Happy Friday! We’re now over halfway through the year, and I’m sure you’ve seen the headlines—startup funding in MENA was significantly down in H1 compared to the same period in 2023.

It’s true. There’s no denying that.

But, you don’t have to dig very deep to find green shoots…

P.S. If you missed our weekly deep-dive on the MENA femtech industry, covering major players, their stories, the funding landscape, and regional challenges, check it out here.

Today’s briefing is a 5 min read:

• 🥊 MENA startup funding down in H1, but not out for the count this year

• 🇯🇴 ISSF announces $5 million investment in Global Ventures' Fund III

• 🇦🇪🇮🇳  India-based Stride Ventures invests $1 million in UAE’s Maalexi

• 🔈 Catch up on VC React Podcast - Episode #2 

🚀 Weekly funding round-up

🌾 Maalexi, a risk management platform for small food and agri-businesses, has secured a $1 million investment from India-based venture debt firm Stride Ventures.

• Founded in 2021 by Dr. Azam Pasha and Rohit Majhi, the platform enables efficient cross-border trade with digital contracts, AI-enabled inspections, and blockchain-authenticated documentation.

💰 Investor lowdown: Along with this recent $1 million investment, in early 2024, Maalexi raised $3 million in a pre-Series A funding round led by Global Ventures, who joined existing investors Rockstart and Ankurit Capital.

🤝 Back in February 2024, Stride Ventures partnered with Hub71 to support startups in Abu Dhabi by providing access to capital, mentorship, and resources.

This investment in Maalexi marks Stride Ventures’ first in the GCC.

Startup Ecosystem

🥊 MENA startup funding down in H1, but not out for the count this year

📉 The first half of 2024 saw a notable decline in total funding.

Wamda reported a 46% decrease, while MAGNiTT noted a 34% slump—splitting hairs isn’t necessary.

The long and the short of it is: funding was down, and pretty significantly.

🔎 Why?

At a regional level, uncertainty due to the war in Gaza and the potential for military escalation likely contributed to doubts among local and international VCs.

Zooming in on Egypt, the startup ecosystem saw a drastic decline, with 33 startups raising only $83 million, an 80% drop from last year, driven by economic crises and high inflation.

🌪️ The positive spin

Despite the downturn, investor activity increased by 33%, and new funds launched surged by 130%. Capital is coming.

Q2 funding saw a slight 5% increase over Q1 (although it was still down 9% compared to the same period in 2023, but let’s not dwell on that).

 🔑 Key takeaways

• UAE and Saudi Arabia: Continue to lead in transactions and funding.

• Deal Count: Down 18% with 211 transactions.

• Proptech: Surpassed fintech as the most funded sector with $200 million across 14 deals.

• B2C vs. B2B: B2C model deals declined by 64%, while B2B model deals surged by 153% in H1 2024.

• Female-led Startups: Raised $1.8 million across 15 deals, down from $6 million the previous year.

• Debt Financing: Dropped from 39% of total funding in H1 2023 to 17% this year.

• Series A Startups: Attracted $169 million, with Seed stage financing 52 rounds totaling $131 million.

• Exits: Plummeted by 63%, with only 10 exits.

🔮 Flashforward

Several VCs have launched new funds, pledging billions to invest in MENA tech companies, which fingers crossed will boost investment volumes in the second half of the year.

💰VC round-up

💰 Saudi Arabia-based VCs led with 60 deals in H1, followed by UAE with 41 and Egypt with 24. The US was the top foreign investor with 31 startups, and the UK followed with 19. Saudi Arabia’s RZM Investment and Bahrain’s Hope Ventures were the most active, each with seven deals, followed by Flat6Labs with six, and Disruptech with five.

🇯🇴 The Innovative Startups and SMEs Fund (ISSF), Jordan's largest investment fund, has announced a $5 million investment in Global Ventures' Fund III. This year, ISSF has also invested in MSA Novo’s MENA Fund and Propeller Ventures II. As part of the deal, Global Ventures will be mandated by ISSF to invest in Jordanian startups. So far, Global Ventures' Fund III has disclosed investments in Immensa, an additive manufacturing startup, and Maalexi, a risk management platform. ISSF previously invested $1.5 million in Global Ventures' Fund II in January 2022.

💻 Tech round-up

🤖 Dubai property giant DAMAC Group has invested $50m in AI firm Anthropic and also invested in Elon Musk's xAI and French AI firm Mistral. These investments are part of DAMAC's strategy to advance digital infrastructure and support essential tech transitions for future growth and innovation.

🚕 UAE-based mobility company Hala is entering the Egyptian market with partner MwaslaTech, a provider of smart transport solutions. Founded in 2019 as a joint venture between Careem and Dubai's RTA, Hala aims to introduce e-hailing taxi services and enhance travel experiences in Egypt, focusing on new cities like the New Administrative Capital.

🚎 Swvl, a Nasdaq-listed platform for efficient, accessible, and environmentally friendly transportation alternatives, catering to enterprise and government clients, has secured a 5-year, $6.3 million contract with telecom giant e& Egypt, bolstering its position in the Egyptian market.

☁️ Omar Saud Al-Omar, Kuwait’s Minister of Commerce and Industry, has led the opening of new Google Cloud offices in Kuwait. This follows a 2023 agreement with Google Cloud to enhance government services, AI capabilities, and cybersecurity. The new offices, licensed by KDIPA, will also focus on upskilling government employees and entrepreneurs in digital technologies, reinforcing Kuwait’s National Vision 2035.

💳 NOW Money, a leading digital payroll and banking platform for migrant workers, has partnered with Mastercard. This collaboration will provide NOW Money customers with Mastercard payment cards, offering secure and convenient access to their finances, supporting the startup’s goal of improving financial services for underserved communities in the GCC.

💰 VC React Podcast: Episode 2

Episode 2 of VC React Podcast is now live! This time around, myself and Ahmad were delighted to be joined by:

• Tamer Azer (Partner at Shorooq Partners)

• Tarek Seif El Nasr (Head of Growth at Falak Startups)

We discussed the acquisition of Silicon Valley-based Crews by Core by Saudi-based WakeCap, a construction management and IoT platform, the implications of international VC firms like Breega and Hashed establishing offices in MENA, and the Saudi gaming and esports industry in light of the eSports World Cup kicking off in Riyadh.

📆  Events and opportunities

👦 Changelabs is launching its MENA Fintech Accelerator in Egypt, targeting early-stage fintech startups across Africa and MENA. In partnership with DisrupTech Ventures and InDrive New Ventures, the 10-week program will support 12 SMEs with mentorship, funding, and strategic partnerships through workshops and sessions.

📅 Deadline to apply: August 1st, 2024

🚀 The Misk Entrepreneurship Accelerator is accepting applications for its tenth cohort, offering access to networks, business development, coworking space, IT support, and post-program assistance. Highlights include one-on-one coaching, in-person weeks, workshops with industry leaders, a pitch event for investors, and a Project Demo Day.

📅 Apply by August 15th, 2024.

📈 Applications for Batch 4 of the 500 Global Seed Bootcamp in Egypt are now open to pre-seed and seed-stage startups! In collaboration with ITIDA, this 5-day program offers guidance on product-market fit, sales, marketing, fundraising, strategy validation, mentorship, and networking opportunities.

📅 Apply by August 15th, 2024.

📰 What we’re reading

• Gaza Sky Geeks. The Impact of the Gaza Crisis on the Palestinian Tech Ecosystem

• Alex Lazarow. The Money Behind The Money: LP Trends In Global VC

• 51 Labs. The State of Investments In Iraq - 2023