Report: Venture capital in emerging markets fell by more than 40% last year
January 8 at 9:30 am in Dubai
Venture capital investments in emerging markets such as the MENA region fell by more than 40% compared to 2023, According to a new report. The data reflects the broader global trend of declining venture capital funding in the past two years, especially for non-AI companies.
Total amounts raised across the markets surveyed reached US$9.1 billion in 2024, a 41% decline year over year. Furthermore, there was a 20% decline in deal activity year-on-year, with the number of deals falling to 1,527 deals. However, there may soon be signs of recovery as interest rates decline globally, leading to lower inflation, while early-stage investment has shown resilience.
Directions are shown in 2024 Venture Investing Report From MAGNiTT, a research group based in the Middle East and North Africa. The report covers the overall emerging venture markets (EVMs), looking at venture capital investments in the Middle East, Africa, Southeast Asia, Turkey, and Pakistan.
In the MENA region, startups raised $1.9 billion in 2024, a decline of 29% year-on-year, but this was a slight decline compared to what happened in Southeast Asia (45%) and Africa (44%).
In addition, funding levels in 2024 remained higher than 2020 levels, ahead of the boom years of 2021 and 2022, meaning the region continues to grow in projects.
There was a 7% year-on-year increase in the number of deals (571) and the number of investors by 18% (to 475).
47% of total investments were between $1 million and $5 million, indicating a shift to early-stage investments. However, the MENA region saw a significant decline in late-stage deals.
Across the Middle East, North Africa, Africa, Southeast Asia, Turkey and Pakistan, fintech continues to deliver a strong performance, securing $3.9 billion in funding in 2024, reflecting that fintech is performing well in emerging markets where financial services are weaker. development on the ground. .
The report noted that this represents an opportunity for merger and acquisition activity across geographies within the region.
There was a predictable split as international investors focused more on late-stage deals, such as Insider’s $500 million round and Tyme’s $250 million Series D. This type of investor made up 53% of the 475 investors who backed startups in the region. Meanwhile, local investors tend to stick to the early stage.
All this in the context of a decline in global exits by 32% year-on-year to just 94 in 2024, and the increasing difficulty of obtaining late-stage capital as public markets remain closed.
“We expect interest rate cuts to start boosting capital availability over the next six to nine months, paving the way for a stronger financing environment in 2025,” Philippe Bahoshi, CEO of MAGNiTT, commented in a statement. Overall, 2024 is “on,” he said. Most likely the “bottom of the curve” in terms of declining funding.
He added that the UAE, Saudi Arabia and Qatar saw “an increase in deal activity year-on-year” despite a slowdown in overall capital deployment. The total number of investors has also increased significantly in the MENA region, indicating that investors, especially international ones, may have increasing confidence in startups in the region.
