Saudi Arabia has emerged as the foremost hub for venture capital in the Middle East and North Africa (MENA), securing $750 million in 2024. This achievement marks the second year in a row that the Kingdom leads the regional VC landscape.
According to MAGNiTT, Saudi Arabia represented 40% of MENA’s venture capital investment, with a 16% increase in deal activity. The Kingdom executed 178 deals, the highest in the region, underscoring strong investor faith and a robust startup scene. The largest transaction was a $130 million funding round for Salla, a Saudi-based e-commerce platform.
The United Arab Emirates followed with $613 million in funding, leading in transaction volume with 188 deals and 12 successful exits.
Emerging Venture Markets Overview
MENA startups collectively raised $1.9 billion in 2024, a 29% decrease from the previous year. However, funding levels remained higher than those in 2020, indicating ongoing growth in the venture sector.
The Middle East attracted $1.5 billion through 461 deals, a 10% increase in activity. Investor participation rose by 14%, with 392 investors and 24 exits recorded.
Venture capital performance in emerging markets, including the Middle East, Africa, Southeast Asia, Pakistan, and Turkiye, saw a substantial slowdown in 2024. Total funding fell by 40%, and deal volumes dropped by 20% compared to 2023, both below 2020 figures.
Southeast Asia led with $5.6 billion raised across 564 deals, while Africa performed the weakest, securing $1.07 billion from 294 deals.
Mega Deals and Early-Stage Investment
Global trends, such as reduced late-stage funding, were evident in emerging markets. Mega deals, worth $100 million or more, decreased by 56% from 2023. The first quarter of 2024 reported the lowest mega deal funding since late 2019, with late-stage investments most affected.
Despite this, early-stage investments remained resilient. There was a notable rise in seed and pre-series A funding, with an increase in $1 million to $5 million ticket sizes.
MAGNiTT emphasized the importance of early-stage investments for future growth in deal activity. Philip Bahoshy, MAGNiTT’s CEO, noted a potential recovery in the venture market, citing declining interest rates in both developed and emerging markets as a positive sign. He anticipates improved capital availability in the coming months, potentially fostering a stronger funding environment by 2025.
The Middle East’s share of transactions in emerging markets rose to 35% in 2024, while Southeast Asia held the largest share at 43%. Africa’s share fell to its lowest in five years, at 22%.