Despite a broader slowdown in global venture capital activity, startups in the Middle East and North Africa (MENA) have demonstrated resilience, securing $1.3 billion across 352 deals in the first nine months of 2024. This represents a 13% year-on-year decline.

According to MAGNiTT’s Q3 2024 MENA Venture Investment report, the region outpaced other emerging venture markets, attracting a 34% increase in total investors. However, exits dropped 50%, with only 17 recorded during this period.

Philip Bahoshy, CEO of MAGNiTT, attributed MENA’s appeal to a growing number of early-stage opportunities and a 69% increase in international investor participation.

Bahoshy expressed optimism for the fourth quarter, pointing to upcoming events like Expand North Star and the Future Investment Initiative Forum as potential catalysts for increased funding activity in the MENA region.

While the global venture capital market faced a significant downturn, raising $4.9 billion in the first nine months of 2024—a 45% decline—the MENA region exhibited relative stability, with only a 6% drop compared to the previous year, marking a more modest decline than other emerging markets.

Fintech remained the leading sector in MENA, attracting $480 million across 72 deals. The Saudi Public Investment Fund’s Sanabil Investments emerged as the top investor, deploying $59 million, while Flat6Labs led in deal count with 37 transactions.

The UAE, Saudi Arabia, and Egypt stood out for deal volume. The UAE accounted for 38% of MENA deals, marking a 12% rise in transactions, driven by a 40% increase in seed and pre-Series A rounds. Saudi Arabia experienced a 7% year-on-year rise in deal count, with a 46% jump in seed-stage funding, while Egypt recorded a 45% increase in seed and Series A rounds.

In terms of funding, Saudi Arabia led the region with $509 million, despite an 8% annual decline, followed by the UAE at $380 million, down 18%. Egypt topped Africa in funding, securing $304 million across 56 deals, with the largest being Halan’s $157.5 million raise.

Looking ahead, Bahoshy noted that the fourth quarter will be pivotal.

“The fourth quarter of 2023 set a high benchmark with two mega deals in Saudi Arabia and the year’s highest quarterly funding in MENA,” he added. “With global trends pointing toward lower interest rates and an uptick in investment activity, the fourth quarter of 2024 will be a crucial period. All eyes are on whether we can exceed last year’s performance.”