TLDR:
- The Middle East and North Africa saw a 23% drop in VC funding in 2023, with Bahrain, Qatar, and the UAE experiencing significant decreases.
- Gulf countries like Qatar are investing in start-up ecosystems to boost VC investment.
Article Summary:
The Middle East and North Africa region experienced a 23% decline in venture capital (VC) funding in 2023, with Qatar, Bahrain, and the UAE being the most affected by significant decreases. A report by Qatar Development Bank and MAGNiTT revealed that capital decline in the MENA countries reached 23% year-on-year, with a 34% drop in deals compared to the previous year. The overall economic volatility, high interest rates, and competition with safer assets were identified as factors impacting the VC ecosystem. Investments in Qatar plummeted by 57%, with Bahrain seeing an 82% drop and the UAE a 45% fall. Egypt also experienced a 30% decline in VC funding in 2023. Gulf countries reported a 14% decline in funding, excluding Saudi Arabia, which skewed the average with a 33% increase. However, the report highlighted a positive outlook for 2024, with the announcement of new funds and the availability of dry powder in the market. Interest rate cuts and the return of international interest are expected to accelerate VC investments in the region.
Gulf countries, including Qatar, are actively investing in start-up ecosystems to stimulate VC investment. Qatar announced a $1 billion “Fund of Funds” at the Web Summit, aiming to develop a vibrant VC and start-up market. The Qatar Investment Authority’s $1 billion deployment seeks to support the establishment of start-ups and foster entrepreneurship in the country. Between 2016 and 2023, Qatar saw the foundation of 187 start-ups and 224 venture capital transactions, indicating a growing interest in the start-up sector. Although the report suggests a positive trend in VC investments for the coming year, the impact of these investments on the overall market remains to be seen.
