According to data platform Magnitt, companies in the UAE raised US$699 million in the first half of 2022, ranking the Emirates as the top venture capital fundraiser in the Middle East and North Africa.
The Emirates was also the leader in terms of deals, which grew 10 per cent in the six-month period from a year ago, Magnitt said in a report on Tuesday.
The UAE also hosted the biggest deal — a $181m convertible note mega-round for Abu Dhabi-based Pure Harvest in June, marking the 10th straight year that the UAE has hosted a mega-round, which is funding worth $100m or more.
The UAE attracted more than $1.47 billion in venture capital 2021.
Saudi Arabia and Egypt were second and third, respectively, in both funding and deals closed. The kingdom attracted $584m, a more than threefold rise from the first half of 2022, on 79 deals, while Egypt funding more than doubled to $307m on 78 deals.
Investments in Bahrain surged almost eightfold to $116m, placing the country in fourth place, followed by Tunisia which grew a third to $36m. In terms of deals, the countries swapped places to keep their top-five rankings.
Easy access to diverse funding channels and favorable legislative tools in the UAE are “helping build one of the most globally attractive landscapes for start-ups and entrepreneurs”, said Ahmed Al Naqbi, chief executive of Emirates Development Bank, which sponsored the study.
“With the recognition that today’s business landscape is changing at a faster pace in a hyper-connected world, the UAE has, over the past decade, made significant strides in growing a business-friendly ecosystem enabling the immense talent pool across the country to tap into opportunities easier than ever before,” Mr. Al Naqbi wrote.
The growth of start-ups has accelerated in tandem with the increase in digitalisation in key sectors such as retail, services, e-commerce and governments.
Globally, the value created by start-ups is about $3 trillion, which is almost at par with the gross domestic product of a G7 economy, according to advisory firm Startup Genome. Funding for these companies broke records in 2021 when it hit $621bn, according to CB Insights.
“Year on year, the UAE continues to solidify its position as a leading hub for innovation in the region. We are consistently witnessing the birth and growth of pioneering, UAE-born, solutions for the region and the world across verticals,” Noor Sweid, managing partner at Dubai-based Global Ventures, said in the Magnitt report.
The study showed that the financial technology industry led the funding raised in the first half, moving up from second place a year ago, as investments more than tripled to $234m.
Agriculture jumped four spots to second, with $181m. In third and fourth places, fashion and lifestyle ($50m) and health care ($50m), also grew multifold. Transport and logistics dropped from the top spot to fifth as funding declined 40 percent to $40m.
In terms of the number of deals, FinTech still led the way with 28, a 65 per cent rise from the previous period. E-commerce secured nine deals, and transport and logistics eight, with educational technology and health care each striking five deals. EdTech deals surged by 150 percent.
More than half of the capital used in the UAE in the first half was concentrated in the top five deals this year, compared to 77% in the same period last year. Pure Harvest alone has raised more than a quarter of the venture capital.
