TLDR:
– Gulf venture financing remained steady in 2023, despite a funding drought in the US, Europe, and Israel.
– The Middle East and North Africa (MENA) region raised about $4 billion in funding last year, a 1% increase from the previous year.
– Startup funding in Israel saw a significant decline, with seed funds dropping by 60%.
– Debt financing accounted for nearly half of fundraising in MENA in 2023, with equity accounting for $2.2 billion across 488 deals.
– December 2023 saw an upswing in funding, with a total of $456 million raised by startups in the region, excluding a major debt deal with J.P. Morgan.
Gulf investors defied the global trend of reduced startup funding in 2023, with the Middle East and North Africa (MENA) region raising around $4 billion in financing, a 1% increase from the previous year. In comparison, startup funding in Israel saw a significant decline, with seed funds dropping by 60%, and Europe and the US experiencing declines of 44% and 30%, respectively.
However, when looking at how capital was raised in MENA, the picture is not as positive. Almost half of the fundraising in the region came through debt financing in 2023. Equity accounted for $2.2 billion across 488 deals, a 36% decrease from the $3.45 billion raised in 2022 and a steep decline from the nearly 800 deals done the previous year.
Despite these challenges, the year began on an upswing, with startups in the region raising a total of $456 million in December 2023, excluding a major debt deal with J.P. Morgan. This marked an 18% increase from November and a 253% leap compared to the previous year. The majority of funding activity was concentrated in the UAE and Saudi Arabia.
In Israel, early-stage tech startups raised $7.3 billion in 2023, the lowest level of seed financing since 2018. The decline was attributed to three factors: the global economic slowdown, Israel’s internal conflict over changing its judicial system, and the Gaza war.
Overall, the steady venture financing in the Gulf region amid a funding drought in other parts of the world highlights the resilience and potential of the MENA startup ecosystem. However, the reliance on debt financing raises concerns about the sustainability and long-term growth of these companies.
