Middle East and Africa Venture Capital Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

Middle East and Africa Venture Capital Market is segmented by Type (Local Investors, and International Investors), by Industry (Real Estate, Financial Services, Food & Beverage, Healthcare, Transport and Logistics, IT & ITeS, Education, and Others) and by Country (United Arab Emirates, Saudi Arabia, Egypt, and Rest of Middle East and Africa).

Market Snapshot

Market Summary
Study Period: 2017-2026
Base Year: 2021
CAGR: 15 %

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Market Overview

Middle East and Africa Venture Capital market is estimated to record a CAGR of approximately 15% during the forecast period.

COVID-19 accelerated the region's digital transformation, particularly in businesses where demand was high, such as e-commerce, Edtech, and healthcare. These sectors received greater demand because of global lifestyle changes, and significant capital inflows into these sectors drew investors' attention.

With ongoing development and high investor confidence, Middle East and Africa based start-ups saw a record investment of just over USD 1 billion in 2020, a 13% increase year over year. This was largely due to huge investments in start-ups such as EMPG (USD 150 million), Kitopi (USD 60 million), and Vezeeta (USD 40 million) in the first half of the year. Historically, the UAE, Egypt, and the Kingdom of Saudi Arabia were the most established innovation centres in the Middle East and Africa, accounting for 65 percent of agreements in 2020. Other nations accounted for 25% of all investors in Middle East and Africa based startups in 2020, demonstrating a strong foreign interest for the region's startups.

The venture capital investment ecosystem in the region continues to thrive and innovation remains a top priority for regional governments, ensuring that start-ups are well nurtured. The initiatives range from governments providing start-ups and SMEs with technological resources to get up and running, to government-backed venture capital funds ready to invest. As startups continue to mature and reach scale they have become more interesting for international investors who have shown continued interest in the region. Success stories like Souq, Careem, and Instashop have highlighted the exit opportunities and increased opportunities in the region.

The Middle East and African startup scene is similarly capturing attention; not only due to the number of quality entrepreneurs, but also the significant acquisitions of regional E-Commerce leader souq.com by Amazon (for almost USD 600 million) and the rideshare platform Careem by Uber for over USD 3 billion. Countries in the Gulf have leaned forward in regulatory environments to welcome innovative talent and streamline the rule of law to support FinTech and more. The Kingdom of Saudi Arabia’s Vision 2030 strategic policy positions start-ups and SMEs as a key factor in the kingdom’s ongoing economic prosperity. The International Finance Corporation (IFC), a member of the World Bank Group, announced it was partnering with the Egyptian FinTech Association on the IFC’S Fintech Acceleration Programme to support innovation and entrepreneurship in the country.

Scope of the Report

The report on the Middle East and Africa Venture Capital market provides a comprehensive evaluation of the market with market segmentation, product categories, existing market trends, market dynamics shifts, and growth opportunities. The market is segmented by Type (Local Investors, and International Investors), by Industry (Real Estate, Financial Services, Food & Beverage, Healthcare, Transport and Logistics, IT & ITeS, Education, and Others) and by Country (United Arab Emirates, Saudi Arabia, Egypt, and Rest of Middle East and Africa).

By Type
Local Investors
International Investors
By Industry
Real Estate
Financial Services
Food & Beverage
Healthcare
Transport and Logistics
IT and ITeS
Education
Other Industries
By Country
United Arab Emirates
Saudi Arabia
Egypt
Rest of Middle East and Africa

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Key Market Trends

The United Arab Emirates Attracts Higher Investments in the region

Middle East attracted over USD1 billion of VC investments in 2020, of which UAE accounts for a lion’s share of 56%. 33 of the 50 highest funded startups in the Middle East region are in the UAE. The Venture capitals in UAE and the Middle East region have been active investors over the years. However, the trend of global VCs making big bets can be seen in the eye-popping investments into Pure Harvest and Kitopi at the top end, all the way to smaller bets in Eat, Mamopay, etc. by the likes of Wafra, Lumia, Global Founders Capital and 500 startups. International investors showing interest in the region, specifically the UAE, and realizing that there is incredible talent creating a lot of value both regionally and exporting it to other markets.

The UAE made the most investments in the region by nearly double its leading competitor (Turkey) and nearly four times its closest GCC counterpart (Saudi Arabia). The UAE’s focus on technology and innovation comes as no surprise to people familiar with the region, as cities such as Dubai and Abu Dhabi continue to pioneer free zones and technology forward cultures through economic incentives. The UAE leads the region in several investments made and several investors within the country.

The UAE’s vibrant startup ecosystem continues to attract investments and the trend will only pick up further as regional recovery sets the tone. The UAE Venture Report indicates as of Q1 2021, around 40 per cent of investors in UAE-based startups came from investors from outside of the Mena region according to Magnitt.

The Abu Dhabi Investment Office – the government hub in the Emirate of Abu Dhabi responsible for attracting foreign and domestic investment – announced in January 2020 that it has partnered with Microsoft to provide a range of initiatives to support start-ups with the tools and resources to scale their businesses. The program provides technology, cloud services and business support tools aimed at accelerating growth opportunities for start-ups.

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Favorable Demographics in the Region are Boosting the Venture Capital Market

There are enormous advantages demographically. Over 400 million people in the region, 31% are under the age of 15. Unlike other ecosystems like China that must navigate an ageing population, Middle East and Africa has an enormous youth “opportunity,” where half or more of the populations in most countries are under 35. Young people are connected, as smartphone penetration exceeds even 100% in parts of the Gulf and are enthralled by entrepreneurship and are beginning to see it as a viable path to economic prosperity. In a societal structure where most graduates expect a government job.

In addition to youth, women are often leading the charge. Women’s participation rate in startups is higher than most corporations in the region, and women’s entrepreneurship in the Middle East is higher than in many parts of the world. While it is still early days, the impact on job creation has been visible, with startups employing thousands of people regionally and, more importantly, making them shareholders in the business.

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Competitive Landscape

Around 40% of investors in UAE-based startups came from outside of the region. Some of the topmost active investors across the region are 500 startups, Falt6Labs Bahrain, Vision Ventures, Wamda Capital, Saudi Venture Capital (SVC), Algebra Ventures, Global ventures, Beyond Capital, Nuwa Capital, Phoenician Funds, and others.

Recent Developments

  • June 2021 - Gulf Islamic Investments, a majority shareholder in the successful e-commerce giant Mumzworld, is turning its attention to the Indian startup ecosystem, particularly in the healthcare, technology, and consumer sectors.
  • June 2021 - Hub71, Abu Dhabi’s global tech ecosystem, has joined forces with New York-born Modus Capital, venture capital and venture builder firm to launch Ventures Lab. The venture builder will enable early-stage founders from around the world to develop successful and scalable startups from Abu Dhabi. Ventures Lab at Hub71 is the first venture builder programme in the UAE launched by Modus.

Table of Contents

  1. 1. INTRODUCTION

    1. 1.1 Study Assumptions and Market Definition

    2. 1.2 Scope of the Study

  2. 2. RESEARCH METHODOLOGY

    1. 2.1 Study Deliverables

    2. 2.2 Study Assumptions

    3. 2.3 Analysis Methodology

    4. 2.4 Research Phases

  3. 3. EXECUTIVE SUMMARY

  4. 4. MARKET INSIGHTS AND DYNAMICS

    1. 4.1 Market Overview

    2. 4.2 Funding and Revenue Statistics in Venture Capital Space of Middle East and Africa

    3. 4.3 Market Drivers

    4. 4.4 Market Restraints

    5. 4.5 Value Chain/ Supply Chain Analysis

    6. 4.6 Porter's Five Forces Analysis

      1. 4.6.1 Threat of New Entrants

      2. 4.6.2 Bargaining Power of Buyers/ Consumers

      3. 4.6.3 Bargaining Power of Suppliers

      4. 4.6.4 Threat of Substitute Products

      5. 4.6.5 Intensity of Competitive Rivalry

    7. 4.7 Government Regulations and Industry Policies

    8. 4.8 Imapct of COVID-19 on the Market

  5. 5. MARKET SEGMENTATION

    1. 5.1 By Type

      1. 5.1.1 Local Investors

      2. 5.1.2 International Investors

    2. 5.2 By Industry

      1. 5.2.1 Real Estate

      2. 5.2.2 Financial Services

      3. 5.2.3 Food & Beverage

      4. 5.2.4 Healthcare

      5. 5.2.5 Transport and Logistics

      6. 5.2.6 IT and ITeS

      7. 5.2.7 Education

      8. 5.2.8 Other Industries

    3. 5.3 By Country

      1. 5.3.1 United Arab Emirates

      2. 5.3.2 Saudi Arabia

      3. 5.3.3 Egypt

      4. 5.3.4 Rest of Middle East and Africa

  6. 6. COMPETITIVE LANDSCAPE

    1. 6.1 Overview (Market Concentration and Major Players)

    2. 6.2 Company Profiles

      1. 6.2.1 500 Startups

      2. 6.2.2 Vision Ventures

      3. 6.2.3 Falt6Labs Bahrain

      4. 6.2.4 Wamda Capital

      5. 6.2.5 Saudi Venture Capital (SVC)

      6. 6.2.6 Algebra Ventures

      7. 6.2.7 Global ventures

      8. 6.2.8 Beyond Capital

      9. 6.2.9 Nuwa Capital

      10. 6.2.10 Phoenician Funds*

    3. *List Not Exhaustive
  7. 7. MARKET OPPORTUNITIES AND FUTURE TRENDS

  8. 8. DISCLAIMER

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Frequently Asked Questions

The Middle East and Africa Venture Capital Market market is studied from 2017 - 2026.

The Middle East and Africa Venture Capital Market is growing at a CAGR of 15% over the next 5 years.

500 Startups, Nuwa Capital, Vision Ventures, Falt6Labs Bahrain, Saudi Venture Capital are the major companies operating in Middle East and Africa Venture Capital Market.

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