UAE startups on a roll
Startups across the Middle East and North Africa (Mena) region and the UAE are turning out to be buoyant.
First-quarter funding data showed robust activity in the sector following Amazon's acquisition of Souq.com and Jadopado announcing it has been bought by an unnamed company for an undisclosed amount. All eyes are now on Emaar's venture 'Noon'.
The current year may see the figures of 2016 - 120 deals valued at $889 million - being topped as the region has seen $36 million in funding so far from 35 disclosed deals and multiple venture capitalists raising a second fund for the region, according to MAGNiTT, the largest online engagement platform for startups in the Mena region.
"2017 has already witnessed the largest Mena technology exit in history, at around four times the size of the previous record holder. Our role as UAE-based venture capitalists is to empower and accelerate value creation and complete the cycle with an exit. With the Talabat exit to Rocket and the recent exit of Souq to Amazon, we expect UAE entrepreneurial spirit to multiply and startup ambitions to sky rocket," says Walid Hanna, managing partner of Middle East Venture Partners (MEVP).
Exits are key to the growth of the ecosystem. Startups should be optimistic that their companies can succeed and proposer with exit options existing in the region. Simultaneously investors, whether institutional or angel, begin to see returns on their investments, endorses the MAGNiTT report.
"We have also attracted talent and nurtured serious innovation and growth in this country. With the recent boost in M&A activity, we expect our rich deal pipeline to become richer as more talented entrepreneurs head to the UAE to benefit from the venture capital momentum," added Hanna.
The recently held Arab-China Tech Summit, which welcomed more than 40 delegation from China, comprising venture capitalists exploring to invest in the UAE's startup industry is a testimony of the growing potential of the sector.
Mona Ataya, founder and chief executive of Mumzworld, who is in midst of getting her fourth round of funding, said: "The trends have changed. Businesses are no more limited to a region as the world has become a more holistic place where you need to act local but think global and this implies to the UAE startup industry to ensure they exploit full potential to reach out their business on global scale."
The launch of the quarterly Mena funding scorecard by MAGNiTT looks to engage with ecosystem players to further increase visibility and transparency on the activity taking place in the region.
Philip Bahoshy, founder and CEO of MAGNiTT, said data transparency is at the core of decision making for Mena stakeholders whether they are investors fundraising, corporates looking to create innovation initiatives or government entities looking to devise policy decision making.
Bahoshy also expects to see a lag in the disclosure of deals as term sheets are finalised and startups are able to disclose deals. "No doubt there will be further announcements leading up to Ramadan and into the summer period," he said.
The key takeaways from MAGNiTT's first-quarter report card also lists investments of $36 million which is similar to first quarter funding in 2015 but well below funding in first quarter of 2016 with large investments of $275 million in Souq as well as $67 million in Wadi.com. Funding in January saw a strong start to the year with $24.7 million. The other investments include the $12 million of Iyzico (Turkey), $5 million in Scriptr (Lebanon), $5 million in Vezeeta (Syria) and $2 million in Liwwa (Jordan) and STEP (Lebanon).
As the ecosystem continues to grow we see the emergence of new venture capitalists in the Mena space as well as new funds being raised by existing venture capitalists including MEVP, Wamda Capital and Beco capital to name a few. Venture capitalists with notable activity in first quarter include Silicon Badia, MEVP, BECO Capital and WAMDA Capital, adds the MAGNiTT report.