According to data from the 2017 State of MENA Funding report by Dubai-based online startup platform MAGNiTT, companies in the MENA region saw a record investment of $560 million in 260 startups.
The investments were up 65 percent from 2016, with e-commerce and FinTech remaining the most popular industries, accounting for 11.9 percent each.
Although 2017 was a record funding year for the region, overall, in comparison to the impressive $874 million in funding deals that were made in 2016, which included investments in Souq.com and Careem, 2017 saw 36 percent less investment, Forbes Middle East noted.
"Careem and Souq are great examples for others to follow, however, given their success, their funding figures skew the underlying data and creates a misrepresentation of the growth of the ecosystem," said the founder of MAGNiTT, Philip Bahoshy.
The UAE received the majority of those investments, about 70 percent, while Saudi Arabia saw a 4 percent increase in deal transactions since last year, despite a 3 percent fall in the number of deals.
Lebanese startups saw a 12 percent drop in investments from the previous year, while Kuwait saw a 3 percent increase in deal transactions from 2016.
Some of the top investments included $150 million in ride-hailing app Careem, $90 million in streaming service StarzPlay Arabia, $41 million in courier firm Fetchr, $20 million in payment solution Paytabs and $12 million in travel search engine Wego.
List of top 10 deals in 2017
The MAGNiTT report does not include investments that were made in either Turkey or Iran.
As for venture capitalists, 500 Startups was the most active in terms of the number of deals, having arranged investments in over 30 companies in the region.
They were followed by Middle East Venture Partners with 14 deals, KSA Funding Institutions with 8 deals and Saudi Aramco Ventures with 8 completed deals.
Key points from MAGNiTT’s 2017 State of MENA Funding report
1. Funding overview
- Last year saw a 65 percent rise in investments to $410 million (excluding Souq & Careem), which is a MENA record
- More deals were undertaken in 2017 than in any previous year across the MENA ecosystem
- 2017 saw a record Q2, Q3, and Q4 in terms of investment amounts and number of transactions
- Top 10 investments amounted to $349 million, which accounted for around 60 percent of 2017 funding
- Top 5 investments included $150 million in Careem, $90 million in StarzPlay Arabia, $41 million in Fetchr, $20 million in Paytabs, and $12 in Wego
2. Investment breakdown
- 2017 saw e-commerce and Fintech maintain their positions at the top of the investment deal flow, both accounting for 11.9 percent of all deals
- Food and Beverage saw the largest increase of 3 percent in deal flow across 2017
- FinTech startups also make up 3 of the 10 largest investments in 2017 - Paytabs ($20 million), Souqalmal ($10 million), and Wahed ($7 million).
- Logistics and Transport also proved big winners with Careem ($150 million), Fetchr ($45 million), and Wego (12 million)
- The UAE continues to be the dominant market with 70 percent of all investment amounts and 37 percent of the transaction (excluding Careem’s investment of $150 million)
- Notably, KSA observed the largest increase in investments, up 4 percent from 2016, despite a 3 percent fall in the number of deals
- Lebanese startups saw the biggest drop in investment amount, down 12 percent from 2016
- Kuwait saw the biggest increase in deal transactions, up 3 percent from 2016
Philip Bahoshy also added that "governments across the region continue to encourage innovation as a source of diversification and to assist with unemployment and empowering youth".