact of the global economic slowdown on venture capital activity in the MENA region. Large markets within the region experienced a significant 58% Year-over-Year (YoY) decrease in the number of deals. Despite the decline, funding managed to surpass $1 billion, with a substantial portion coming from major funding rounds by startups in Saudi Arabia and Egypt.
Contrasting Fortunes for Sectors
The report indicated that specific sectors faced contrasting fortunes. Financial technology companies experienced a 30% decline in financing deals, raising $418 million in 1H 2023 compared to $595.7 million in the same period the previous year. Conversely, the e-commerce sector witnessed an 80% surge in funding, reaching $398.2 million in the first half of 2023, up from $221.5 million in the previous year. Investors in the MENA region showed growing interest in smaller investments, with financing tranches ranging between $1 million to $5 million becoming increasingly favored.