Sixty startups across the Middle East and North Africa region (Mena) raised a mammoth $1.15 billion, the highest amount recorded for the year, representing a staggering 825 per cent increase year on year (YoY) and a 55 per cent increase month on month (MoM). However, $700 million of that alone is down to the debt round raised by UAE-founded, now Saudi Arabia headquartered fintech, Tabby. 

Without this debt, the total amount raised by startups in Mena in December falls to $456 million, a rise of 18 per cent MoM and a 253 per cent rise YoY. 

The total amount raised by startups in 2023 (including debt) totalled $3.98 billion across 498 deals, a rise of less than 1 per cent compared to the $3.95 billion raised in 2022 across 802 deals. Discounting the debt rounds however, reveals an entirely different picture. Last year, startups in Mena raised a total of $2.2 billion across 488 deals, compared to the $3.45 billion raised in 2022 across 786 deals, a fall of 36 per cent in terms of deal value and a drop of 38 per cent in terms of transactions. 

The amount of debt raised in 2023 amounted to $1.77 billion, a 256 per cent increase compared to 2022. 

Overall in December 2023, deal-making activity exhibited an upward track, as 60 transactions were registered, compared to 49 deals in November. The main drivers were a noteworthy uptick in grants, mostly concentrated in the UAE, Saudi Arabia, and Lebanon, and the graduation of 19 startups from the Sanabil 500 Startup accelerator programme and Techstars Riyadh.

In terms of countries, Saudi Arabia continues to be the top destination for VC funding for the second month in a row, thanks primarily to Tamra and Tabby’s large-sized ticket transactions. Egypt came in as a distant second with $12 million raised across five deals, followed by the UAE with 21 deals worth $8 million.

In terms of sectors, fintech dominated the investment landscape, with 25 deals amounting to over $1 billion (including Tabby’s debt round). Cleantech brought in the second-highest amount of funding with $20 million across nine deals including Saudi Arabia-based re-commerce marketplace Soum, which raised $18 million in a round led by Jahez, and UAE’s Zeroe, which raised $2.2 million for its AI-powered carbon management platform.

Other sectors that attracted sizable investor interest include healthtech, edtech, logistics, and mobility.

In a recurring trend, early-stage deals, sourced primarily from accelerators, dominated the deal volume last month. In terms of value, the VC spend increased across all stages.

Last month, 99.1 per cent of the funding went to male-led startups, while mixed founding teams and female-founded startups together comprised less than 1 per cent of deal value.

Key developments

Last month, four acquisition and merger deals took place including Jedo’s acquisition of Jump In, Mercer’s acquisition of Talent Enterprise, Clara’s acquisition of Corporate, Pure Harvest’s acquisition of Red Sea’s production facility in Saudi Arabia, and Maxab’s merger with Wasoko.

In the spirit of COP28 recently wrapped up in the UAE, several cleantech-focused initiatives were unveiled in December. This includes an accelerator programme by PepsiCo, SABIC, and AstroLabs and a $750 million climate tech fund from Investcorp, Moreover, The Dubai Future District Fund (DFDF) announced it will earmark up to Dh200 million of its Dh1 billion fund to invest in companies offering decarbonising technologies.

As many as 17 startups did not disclose the value of their transactions for which we gave a conservative amount of $100,000. These include eight graduates from the Sanabil 500 Startup accelerator programme, along with Velents, Speaklab Business, Mamopay, COINCERTIK, Qannas, Sol Stores, Naeem, Banknbox, and HyveGeo

These monthly reports are a collaboration between Wamda and Digital Digest.