VC investment in emerging markets such as the Middle East and North Africa (MENA) plummeted by over 40% compared to 2023, according to a new report. The data reflects the broader global trend of declining VC funding over the past two years, especially for non-AI companies.
Total purchases surveyed were $9.1 billion in 2024, down 41% year over year. Additionally, there was a 20% drop in trading activity, with the number of deals falling to 1,527.
However, there may be signs of recovery soon as interest rates decline globally, resulting in lower inflation.
Trends are described in Business Enterprise Investment Report 2024 by the MAGNiTT research group based in MENA. The report looked at VC investments in the Middle East, Africa, Southeast Asia, Turkey and Pakistan.
In the MENA region, startups raised $1.9 billion in 2024, a 29% year-over-year decline. However, this was a small drop compared to that seen in Southeast Asia (45%) and Africa (44%).
Additionally, funding levels in 2024 were still higher than they were in 2020, meaning venture interest in the region continues to grow — provided you factor in the uptick in the boom years of 2021 and 2022 .
There was a 7% increase in the number of transactions (571) and the number of investors increased by 18% (to 475) compared to a year earlier.
And 47% of all investments were in the $1 to $5 million range, signaling a shift to early-stage investing. However, MENA saw a significant drop in late-stage deals.
Across MENA, Africa, Southeast Asia, Turkey and Pakistan, fintech continues to perform strongly, raising $3.9 billion in funding in 2024, reflecting that the industry is doing well in emerging markets, where the most developed financial services are impossible. the ground.
The report noted that this presents an opportunity for M&A activities in various geographies of the region.
There was a predictable split, with international investors focusing more on late-stage deals like Insider’s $500 million round and Tyme’s $250 million Series D. These investors made up 53% of the 475 investors who backed startups in the region. Meanwhile, local investors tended to stick to early-stage deals.
All this against the backdrop of a 32% decline in global spending to just 94 in 2024 compared with a year earlier, and late-stage capital becoming harder to come by as public markets remained closed.
Philip Bahoshy, CEO of MAGNiTT, commented in a statement: “We anticipate that interest rate cuts will begin to boost the availability of funds over the next 6-9 months, paving the way for a stronger funding environment in 2025.” He said that overall, 2024 was “probably the bottom of the curve” in terms of funding downturns.
It added that the UAE, Saudi Arabia and Qatar saw “increased deal activity year-on-year” despite a slowdown in overall capital growth. The overall number of investors also increased significantly in the MENA region, indicating that investors, especially international ones, may have increased confidence in the region’s startups.
