MENA Investor Analysis

MENA Investor Analysis: Investor Location

J&A has collected investor data to generate a summary of Middle Eastern and Northern African (MENA) investor location, investment size, investment volume, and investment location. This article provides data and insights on these topics. It is important to know that many transactions in the MENA region are not announced, therefore the metrics here report less activity than what is truly taking place. The date herein is collected from 2000 to 2018.

The United Arab Emirates Makes the Most Investments

  • The United Arab Emirates (UAE) made the most investments in the MENA region by nearly double its leading competitor (Turkey) and nearly four times its closest Gulf Cooperation Council counterpart (Saudi Arabia).
  • The UAE’s focus on technology and innovation comes as no surprise to people familiar with the region, as cities such as Dubai and Abu Dhabi continue to pioneer free zones and technology-forward cultures through economic incentives.

The Number of VC Firms Is Increasing in the MENA Region

  • Over 50% of existing MENA VC investors were started between 2011 and 2018. The below figure shows the growth of MENA investors by type since the year 2000.
  • There has been a steady development of private equity funds in the region. Firms that identify as venture capital skyrocketed since 2011. Angel investors and incubators also increased dramatically in the same period. Venture capital firms, incubators, accelerators, and angel groups make up 80% of new investment firms in the region since 2011.

VC Investments Are Concentrated by Country

  • Not surprisingly, the UAE leads the MENA region in the number of investments made and the number of investors within the country.
  • The mix of private equity investors, venture capital investors, angel groups, accelerators, and incubators remains fairly consistent among the leading countries. VC firms and angel groups are the two most common firm types.
  • Private equity growth is expected to continue as the market matures.

The insights and data herein signify strong growth in a maturing investment region. Next, we will review the amount of invested capital per deal, the number of deals invested in by MENA entities, and investment locations.

MENA Investor Analysis: Investment Size and Volume

In this section, we will analyze the average money raised from MENA investors by round, the number of companies invested in by round, and briefly review where MENA portfolio companies are headquartered. All data is from the years 2000 to 2018.

Investment Dollars Increase as Rounds Advance in Stage
  • The amounts raised in early-stage rounds from MENA investors (pre-seed, angel, and seed) are similar to the amounts raised in the same rounds from North American investors.
  • Series D and E amounts raised per round were higher on average than North America rounds. This is likely because more popular brands raise money from MENA investors on their way to “unicorn” status. This also reflects the relative scalability of the market due to the consolidation of decision-makers.
  • Series F, G, and H were not analyzed due to the limited amount of data available and relative skewing of results.
Investors Make Angel and Seed Investments Most Often
  • The number of investments made in angel and seed rounds was more than all other rounds combined. This is likely due to the relatively high concentration of high net worth individuals in MENA countries.
  • The number of investments made decreases as rounds advance in stage, though the total money invested in each round increased. This is identical to what is seen by North American investors.
  • This data is based on 1,381 investments made from 2000 to 2020.
Investments are Globally Diverse
  • Only 32% of companies invested in by MENA investors are based in the MENA region, showcasing a desire for portfolio diversification.
  • North American and European companies make up over 56% of MENA investments.
  • J&A expects investments in South America and the MENA region to increase significantly over the next five years.

The following section will highlight where investments are located, as MENA investments are more diverse than North American investments. J&A will also highlight regions where growth and opportunity are expected.

MENA Investor Analysis: Investment Locations

As shown in the previous section, investments are globally diverse for MENA investors. The data herein showcases which investments have taken place over the last 15 years. J&A expects strong South American and MENA investment growth due to government initiatives. We also expect Eastern African and Southern African investments to grow disproportionately in deal count five to 10 years from now.

MENA Investors Favor North American Investments by Both Dollar and Count
  • North American (NA) investment round sizes are uniquely large, showing a strong value placed by the MENA investor in NA deals.
  • Asia is not analyzed due to several exceptionally large investments that skew results.
  • Investments by industry were relatively broad, with no single industry commanding a majority of investment dollars.
  • J&A anticipates that both the number of deals and the dollar volume per deal will increase for MENA-based companies in 2020 and beyond.

The chart below shows the average investment dollar amount made by MENA investors in each region.

Mapping Deals Over $50 Million Made by MENA Investors Across the World

The map below shows the brands that raised over $50 million and their respective locations.

  • North America: Not surprisingly, North America took the top spot with leading tech investments and brand names familiar to everyone such as Lyft, Uber, and Collective Health.
  • Europe: Spain, Germany, and the United Kingdom commanded the largest deals with brands like Babylon and Wefox.
  • MENA: Most of the deals made by MENA investors were in the MENA region and include brand names such as Careem, TruKKer, and Fetchr.
  • Asia: Asia was home to some giant deals, namely Koudai and BigBasket, that were removed from this data set because they skewed results.
  • Oceania and South America: J&A anticipates these regions will grow in both investment dollars and size due to advancements made by local technology companies and relative maturing of economies. Both regions are not without struggle. As North American markets become more mature and saturated, Oceania and South America will play increasingly important roles in the global technology landscape.

Key Takeaway: The Importance of Saudi Arabia

It is important to note the anticipated growth of Saudi Arabia in the MENA region. Based on the kingdom’s initiatives and relative wealth, J&A and other authorities expect the Kingdom of Saudi Arabia (KSA) to experience tremendous growth over the next 10 years. Investments in technology and innovation will be a major part of this growth. KSA is relatively small within MENA, but the country’s power in fuel and geopolitical posturing will likely lead to meaningful activity in the near term.

Sources: Crunchbase | McKinsey | International Monetary Fund | World Bank | PwC MENA