UAE remains a startups hub as $700 million raised in first half

The UAE retained its supremacy as the top destination in the Middle East and North Africa (Mena) for startups as it secured almost $700 million in financing through 85 deals during the first half of the year, the latest data shows.

Magnitt, which released the first UAE venture capital report in partnership with the Emirates Development Bank (EDB), said the UAE continues to reign as the top-funded and most transacted market in Mena accounting for 50 per cent of all the investment accumulated by the region.

Saudi Arabia secured the second position with $584 million in financing through 79 deals while Egypt ranked third by attracting $307 million in funds in 78 deals.

In terms of funding, Bahrain climbed three positions to number four by securing $116 million in funds while Tunisia moved one position up to the fifth position with a $36 million investment in its startups.

In terms of deals, Tunisia moved two slots up to the number four position with 15 deals while Bahrain jumped four positions to fifth rank with 10 deals. About 25 per cent of the total funding aggregated by the UAE was driven by Pure Harvest’s $180.5 million mega-round ($100M+), marking the 10th consecutive year of mega deals for Mena’s top geography. The Pure Harvest deal drove 26 per cent of the venture capital raised in the UAE during the first half of 2022.

Tabby ($54 million), Wahed ($50 million), altibbi ($44 million) and Huspy ($37 million) were the leading startups in terms of financing raised during the first half.

"We are continuously exploring new initiatives and opportunities to catalyse the growth of businesses, bolster the culture of entrepreneurship, and provide the funding solutions to enhance the ecosystem for entrepreneurial minds across the UAE," Ahmed Mohamed Al Naqbi, chief executive of EDB, said.

Noor Sweid, managing partner at Global Ventures, said the UAE continues to solidify its position as a leading hub for innovation in the region, amassing 27.3 per cent of deals across the Mena region and 34.4 per cent of funding this year alone.

"We are consistently witnessing the birth and growth of pioneering, the UAE-born solutions for the region and the world across verticals. The UAE is quickly becoming an illustrative example that some of the most promising and fundamental opportunities of the future will originate from the region," Sweid said.

Fintech remains on top

Fintech remained the leading industry of choice for investors in the Emirates driving 32 per cent of total deals and 33 per cent of total capital deployed during the first half. It recorded a 249 per cent year-on-year growth in the first half by securing $234 million financing.

Pure Harvest's $180.5 million deal drove the agriculture sector to the second-most funded rank in the UAE during the first half.

With $50 million financing, fashion and lifestyle climbed 13 positions to secure the third rank while healthcare ($50 million) moved six slots to claim number four rank. Transport and logistics raised $40 million and the dropped to the fifth rank.

In terms of the op industries by number of deals, e-commerce and Transport and logistics remained on second and third positions while edtech climbed six ranks to become the fourth most-transacted industry in first half. Healthcare also moved three positions to made it to the top five rankings.

Sharing El-Badawi, chief executive at Dubai Future District Fund, said the UAE is on the cusp of reaping compound rewards for its efforts in openness and innovation, and this is particularly true for the startup ecosystem and the VC funding that supports it.

> Similar to its peer Mena markets, fintech remains the leading industry of choice for investors in the Emirates driving 32% of total deals and 33% of total capital deployed, followed by E-commerce and Agriculture. The Fashion & Lifestyle industry jumped 13 spots to become the third-most funded industry in UAE