One of the biggest Middle East and North Africa (MENA) economies, the United Arab Emirates (UAE), has cemented its position as the leading destination for venture capital investment in the region.
In the first half (H1) of the year, UAE-based companies racked up a total of 85 deals amounting to $699 million in investments, a recent report by MAGNiTT reveals.
By both total funding and the number of deals closed, the FinTech sector emerged as the most successful industry in terms of attracting investor dollars, accounting for 34% of total capital invested and 22% of all VC transactions in the UAE in H1 2022.
In total, the UAE’s FinTech sector brought in $234 million from 28 deals in the first half of the year, a 249% increase in value compared to H1 2021.
Agriculture made its debut in the top two most attractive industries for investors following a single $181 million funding round for AgriTech startup Pure Harvest Smart Farms. That single deal also accounted for 26% of the venture capital raised in the country in H1 2022, while the top five deals combined made up 52% of the total investment raised.
Emirati Firms With Global Ambitions
At the high-value end of the spectrum, venture capital is being used by UAE startups to expand into the wider MENA region and beyond.
When Pure Harvest Smart Farms publicized its $181 million funding round, Co-founder and CEO Sky Kurtz pointed to the mega round as a demonstration that the firm “can reliably deploy our high-tech farming solutions across the GCC [Gulf Cooperation Council]. Now it is time to enter new markets that share similar challenges to our own.”
The UAE’s second-most highly valued VC deal in the first half of the year was closed by the buy now, pay later (BNPL) firm Tabby, which netted $54 million in a Series B funding round in March.
Read interview with Tabby CEO: Tabby Remains Independent Amid Increasing Consolidation in MENA BNPL Space
Since then, the Dubai-based firm has picked up a further $150 million in debt financing to fund its regional expansion plans. And as the company stated in a press release at the time, the loan represented the largest credit facility ever secured by a FinTech in the GCC.
Finally, PropTech startup Huspy, which brought in the UAE’s fifth largest deal with a $37 million Series A, said it would use the injection of capital to expand its presence in the UAE, Spain and pursue growth in new European markets.
Strong Start to H2 2022
A few days into the second half of the year, UAE-based digital bank Yap reaffirmed the country’s regional dominance in the VC space with a $41 million VC injection earmarked for its expansion into Saudi Arabia, Egypt, Pakistan, and Ghana.
What’s more, the Emirati government announced last month a state-sponsored initiative to promote a business-friendly environment and foster innovation and entrepreneurialism in the country.
As PYMNTS reported, government-employed citizens of the UAE will now be able to take up to a year’s leave to start their own business ventures. They will be able to do so without risking their jobs and the state will continue to pay half of their usual salaries during their time off.
“His Highness Sheikh Mohammed is a visionary. He understands how important it is to support the country’s citizens to achieve their dreams,” Alanoud Alhashmi, founder and CEO of the Futurist Company, said, as reported in the Khaleej Times. “Look at Talabat and Souq.com. They have become unicorns in the country thanks to its business-friendly environment.”
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