GLOBAL IN­VEST­MENTS IN STAR­TUPS

GLOBAL VEN­TURE FI­NANC­ING TRENDS

Arabnet - The Quarterly - - Entrepreneurship -

The year 2016 saw a sub­stan­tial to­tal ven­ture cap­i­tal in­vest­ment of $127.4B glob­ally, while world­wide ven­ture cap­i­tal ac­tiv­ity de­clined by 24%, clos­ing in on just 13,665 deals - sug­gest­ing some very large deals. While the value of in­vest­ments ap­pears rel­a­tively good in com­par­i­son to pre­vi­ous years - amount­ing to nearly dou­ble the to­tal global VC in­vest­ment seen in 2013 and only a 10% de­crease in value of in­vest­ments year-on-year, the ma­jor de­cline in the num­ber of deals in­di­cates a more com­pli­cated year for ven­ture cap­i­tal in­vest­ment. The out­look for 2017 re­mains pos­i­tive, how­ever, with the an­nounce­ment of new or ex­panded funds, in­clud­ing a $1.5 bil­lion VR fund from HTC and a new Ai-fo­cused ef­fort at Mi­crosoft.

FIG­URE 1: NUM­BER OF IN­VESTORS BY YEAR

The num­ber of tech in­vestors in MENA has been grow­ing ex­po­nen­tially, with the ecosys­tem adding (on av­er­age) around 10 new funds per year be­tween 2009-2012, ac­cel­er­at­ing to about 20 new funds per year in 2013-2014, and then jump­ing to about 30 new funds per year in the past two years (2015-2016). Of the 30 fund­ing in­sti­tu­tions founded in 2016, 40% of th­ese funds are based out of the UAE; mean­while, 6 funds have closed down in the pe­riod cov­ered by the re­search.

FIG­URE 13: GEN­DER DIS­TRI­BU­TION AMONG FOUNDERS BY YEAR

Gen­der dis­tri­bu­tion among startup founders has been rel­a­tively sta­ble over the years rang­ing from 10% to 15%. In­ter­est­ing, this past year broke from that pat­tern – fe­male founders in MENA tech star­tups that raised fund­ing in 2016 jumped to 26%demon­strat­ing that the ecosys­tem is do­ing a bet­ter job at­tract­ing and sup­port­ing women founders.

FIG­URE 2: PER­CENT NUM­BER OF IN­VESTORS BY GE­OG­RA­PHY

The in­vestor com­mu­nity con­tin­ues to be heav­ily con­cen­trated in a few coun­tries, with the rest of the in­vestors be­ing scat­tered, a few each, across other mar­kets. The UAE is home to about one third of all in­vestors; Saudi Ara­bia and Le­banon com­bined ac­count for another third; and all other coun­tries to­gether make up the re­main­ing third of the in­vestor pie. Le­banon has an ex­cep­tion­ally high num­ber of funds for such a small coun­try, driven by Cir­cu­lar 331 of the Cen­tral Bank of Le­banon; mean­while, Egypt, one of the re­gion’s largest mar­kets, has a rel­a­tively low num­ber of funds for such a pop­u­lous coun­try with so many star­tups.

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