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Aug, 2021     

MEA: Dissecting the $2bn Funding upsurge

MEA investments surged to USD 2.1 Bn YTD in 2021, already ~2x of last year


1. MEA investments surged to USD 2.1 Bn YTD in 2021, already ~2x of last year

Funding activity in MEA has seen a strong upsurge in 2021 and the YTD amount is 2x the annual funding raised over the past 3 years.

The Digital economy has been driving this upsurge with players a) across sectors and b) stages of evolution closing strong funding rounds.

MEA Funding USD Bn, 2018-2021YTD

Note(s): 1. Investment Data from select 20 industries

2. Early stage and series A deals continue to be strong; Large investments also seen in series B+ and debt

Early stage and Series A funding continues to dominate the mix in terms of number of deals closed over the past 3-4 years. This would manifest itself in some interesting models scaling up and coming into the radar among emerging sectors.

Large investments in series B+ rounds and debt funding has also been observed in 2021

Note(s): 1. Investment Data from select 20 industries

3. Average deal value saw strong jumps across stages, indicating more sizable funding inflow which will enable robust growth over the medium term

Average deal value compared across past two years brings out an interesting trend. The average ticket sizes have increased significantly across all stages of investments. This is reflective of the increased confidence investors have in upcoming players and would auger well to provide a stronger growth runway for these platforms.

MEA Average Funding per Deal by Stage, USD Mn, 2020-2021 YTD

Note(s): 1. Investment Data from select 20 industries

4. There is also an interesting trend playing out where average time between rounds is reducing – indicating that players are scaling up fast with strong and timely investor backing

The average time between subsequent rounds has been decreasing consistently over the years now falling below the 1-year mark in 2021. This is a strong indicator of players scaling up rapidly over the past few years backed by consistent and timely investor support.

Investors were also reinvesting in companies which faced a headwind due to the pandemic to ensure the firms have a good enough runway to come out stronger.

Timeline Between Rounds – GCC, 2018 – 2021YTD

Note(s): 1. GCC here includes UAE & KSA which account for majority of investments

5. FinTech and Food Services have seen strongest investor backing over the period; many other sectors are emerging

A plot of # of investments vs Total investment value throws in some interesting conclusions.

FinTech has been at the forefront of investor interest with highest number of deals with sizable tickets. FoodTech also is a sizable sector seeing strong investor interest.

There are a few emerging sectors to watch out for including SaaS, HealthTech, Vertical play in e-tailing, EdTech, eB2B to name a few, that could offer a strong medium to long term growth potential.

MEA Funding by Sector, # of Deals x Total Value of investment

Note(s): 1. While sizable players are present among e-tailing horizontals, we are seeing the emergence of vertical players focussed on Niches as the market evolves