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These results were announced by Philip Bahoshy, founder and CEO of the new startup platform MAGNiTT, during a webinar.
According to the “Middle East and North Africa Venture Capital Report for the First Half of 2019”, in the first half of 2019, the financing amount of all new startups in the region increased by 66% compared with the same period last year, reaching US$471 million, and the investment amount increased by 28%. The number of transactions reached 238.
The report highlights the rapid growth of the MENA region’s startup ecosystem.
geographical landscapeNumber
Within regions, the UAE remains the most active ecosystem, with 63 deals (26%) and 66% of funding ($311 million) in the first half of 2019. However, these figures were down 2% from the first half of 2018.
Bashi said: “The UAE has been doing this longer than other smaller ecosystems.As others slowly emerge, we begin to see a shift.”
The emirate has long been the center for entrepreneurship and business in the Middle East and North Africa region, with the highest number of new startups of any country in the region.
With its relatively affluent local consumers and many regional corporate headquarters, the UAE is a great starting point for B2C and B2B startups looking to expand further into the region.
He continued, “Egypt and Lebanon accounted for 21% and 13% of total transaction volume respectively, also down 2% from the first half of 2018.”
“New small ecosystems are beginning to emerge, such as Saudi Arabia (11%, growth 1%), Tunisia (8%, growth 3%), Bahrain (5%, growth 3%), Oman (1%, growth 1%) ).”
“Tunisia has recently enacted initiatives such as the Tunisian Entrepreneurship Law to boost the local entrepreneurial sector,” said Sietse van de Kerkhof, Venture Capital Data Manager at MAGNiTT Asian Food Navigation.
“The past few years have seen the launch of many government initiatives in the region, including Saudi Arabia, as the Kingdom aims to become the region’s hub for entrepreneurship and innovation.These initiatives include accelerators such as the recently launched MiSK 500 MENA Accelerator and MiSK Growth Accelerator, SAGIA and FinTech Saudi accelerated launch licenses, among others.”
He added that a small country like Kuwait has an emerging restaurant industry, saying: “Kuwait has been one of the leading centers for F&B start-ups, investments and exits.”
The first half of 2019 also saw an influx of foreign investors, with 30% of all entities investing in new startups in the MENA region being international investors, such as China’s MSA Capital and German food group Henkel.
Industry segmentationNumber
During the webinar, Bahoshy also mentioned that more and more investors are now paying attention to the catering industry.
The amount of financing in the catering category increased by 1% compared with the first half of 2018, and the amount of financing in the first half of 2019 reached US$20 million. Catering financing accounted for 4% of the total financing.
The largest restaurant investors are Savor Ventures and 500 Startups, both of which have invested in two restaurant startups.
“As the total number of transactions has grown steadily over the past few years, the absolute number of F&B transactions is also expected to increase,” Kerkhoff added.
The top three industries by financing amount are real estate, e-commerce, express delivery and transportation.
Bahoshy cited some ME catering startups, such as Dubai-based office lunch delivery company “Lunch:on” and Egyptian junk-free food delivery app “Yumamia”.
Lunch:on recently closed a $5.5 million Series A round, and Yumamia closed a $2.8 million Series A round.
“This is encouraging as you see the ecosystem maturing and moving away from pure infrastructure like transportation and logistics towards more interesting and diverse industries,” Bashi said.
Kerkhoff said: “Delivery and shipping and e-commerce have historically been large industries, with fintech gaining traction recently.”
“However, the restaurant industry has become increasingly prominent in the region through acquisitions such as Talabat and RoundMenu, as well as acquisitions from restaurant-specific investors such as Savor Ventures..”
Bashi said: “Governments in the region are more transparent than ever.You are slowly seeing the barriers to entry into new markets decrease.”
He thinks: “I I don’t think the government’s main role is necessarily to solve the financing challenges of new companies. The government can play a greater influence in promoting the environment for new companies to thrive.They should strive to create a cost-effective environment for new startups and establish a cost-effective process that, even if they fail, motivates them to try again.”
“It is time that each country can clearly define its proposition, not only for the growth of local startups but also for the expansion of startups into their region.”
“Clarifying “how” and “at what cost” to grow into countries such as the UAE, Saudi Arabia, Lebanon, Jordan or any other country in the region will lead to more scalable and successful startups.”
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