GLOBAL INVESTMENTS IN STARTUPS
GLOBAL VENTURE FINANCING TRENDS
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.