After a gloomy Q1, will the VC ecosystem see the light in Q2?

?? Venture Capital was riding high in 2021 with cash flowing into startups and valuations scaling upwards. Then came 2022. Soaring inflation and surging interest rates brought the market crashing down. By the end of Q4, the?deal flow had receded by 17% compared to Q1 in the MEAPT?region, startup valuations dipped,?tech IPO stocks plummeted, and the ecosystem braced itself for the VC winter.

?? Now that we’re through with the first quarter of the year, is the tech market back on track??

?? Well, the numbers have their own story to tell. According to Crunchbase, global funding saw a 53% decline year-on-year, from $162Bn in Q1’22 to $76Bn in Q1’23. In the Emerging Venture Markets,?the total number of deals retreated by 40% and funding declined by almost 70%.?

?The overall picture for venture capital looks bleak, the Fed raised interest rates again at the end of last month and some regional banks followed suit. There are reports of an abundance of “dry powder”, as per Pitchbook, global dry powder currently stands at over $550Bn. But, 2023 might just be about surviving, not thriving. With valuation corrections, we are likely to see more down rounds and with increasing interest rates, investors are going to continue to practice caution in deploying funds. Any signs of recovery in venture capital would only be seen towards the end of this year or the start of the next.?

?? This Week's Insights and Charts:

?? The Q1 2023 MEAPT Venture Investment Summary examines the impact of the ongoing global macroeconomic uncertainties on the performance of the Venture Capital market in the MEAPT region.

?? After a record-breaking 2022, Saudi Arabia started the year with an all-time high quarterly funding of $359M with 81% of the total coming from two $100M+ deals closed in the Kingdom during February.

?? At a time of economic uncertainty, debt can be a viable alternative for startups to fuel their tank. Amid the current market cooldown and VCs being more conservative when it comes to deploying capital, venture debt has been reporting a rise. We look at the leading debt investors in MENA-based startups.?

?? In terms of geographical comparison, KSA and Egypt overtook the UAE as the most funded geographies owing to their respective MEGA rounds. However, UAE continues to hold its lead over its peer MENA markets in terms of non-MEGA deal funding, by recording over $152M.

?? Webinar Alert ??

?? Hosted by Founder & CEO?Philip Bahoshy, join our webinar to delve deeper into Q1 2023 data, where the quarter stands in deals and funding compared to its priors, which geographies fared best and how did M&A activity kick off the year, in addition to a number of insights highlighting the performance of the ecosystem.

Register Here

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