The Middle East and North Africa (MENA) startup ecosystem showed great resilience in 2024 despite a notable decline in funding. MENA startups recorded $2.3 billion in investments in 2024, a 42 percent annual decline. Excluding debt financing, the decline is just 11 percent. However, the sector witnessed rising deal volumes and sectoral diversity as it continues to develop.
Despite the drop in value, the ecosystem saw growth in activity, with 610 deals marking a 3.5 percent annual increase.
According to the latest report from Wamda, the UAE led the MENA region’s startup ecosystem with $1.1 billion raised across 207 startups. In second place came Saudi Arabia, raising $700 million in 186 deals. Meanwhile, Egypt raised $334 million in 84 deals last year and Oman rose to 4th place with $41.5 million.
GCC countries are the highest funded
GCC countries emerged as the highest funded last year, with Oman making a significant leap from 10th place in 2023 to 4th in 2024, securing $41.5 million across 12 startups. followed by Bahrain, which saw an investment of $29 million through 12 deals, and Kuwait, whose ecosystem received $22 million in investment through eight startups.
Excluding Egypt, Morocco and Tunisia led North Africa, raising $20.8 million and $13.1 million, respectively.
Meanwhile, smaller ecosystems like Jordan, Qatar, and Lebanon showed modest growth but signaled long-term potential. Jordanian startups have shown resilience, raising $15 million invested in 26 startups, up from only $9 million in 2023. Smaller ecosystems, such as Qatar, Palestine, Iraq, and Lebanon, received modest investment levels at less than $15 million each.
Three primary sectors emerge in the UAE
The distribution of capital across sectors within the UAE startup ecosystem provides significant insights into the ongoing developments in the Emirati market. Investors directed their attention towards three primary sectors: fintech, which raised $265 million in 47 transactions; Web 3.0 developers, securing $255 million through 19 deals; and proptech, attracting $197 million across 13 deals.
With a huge market like the UAE, which embraces a multi-national population and is a destination of the world’s wealthiest dynasties, fintech and proptech emerge as the most guaranteed investment verticals.
In the meantime, the UAE remains at the forefront of the entire region in adopting the new generation of technology, translating into the growing interest of investors in startups providing Web 3.0 services.
Fintech dominates startup ecosystem
Fintech dominated with 30 percent of total funding at $700 million. In Egypt and the UAE, fintech emerged as the leading sector in terms of funding, whereas in Saudi Arabia, software-as-a-service (SaaS) captured the majority of investments, which is understandable given the hype the Kingdom is witnessing in the tech sector.
MENA startups providing Web 3.0-focused services have secured the second spot, with $256.8 million stretched across 23 transactions, closely followed by e-commerce startups, which raised $253 million by 58 startups.
SaaS ranked second in terms of deal count, following fintech, with 65 SaaS providers securing a total of $228.6 million in funding. However, the foodtech sector was hit hard last year, obtaining only $77 million in 18 transactions, a stark contrast to the $224 million raised by 47 startups in 2023.
Early-stage startups lead investments
The early stages garnered the bulk of investment last year, accumulating over $1.2 billion across 300 startups ranging from pre-seed to Series A stages. In the later stages, specifically Series B and Series C, investments totaled $332 million across 10 deals, whereas only two startups managed to secure their pre-IPO rounds, amounting to $143.3 million.
Female-founded startups raised just $27.6 million or 1.2 percent of funding, though this marked progress from 2023. Meanwhile, startups co-founded by men and women secured $192 million, despite fewer deals.
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Investor appetite shifts to B2B model
Last year, investors’ appetite shifted to the business-to-business (B2B) model, injecting $1.2 billion into 325 startups operating in the B2B model, while 209 startups working in the business-to-consumer (B2C) field saw investments of $717 million, and the remainder went to startups operating in both models and the direct-to-consumer (D2C) models.
