startup investments: the evolution of the mena ecosystem in 2016 [report]

Startup Investment Report2016 Highlights of the MENA region

March 2017

8% 63% 18% 12%

2016 was a favorable year for MENA startups

Startup Investment Report 2016 2Wamda Research Lab

59% 30% 9% 2%

Investment Stages

Seed Series A Series B Series C

$815M+Collected by

Startups in 2016

$350M Careem

$121M Top 5 Rounds (After Careem & Souq)

Wadi.com 67M

Bayut 20M

Propertyfinder 20M

The Luxury Closet 7.8M

Holiday.ME 7M

$69M Raised by 32 Startups

By number of investments:

$275M Souq.com

In addition to 28undisclosed deals

By transaction value:

𝑛1 = 53

1: The sample consisted only of stages publicly disclosed by the involved parties

Fintech

Ecommerce

Food & Dining

Cars

20%

14%

8%

8%

Egypt currently has the largest share of seed stage investments and

further investments at the Seed and Series A stages are likely to

increase given the $55.6M in raised by two funds to support Egypt’s

startups

The UAE remains the most prominent startup hub in the region, with the

highest concentration of investments and the region’s two unicorns:

Souq.com and Careem.

67

15

16.3

11.4

13.2

UAE Jordan Lebanon Egypt

Disclosed Investments / Country

Number of Deals Disclosed Amounts ($M)

27 764


With Investments concentrated in four hubs

50% of investments were dedicated to four sectors:

% of investments


In addition to increasing financial support

Venture Capital

41%

Corporate Venture

29%

Private Equity9%

Support Institution 7%

Other 14%

Corporate venture capital forms a sizable portion of this year’s investors,

which comes with a surfeit of benefits for startups that include access to

markets and distribution channels otherwise unavailable.

In addition, the emergence of late stage private equity deals from non-

MENA investment firms in the UAE signals investor confidence in the

potential of regional tech companies. This marks the beginning of the

UAE’s transition into a mature ecosystem.

Available funding rose 287% above the disclosed 2015 amounts.

Moreover, there is an increased focus on providing funding past the seed

stage (Only 4 of the 11 new funds target seed stage companies

exclusively). This is crucial to bridging the funding gap that would enable

startups to effectively scale up and expand internationally.

Turn8 Fund $60M Seed

Innov Invest $51M Seed

Ibtikar Fund $12M Seed

Flat6Labs Fund $5.6M Seed

Algebra Capital $50M Series A/B

Dubai Future Accelerators Fund $275M Multi-Stage

Oman Technology Fund $200M Multi-Stage

Hikma Ventures $30M Multi-Stage

Bedaya $16M Multi-Stage

Riyadh Tanqia Capital $133M SME-Focused

Who were the investors of 2016? $833M In Venture Capital Raised by 10 new funds

Fintech10%

E-Commerce9%

Cars 6%

Ad Tech 6%

Software 6%

Analytics 6%

Learning 4%

1

Others 49%

Consumer Productivity

6%


Furthermore, 2016 saw an uptick of startup acquisitions

Investors and founders

currently favour consumer

services sectors

Acquirer Acquired Sector

My Fatoorah Taajr (60% Acquired) Fintech

Network International Emerging Markets Payments($340M) Fintech

Talabat Q8flowers.com ($3M) E-Commerce

Careem Savaree Travel

Sarouty.ma Selektimmo Real Estate

El Grocer Quickshop.ae E-Commerce

Wuzzuf Viriphy Recruitment

Stillfront Group Babil Games ($17M) Gaming

The rise in M&A activity amongst startups may represent the early stages of

consolidation in some sectors which can catalyze the development of

regional powerhouses in multiple industries.

Startups Founded in 2016 M&A Activity


Regional investments occurred against a backdrop of supportive governmental & academic initiatives

New federal bankruptcy law encouraging investment and increasing

the ease of doing business

Launch of Dubai Future Accelerators program

Abu Dhabi Global Market launch the region’s first Fintech regulatory

sandbox

Announcement of Vision 2030 aimed at diversifying the economy in

addition to the plan to establish a $1.1B fund to support SME growth

New banking law in Morocco legitimizes digital currencies, in addition

to allowing the creation of cards (pre-paid) by non-bank institutions.

This law goes into effect at the end of 2016

New York University Abu Dhabi introduces Venture Launchpad, a 10-

day entrepreneurship boot camp to complement their entrepreneurship

platform and incubator

American University of Sharjah and the Mohammed bin Rashid Space

Centre sign an MoU to develop UAE talent through the Entaliq

Scholarship Program

King Abdullah University of Science and Technology (KAUST) and the

Saudi British Bank (SABB) launch the ‘Taqadam’ Accelerator

The University of Jordan establishes an Innovation center

The American University of Beirut announces its innovation center


Coupled with rising efforts from private support institutions

15

Accelerators

launched

26

Major

events

organized

Most active organizers: Wamda, Seedstars, and Arabnet

BDL Accelerate 2016 had the highest attendance at 20,000

people

STEP Conference, BDL Accelerate, and RiseUp are the top 3

most attended regional events

5600

12600

30000

2014 2015 2016

Attendance at the top 3 events

Examples of Founding Partners:

Corporates playing a bigger role

Global corporate investments in the form of Corporate Venture Capital (CVC) or direct investments were present in 15% of the total deals closed. In MENA, this figure reached 29% in 2016 .

Some notable funds:

Globally, venture capital is showing some noticeable trends


Global VC funding slips

Global funding levels fell during the second half of 2016, particularly

during the final quarter. Total VC deals amounted to $21.8B, the lowest

figure since Q1 of 2014 (KPMG).

2016 also marks the first year that total VC funding fell on a year-on-year

basis since 2012, accompanied by a steady decrease in deal numbers

that started in Q1 2015.

The global decrease in deals appears to be concentrated in the Americas

and Asia, as European deal growth remains positive over the past years

(Atomico).

Highest relative decline was among the seed stage

The total number of seed stage deals drastically decreased globally,

standing at 33% of all deals in Q3 2016; the lowest it has dipped in five

quarters (KPMG). This decrease was likely driven by market uncertainty

during the second half of 2016 as well as a rising preference for later

stage deals targeting more established companies.

Interestingly, the percentage of seed investments in the

UAE stands at 38% (MENA: 59%), further indicating a

shifting preference towards later stage deals

$2.7BDedicated to CVC funds by European corporations (Atomico)

BMW i Ventures bolster their

fund by 500% to $500M with a

focus on urban mobility

Google Ventures is raising a new

$230M fund targeting the

healthcare sector

Authors: Tarek Faycal, Elias Boustani

Contributors: Jonas Feller, Edoardo Giorgetti

Editors: Maya Rahal, Dana Ballout

Wamda is a platform of integrated programs that aims to accelerate entrepreneurship ecosystems throughout the MENA region. Its core focus

includes media, community development, research and corporate and government advisory services. In the past few years, Wamda has become

the leading grassroots community and knowledge platform for entrepreneurs and supporting stakeholders.

The Wamda Research Lab is Wamda’s research program that produces studies on entrepreneurship in the Middle East and North Africa (MENA)

and seeks to foster thought leadership in this field. Its agenda is to inform investors, policymakers, and other stakeholders on barriers to and

solutions for developing entrepreneurship in MENA.

wamda.com/research [email protected] facebook.com/wamdaME twitter.com/wamdaME linkedin.com/company/wamda

MENA Investment Report by the Wamda Research Lab is licensed under a Creative Commons Attribution – Non

Commercial-Share Alike 4.0 International License (CC BY-NC-SA 4.0).

Appendix



I. Resources

MENA Ecosystem Data (Figures & Graphs) : Wamda Research Lab Data & Analysis

Atomico, 2016: The State of European Tech.

KPMG Enterprise, 2017: Venture Pulse Q4 2016.

KPMG Enterprise, 2016: Venture Pulse Q3 2016.

http://www.atomico.com/news/the-state-of-european-tech-2016

https://assets.kpmg.com/content/dam/kpmg/xx/pdf/2017/01/venture-pulse-q4-2016-report.pdf

https://assets.kpmg.com/content/dam/kpmg/xx/pdf/2016/10/venture-pulse-q3-2016-report.pdf

Wamda Capital

Ibtikar Fund

500 Startups

Arzan VC

BECO Capital

Middle East Venture Partners (MEVP)

twofour54

A15

Equitrust

Precinct Partners

Silicon Badia

Souq.com

Egyptian-American Enterprise Fund’s (EAEF)

Jabbar Internet Group

Levant Investment Bank

Samih Toukan

Addventure

Al Tayyar Group

Alsop Louie Partners

Amr Awadallah

Aramex Ventures


II. Investors

B&Y Partners

Berytech Fund

BPI France

Cairo Amman Bank

Capital Bank

Digital Currency Group

Dubai Silicon Oasis Authority

Endeavor Catalyst Fund

Etihad Bank

Force Over Mass Capital

Fransabank

iMena Group

Insure & Match Capital

iSME Holdings

Isource

Jim Payne

Kamelizer

KAUST Innovation Fund

Kickstart Accelerator Zurich

Millenial Partners & Co.

MTN

Naspers

Oncu GSYO

OTMT Holding Company

PayFort

Pinnacle

Rabea Ataya

Samena Capital

Saned Partners

Standard Chartered Private Equity

STC Ventures

Techstars Ventures

Tiger Global Management

Venture Friends

Vostok New Ventures

YCombinator

Jisr Venture Partners

Mulverhill Associates

Rakuten Inc.

Accel

DASH Ventures

Mini Exchange

Movesouq

Mumm

Mumzworld

Myki

NOMADD

OfficeRock

Orcas

Ousta

PayMob

PinPay

Propertyfinder.ae

Reserveout

SchoolApply

Shaghalni

Shezlong

Silkroad Images

Smart Medical Services

Souq.com

TanitCash

Tasameem

The Luxury Closet

Torch

UnnyHog

Wadi.com

5QHQH

Anghami

ArabiAuto

Bayut

Bayzat

Beekast

BitOasis

Boxit

Brate

Careem

Cantalop

CashBasha

Collectionair

Compareit4me

Drofie

eatapp.co

Eventtus

Fadfid

Falafel Games

Geeks.ae

Homely.ae

Holiday.ME

Instabug

InstaShop

joi


III. Investments

Kharabeesh

Liwwa

Lunch:on

M media

Madfoo3at

Masari

Mashvisor

Matic

Wing.ae

Wirez

Worknizer

Wrappup

Mr Usta

startup investments: the evolution of the mena ecosystem in 2016 [report]

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