Venture capital investment in MENA startups holds strong as Fintech dominates, with Saudi Arabia and the UAE leading the region

MENA startups have raised an impressive $1.3 billion in 2024 across 352 deals, demonstrating the region’s resilience amid a global downturn in venture capital. This performance marks only a 6% decline in deal numbers compared to the same period last year, showcasing the continued appetite for innovation and investment in the region.

According to data released by MAGNiTT, a leading venture capital data platform, MENA’s startup ecosystem has outperformed other emerging venture markets (EVMs) such as Southeast Asia and Africa, both of which experienced sharper declines in both deal count and investment. Southeast Asia, for example, saw a dramatic fall in large deals, while Africa’s venture funding dropped by 38%.

Fintech continues to dominate MENA’s startup space, drawing $480 million in investment across 72 deals. This sector’s ability to innovate, especially in regions where financial inclusion remains a challenge, has kept it attractive to investors. Startups focusing on mobile payments, digital banking, and online financial services have led the charge, helping to push the region forward.

Philip Bahoshy, CEO of MAGNiTT, noted a growing interest from international investors in early-stage MENA ventures. “We’ve seen a 34% increase in investors year-on-year,” he explained. “What’s more notable is the 69% jump in international investors.” This rising global interest reflects MENA’s growing appeal as a startup hub, with foreign capital increasingly flowing into the region’s ecosystems.

Bahoshy also expects a strong fourth quarter, historically a key period for investments. Major industry events, including the Future Investment Initiative Forum and Expand North Star, are anticipated to inject further momentum into the startup scene. “The last quarter tends to be busy, and this year should be no different,” he added.

Saudi Arabia and UAE Lead Regional Performance

Within the MENA region, Saudi Arabia has emerged as the leader in funding, securing $509 million for its startups in 2024. This figure represents an 8% decline compared to last year, reflecting global trends, but the number of deals in the Kingdom increased by 7%. Early-stage investments have been particularly buoyant, with a 46% surge in seed deals. Notable Saudi startups, such as Moyasar and SiFi, have been at the forefront of this growth, securing early rounds of funding and paving the way for further expansion.

The UAE followed closely behind, capturing 38% of the region’s deals. Despite a year-on-year decline of 18% in total funding—down to $380 million—the Emirates saw a 12% increase in deal numbers. This increase has been driven by a significant 40% rise in seed and pre-series A deals, suggesting that investor confidence in early-stage ventures remains strong. The UAE’s dynamic ecosystem, supported by government initiatives and a strong network of incubators and accelerators, has been a crucial factor in maintaining its standing as a key destination for startup activity.

Egypt’s Rising Role

Egypt also continued to shine as an emerging player in the MENA startup ecosystem. The country experienced a 45% increase in seed and series A deals, although pre-seed activity dropped by 17%, indicating a shift toward more mature ventures. While Egypt’s overall funding levels were affected by global challenges, the country’s young and tech-savvy population positions it well for long-term growth, particularly in sectors like health tech, fintech, and e-commerce.

A Global Perspective on Venture Capital Trends

The broader global context has been more challenging for emerging venture markets. Overall, EVMs raised $4.9 billion during the first nine months of 2024—a 45% drop compared to the previous year. Southeast Asia, once a key driver of global venture capital activity, suffered the steepest decline, with funding down by 54% due to the lack of large deals exceeding $100 million.

Africa, too, saw a marked slowdown, with a 38% drop in funding to $839 million, alongside a 42% decline in deal volumes. The sharp contraction in accelerator investments, which plummeted by 81%, hit Africa particularly hard. However, fintech remained the leading sector across all EVMs, and in Africa alone, fintech attracted $557 million in funding, demonstrating its global strength.