VC Investments in Emerging Markets Decline by Over 40% in 2024

Venture capital (VC) investments in emerging markets such as the Middle East, North Africa (MENA), and other regions experienced a sharp decline in 2024, with funding dropping by over 40% compared to 2023. This downturn reflects a broader global trend of reduced VC activity, particularly for non-AI companies, over the past two years.

Key Findings

According to the 2024 Venture Investment Report by MENA-based research group MAGNiTT, total funding across the surveyed regions—MENA, Africa, Southeast Asia, Türkiye, and Pakistan—reached $9.1 billion, marking a 41% year-on-year decline. Deal activity also decreased by 20%, with the total number of deals dropping to 1,527.

Despite the challenges, the report suggests potential recovery on the horizon, driven by declining global interest rates and lower inflation.

Regional Highlights

• MENA: Startups in the region raised $1.9 billion in 2024, a 29% annual decline. While significant, this drop was smaller than in Southeast Asia (45%) and Africa (44%). Moreover, funding levels remained higher than in 2020, signaling sustained interest despite the setbacks.
  • Deal count increased by 7% to 571.
  • The number of investors grew by 18% to 475.
  • Early-stage investments dominated, with 47% of deals in the $1 million to $5 million range. Late-stage deals, however, saw a notable decline.
• Sector Focus: Fintech emerged as a key driver, securing $3.9 billion in funding across MENA, Africa, Southeast Asia, Türkiye, and Pakistan. This underlines fintech’s importance in regions where financial services infrastructure remains underdeveloped.

Investment Trends

The report highlighted a predictable split in investor focus:

• International investors leaned toward late-stage deals, including Insider’s $500 million round and Tyme’s $250 million Series D. They accounted for 53% of all investors in the region.
• Local investors primarily supported early-stage startups.

The downturn in global VC funding also impacted exits, which dropped by 32% to just 94 in 2024. Additionally, late-stage capital became scarcer as public markets remained subdued.

Opportunities for Growth

Despite the decline, the report noted opportunities for mergers and acquisitions (M&A) across geographies within these emerging markets. With fintech leading the charge and early-stage funding showing resilience, the ecosystem may find ways to rebound as economic conditions improve.

This data paints a mixed picture for emerging markets, emphasizing challenges while highlighting areas ripe for growth and investment.