Venture capital (VC) investments in emerging markets such as the Middle East, North Africa (MENA), Africa, Southeast Asia, Türkiye, and Pakistan fell by more than 40% in 2024, reflecting global funding challenges.
According to MAGNiTT’s 2024 Venture Investment Report, total VC funding in these regions dropped to $9.1 billion, a 41% year-over-year decline, accompanied by a 20% drop in deal activity to 1,527 deals. 800 alumni, 80% of whom are founders, with the rest being domain experts and researchers.
MENA Region: Resilience Despite Decline
In the MENA region alone, startups raised $1.9 billion, marking a 29% decline from the previous year. However, the decline was less severe compared to other regions such as Southeast Asia (45%) and Africa (44%).
- Growth in Early-Stage Investments: Nearly half of all deals in MENA were in the $1 million to $5 million range, signaling a shift toward early-stage funding.
- Increased Investor Activity: The region saw a 7% rise in deal count and an 18% increase in investor participation, with 475 investors backing startups.
Despite reduced capital deployment, countries like the UAE, Saudi Arabia, and Qatar experienced increased deal activity year-over-year, signaling growing investor confidence.
Advertisement
Sector Highlights: Fintech Leads the Way
Fintech continued to dominate, securing $3.9 billion in funding across all emerging markets. This reflects the sector’s importance in regions where traditional financial services are underdeveloped.
Late-Stage Challenges and Global Context
Late-stage funding became increasingly scarce, with global exit activity plummeting by 32% to just 94 in 2024. Public markets remained largely closed, making it harder for startups to secure late-stage capital.
Philip Bahoshy, CEO of MAGNiTT, commented:
“We anticipate rate cuts to boost capital availability within the next 6-9 months. 2024 likely marked the bottom of the curve for this downturn.”
Looking Forward
As interest rates decline and inflation stabilizes globally, 2025 is expected to bring a stronger funding environment. Emerging markets may see renewed growth, driven by increasing M&A activity and continued international interest in fintech and early-stage investments.
While 2024 presented significant challenges, the resilience of key regions and sectors underscores the long-term potential of emerging markets in the global VC landscape.
