MAGNiTT publishes 2023 emerging venture markets report

56

MAGNiTT, the largest verified data platform tracking venture capital investments across emerging markets, released the 2023 edition of its annual Emerging Venture Markets Report today.The report continues MAGNiTT’s tradition of analysing and comparing VC investments in technology startups headquartered in the Middle East,Africa, Pakistan, and Turkey (MEAPT) region.

Topline data from MAGNiTT’s latest report reveals sustained levels of funding – exceeding $7 billion for the second year in a row – and a steady number of transactions in MEAPT, driven by a record first quarter in 2022. However, further analysis shows a decline in funding and deals in subsequent quarters – in line with a worldwide pullback in venture investing – reflecting caution by VCs as a result of several macroeconomic developments and a climate of general uncertainty.

Within Emerging Venture Markets (EVMs), the MENAregion continues to attract significant interest, surpassing its 2021 funding levels and crossing the $3 billion mark in 2022.This increase was largely driven by a 72% jump in funding for SaudiArabian startups, while Egypt led the number of deals in MENAat 160 transactions.Africa saw close to $3 billion of investment as well, driven by Nigerian startups raising 29% of funding and closing 198 deals. Meanwhile,Turkey led EVMs overall in number of deals, with 295 transactions in 2022.

Philip Bahoshy, Chief Executive Officer of MAGNiTT, commented on the report by saying, “The venture investment landscape across the markets we cover was turbulent in 2022, echoing the global industry. We saw record highs in Q1 followed by rapid realignment as macroeconomic challenges took hold. Interestingly, deeper analysis of the data showed greater complexity in terms of investment divergence and funding success across the different geographies.

Bahoshy added, “More than ever, and particularly during this uncertain environment, there is greater engagement from governments, regulators, investors, and founders with the real-time analytics and the unprecedented depth and verification we are able to deliver via the MAGNiTTdata platform.As we prepare to expand into SoutheastAsia this year and launch a new predictive analytics capability, we can only anticipate greater progress for this promising industry, supported by robust policy- and decision-making that is driven by insightful data.”

Key Highlights

1. Arecord-high first quarter drove funding in Emerging Venture Markets, which crossed the $7 billion mark once again in 2022. However, total EVM funding of $7.24 billion in 2022 is 2.3% lower than the $7.41 billion achieved in 2021. For context, there was a more than 238% jump in total funding from 2020-2021 ($2.19 billion to $7.41 billion respectively).

2. Funding amounts for deals of less than $100 million (or “mega” deals) increased by 11% from $4.14 billion to $4.60 billion. Most of these were made in Q1, likely an “afterburn” from 2021 as a result of delayed impact from more developed markets.

3. Funding and deals declined in Q2 and Q3 then settled in Q4.This continued the downward trajectory from Q1 in line with the global venture capital landscape, marking an uncertain environment as we enter 2023.

4. The evolution of EVM deal sizes in 2021 continued into 2022, with round sizes of $1M-$5M, $5M-$20M, and $20M+ each gaining in proportion over those in the 0-$1 million range.

5. Exits across EVMs continued their upward trajectory to 144 in 2022, with an increase of 36% over 2021, reflecting continued maturity in the region’s VC industry. Middle East exits were the highest among these at 49, an increase of 69% over 2021.

6. Fintech investments continued to lead EVM deals in 2022, followed by E-commerce, Transport & Logistics, Enterprise Software, and Healthcare in a repeat of 2021 rankings.

Pakistan Highlights

1. Pakistan-headquartered startups raised $315 million in funding across 72 deals, with six exits in 2022

2. More than half the funding that Pakistan saw was covered by its top five deals in 2022.

3. Although the number of deals in Pakistan fell by 20% in 2022, funding declined by only 5.4%.

4. Exits reported in Pakistan tripled in 2022, thereby exceeding the exits of the last five years combined.