VC funds flow to UAE, fintech startups, but COVID-19 curbs deals

The coronavirus has dampened the number of venture capital deals in the Middle East, but funds nevertheless flowed to Gulf states including the UAE, Saudi Arabia and Egypt in the first few months of the year, with fintech and e-commerce grabbing a big share, according to online startup platform Magnitt.

digital abstract financial numbers floating on screen

Even though the number of venture capital deals for startups in the Gulf region  declined in the first quarter, the total value of funding increased slightly – with the UAE, Saudi Arabia, and neighboring Egypt grabbing the lion’s share. Investors favored tech sectors including fintech and e-commerce, according to a report from Magnitt, an online platform designed to connect startups and investors

Funding to Middle East and North Africa (MENA) startups outside of Israel hit US$277 million in the first quarter, up by 2 percent from a year earlier – even though the number of deals dropped by 22 percent, due mainly to a sharp decline in March, Magnitt said.

Companies and investors are rethinking their strategies amid the COVID-19 outbreak. Commercial hubs like Dubai and Riyadh have been enforcing strict lockdown measures, curbing  economic activity.

"Historical data highlights that investment rounds across MENA tend to take, on average, 6 months to come to fruition," explained Philip Bahoshy, Magnitt’s founder & CEO, in a statement accompanying the report.

To continue reading this article register now

Download CIO's Roadmap Report: 5G in the Enterprise