Start-up companies in the Middle East and North Africa recorded the lowest volume of funding in years on a monthly basis, as the total amount of funding in April did not exceed $7 million, distributed over 11 deals, meaning that the total funding value has decreased compared to its value in March by about 97%, and by 99% compared to April 2022. In the following lines, we review how the volume of funding and deals was distributed by country and sector, and we try to answer the reasons why the volume of startup funding in April was so low.

Distribution of startup financing by country

Emirati startups occupied the largest share of funding, with a total value of $3.6 million distributed over 3 deals, while Saudi startups came in second place, with $3 million distributed over 3 deals as well. Tunisia and Iraq came in the fourth and fifth places, with total funding of $549,000 and $125,000, respectively. While 4 deals went to Tunisian startups, only one Iraqi startup received funding.

Distribution of financing startups by sectors

Startups active in the financial technology sector occupied the lion's share of total startup funding in April, raising nearly $5 million, or about 71% of the total funding.

Food technology companies came in the second place behind financial technology companies, with a total funding of $600,000, followed by real estate technology companies with a total funding of $533,000, then logistics companies with a total funding of $500,000, while the remaining of the funding was distributed among emerging companies in active in electronic labor market, electronic sports, software as a service, clean technology and agricultural technology.

What are the reasons behind the drop in startup funding in April?

The reason for the significant decline in the volume of funding for startups in April can be attributed to several factors.

First - The month of April coincided with the advent of the blessed month of Ramadan: It is known that the volume of economic activity in Islamic countries, and Arab countries in particular, slows down during the blessed month of Ramadan, but this reason is one within others to be taken into account.

Second - the crises of the global economy: Despite the slowdown in financing startups at the global level, the latter does not have a significant impact on financing startups in the Middle East and North Africa market for many reasons, the most important of which is that financing startups in the region relies heavily on local funding. Specifically, the financing coming from the Gulf Cooperation Council countries, which were the least affected by the economic crises that afflicted the global economy in recent years. Nevertheless, the impact of the global economy situation on financing emerging companies in the region cannot be ignored.

Especially on the Egyptian start-up companies, as during the past two years a number of Egyptian companies witnessed the insolvency, perhaps the most prominent of which was the “Swvl” mass transit company, which depends on the Egyptian market in particular, and was going through an economic crisis. Is was also vulnerable to global market turbulence, due to its large geographical spread and its dependence on international finance.

Third - The pattern of financing startups in the Middle East and North Africa:

It is noted in financing startups in the region that they tend to fluctuate in the amount of financing from one month to another, on the one hand, and on the other hand, the volume of deals varies greatly, as one startup may obtain financing that exceeds one hundred million Dollars, while the volume of funding for five financing deals does not exceed one million dollars, and may even be less than that sometimes, and what confirms this is the financing data for emerging companies in the past years, and the large discrepancy in the volume of funding between months.

In conclusion, the aforementioned reasons have come together to show financing for startups in the month of April of this very meager size. As for the coming months, it will be early to expect a slowdown in the growth of financing for startups. During the first quarter of 2023, startups succeeded in raising more than $1.1 billion, an increase of 17% compared to the first quarter of 2022. Also the month of May has already witnessed a number of relatively large deals, including two company deals. "Tarabut" and "SQUATWOLF" company, where the total amount obtained by the two companies amounted to about $ 62 million, or about 9 times the total funding for startups in the month of April.