The Middle East and Northern Africa region saw its second annual decline in venture capital deals in 2023, but the total round count remained well above historic norms.
Here’s a look at five key trends from PitchBook’s H2 2023 MENA Private Capital Breakdown that demonstrate how the region’s VC ecosystem navigated the challenges of 2023.
A total of $3.8 billion was invested across 663 deals last year, representing annual decreases of about 21% and 24%, respectively.
Despite the slowdown, 2023 was still the second-highest year on record for deal value, buoyed by outsized deals including a $950 million investment in buy now, pay later platform Tabby.
Turkey had the highest percentage of 2023 MENA deal count with 38% of overall investments. The United Arab Emirates is another regional hotspot with 210 closed deals—33.8% of the region’s deal count.
As to be expected in a more nascent VC market, early-stage deals represented the largest share of the region’s overall round count at 42.2%. Late-stage deals have been steadily increasing as a share of the total deal count, reaching 21.6% last year.
Volatility in the public markets, along with higher inflation, led to muted exit activity for VC-backed companies in the MENA region.
Only 19 deals were completed in 2023 for a total of around $300 million, significantly lower than 2022’s figures of 41 exits totaling $3.7 billion.
Following a record year in 2022, MENA fundraising fell in 2023 with 19 funds closing on an aggregate of $1.8 billion compared to the $6.3 billion raised across 37 funds the previous year.
Only one VC mega-fund—defined as over $500 million—closed last year, courtesy of Mubadala‘s more than $710 million Brazil Special Opportunities Fund II.
Featured image of Dubai by Nancy Pauwels/Getty Images
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