UAE ranks first in venture capital investment for startups in the region in 2021, up 93 per cent

According to Magnitt’s 2022 Venture Investment Report

• Dr Al Falasi: With the support of the leadership, the UAE has achieved unprecedented success in attracting venture capital investments for startups by launching integrated national projects to enhance the role of entrepreneurship in the economy
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• Dr Al Falasi: The achievement is a testament to the effectiveness of the national policies and strategies, implemented to enhance the competitiveness and attractiveness of the business environment and entrepreneurial activities in the UAE

• The UAE has emerged as the most attractive market in the region, registering AED 4.3 billion worth of venture capital for startups, which is a new record for the country.
• The result illustrates the strength of UAE's knowledge-based economy, confirms the ability of its markets to attract quality investment, and cements its position as the first place to connect pioneering projects with local, regional, and international investors.
• The venture capital investments were distributed among 155 startups in the UAE in 2021, with a growth rate exceeding 12 per cent compared to 2020.
• The UAE topped the regional list in terms of the average size of a single financial deal, registering a growth of 72 per cent against 2020. This indicates the country's prominence as a hub for growing projects and unicorn companies.
• The report highlights UAE superiority in the Middle East and Africa in terms of the number and size of acquisition deals, claiming 11 out of 35 acquisition deals in the region, reflecting strong ROI for startups in the country.
• The UAE accounted for 46 per cent of the total venture capital received in the Middle East and Africa in 2021, and over 26 per cent of the number of transactions.
• The top five sectors which have attracted capital in the region include food and beverages, financial technology, eCommerce, transportation, logistics, and enterprise software.
• Two Emirati companies - Kitopi, the world’s leading cloud kitchen platform, and Pure Harvest Smart Farms, a regional innovator in sustainable agriculture - are among the list of top five companies that attracted the largest financing deals in the region.

The United Arab Emirates (UAE) has secured the top spot in attracting venture capital investments for startups in the Middle East, Africa, Turkey, and Pakistan during 2021, registering a growth of 93 per cent. These figures were released in the 2022 edition of the Magnitt Emerging Venture Markets Report.    

The report revealed unprecedented regional and global investor participation across markets, with UAE for the first time exceeding the USD 1 billion mark in the venture capital for startups. According to the data, UAE attracted AED 4.3 billion (USD 1.165 billion) venture capital investment during 2021, registering a growth of 93 per cent as compared to 2020.    

His Excellency Dr Ahmad Belhoul Al Falasi, Minister of State for Entrepreneurship and SMEs, said that the figures revealed unprecedented success achieved by the UAE in attracting venture capital investments for startups, adding to the glorious track record of the country.

Thanking the leadership for their support and vision to develop and diversify the national economy, Dr Ahmad Belhoul Al Falasi said that it is because of their perseverance that the UAE has been able to solidify its position as the number one destination for businesses and entrepreneurial projects in the region and the world in line with the country’s vision.

Asserting that 2021 was an exceptional year for the entrepreneurship sector in the UAE, Dr Falasi said: “We have successfully doubled the size of venture capital investments in finance startups and small and medium-sized enterprises in the country. This coincided with the launch of several large-scale national initiatives designed to elevate the entrepreneurial ecosystem, including 'The Entrepreneurial Nation’ and the ‘Projects of the 50’, which provide services for entrepreneurs and project owners.”

Dr Falasi further stated that these results are a testament to the effectiveness of the national policies and strategies, implemented to enhance the competitiveness and attractiveness of the business environment and entrepreneurial activities in the country. “The data reflects the strength of our economy, which is based on knowledge, innovation, technology, and the use of various tools, including venture capital. “The data has made it clear that the UAE is a booming economy with the capability to attract high-quality investments. We have established our position as the region's leading destination for startups and entrepreneurial projects to obtain support from local, regional, and global investors, help them achieve high levels of success, and connect to local and international markets. The initiatives taken by the government ensure an ecosystem that supports high paced development and a level play against regional and global competition with UAE as a starting point.” 

According to the Magnitt report, venture capital investments were distributed among 155 startups in the UAE in 2021, with a growth rate exceeding 12 per cent compared to 2020. It stated that UAE ranked first in Middle East, Africa, Turkey, and Pakistan in terms of the average size of a single financial deal, which reached about AED 28 billion (USA 7.62 billion) in 2021, registering a growth of 72 per cent against 2020.

The report further highlights UAE superiority in the Middle East and Africa in terms of the number and size of acquisition deals, claiming 11 out of 35 acquisition deals in the region. The average size of these deals reached AED 2.2 billion (USD 605 million), which reflects the vitality of the startups market in the country and huge growth opportunities in terms of ROI for business owners and investors, besides the prosperity of the job market.

It said that the UAE accounted for 46 per cent of the total venture capital received in the Middle East and Africa, and also registered 26 per cent of the number of transactions conducted in the region in the same year. This reflects the confidence of regional and global investors in the UAE markets and the growth opportunities they provide. The top five activities that attract capital in the region included food and beverages, financial technology, e-commerce, transportation and logistics, and enterprise software.

The report stated that two Emirati companies - including Kitopi, the world’s leading cloud kitchen platform, and Pure Harvest Smart Farms, a regional innovator in sustainable agriculture - were among the list of top five companies that attracted the largest financing deals in the region. Kitopi, AED 1.5 billion (USD 415 million) company, was the first in the list while Pure Harvest Smart Farms worth AED 238.5 million (USD 65 billion) was at the fifth position.

The report revealed that the UAE was the preferred destination for the relocation of the main and regional headquarters of the startups in the Middle East and Africa. The report also listed some of the most prominent relocations in the market in 2021, including the Lebanese digital music streaming platform Anghami, relocating to the Abu Dhabi international market; the Egyptian company Swvl, which provides transformative ridesharing solutions, relocating to Dubai; the American company Stripe, a leading financial technology in Silicon Valley, USA, which chose Dubai as the launching platform for its regional expansion in the Middle East and Africa; and the American commercial real estate and office workspace solutions company WeWork, which operates from Abu Dhabi and Dubai.