MENA Tech Startups: Navigating a Dynamic Funding Landscape in 2024

The Middle East and North Africa (MENA) tech startup ecosystem demonstrated both resilience and dynamism in 2024, according to a new report by Multiples . While total funding dipped from $4 billion in 2023 to $2.78 billion in 2024, the number of funding rounds actually increased from 583 to 602, indicating a broadening base of funded startups and continued investor interest in the region. This suggests a maturing ecosystem where investors are actively seeking out opportunities, particularly in early-stage ventures.

Key Funding Hubs

The UAE, Saudi Arabia, and Egypt continue to dominate the MENA funding landscape, attracting a massive 96.21% of the total investment.

• The UAE led the way with $1.53 billion across 253 rounds.
• Saudi Arabia followed with $762.9 million from 171 rounds.
• Egypt secured $384.6 million across 115 rounds.

This concentration of investment highlights the strong investor confidence in these key markets, while other countries in the region are attracting significantly less funding.

Sector Spotlight

Fintech, SaaS, and AI emerged as the dominant sectors in 2024, collectively capturing 50% of the total funding. This reflects a growing investor appetite for innovative solutions in these areas, suggesting that these sectors are seen as having significant growth potential in the MENA region.

• Fintech led the way, securing $937 million across 115 rounds, with particularly strong activity in the second half of the year.
• SaaS raised $200 million across 24 disclosed rounds, seeing a peak in funding in March.
• AI attracted $184 million across 28 disclosed rounds, with a funding peak in July.

While these sectors dominated, other industries such as logistics & mobility, retail tech, and others also attracted investor attention. For example, a large $325 million round for Pathfinder in July propelled retail-tech into the spotlight, despite it not being a typical top-funded sector.

Early Stage Focus

The report highlights a strong emphasis on early-stage investments, with Seed and Series A stages constituting the majority of investment activity at 38% of the total funding amount.

• Pre-Seed funding totalled $98 million across 104 rounds.
• Seed stage funding reached $501 million across 222 rounds.
• Pre-Series A and Series A funding reached $666 million across 71 rounds, with Series A accounting for the majority with $536 million.
• Later-stage funding rounds were much more limited, with pre-Series B & Series B seeing $346 million across 10 rounds, and Series C and D having only one round each.

This focus on early-stage ventures suggests a commitment to nurturing the growth of the MENA tech ecosystem from the ground up, however, it also points to an opportunity for later-stage investment as the ecosystem matures.

Investor Landscape

The MENA tech scene saw robust participation from 499 institutional investors in 2024. This diversified funding base reflects a healthy and dynamic ecosystem. Some of the most active investors include:

• Oraseya Capital , a venture capital arm of Dubai Integrated Economic Zones Authority (DIEZ) invested in 24 deals focusing on pre-Seed, Seed, and pre-Series A and Series A stages.
• Flat6Labs , a leading seed and early-stage venture capital firm, made 18 strategic investments in 2024 focusing on seed-stage companies.

Economic and Regional Factors

The MENA region is experiencing moderate economic growth, with an estimated average GDP growth rate of 2.5% in 2024. This growth is fueled by economic diversification efforts, infrastructure investments, and a gradual recovery from the pandemic. The region's young, tech-savvy population and high internet penetration also create a strong foundation for technology adoption and digital innovation. Furthermore, government initiatives and regulatory reforms aimed at fostering innovation and attracting foreign investment are creating a more conducive environment for entrepreneurship.

However, the region faces challenges such as geopolitical uncertainties, fluctuating oil prices, and the need for further regulatory reforms and talent development.

Looking Ahead

Despite a decrease in overall funding compared to 2023, the MENA tech startup ecosystem is demonstrating positive trends, including an increased number of funding rounds, a strong focus on early-stage ventures, and the emergence of new sectors alongside fintech. The region's top VCs, Oraseya Capital , and Flat6Labs are optimistic about the future, anticipating growth in later-stage funding, expansion of AI applications, and a greater focus on climate tech and sustainability. These factors, along with anticipated tech IPOs in the UAE and Saudi Arabia, suggest a bright future for the MENA tech startup scene.

This report highlights the need to watch the MENA startup ecosystem closely as it continues to evolve and present opportunities for investors and entrepreneurs alike.

Sources: MENA Tech Startups Funding Rounds in 2024 by Multiples