Start-Ups in the Middle East and North Africa (MENA) region managed to secure Dh1 billion (US$277 million) in funding during the first quarter of this year, according to MAGNiTT Q1 2020 Mena Venture Investment Report.

This 2 per cent increase in funding from the previous year for the same period is mostly due to a “strong start to 2020” before the coronavirus pandemic derailed global economy and brought it to a halt.

According to the report, this increase was achieved due to top 5 funding rounds being announced before the world went into lockdown mode, effectively shutting down the economy. Starts up such as Kitopi, Vezeeta, and SellAnyCar, all raised their funding in February 2020, with the UAE leading in the highest funding amount, accounting for 51 per cent of the total investments.

Funding rounds in first two months of this year included Kitopi ($60m), a Dubai cloud kitchen company; Vezeeta ($40m), an Egyptian health-tech start-up, and SellAnycar.com ($35m).

Image Credit: MAGNiTT Website

This is not to say that investment deals were up. In fact, according to the report, they were down 22 per cent for the first quarter of the year, compared to the same period last year. and now with the pandemic taking over the world, that figure saw another significant drop down to 67 per cent in March.

While investors are still showing interest as highlighted in the MAGNiTT report, the repercussions of the crisis brought on by the pandemic are not expected to be seen until several months later.

“Historical data highlights that investment rounds across MENA tend to take, on average, 6 months to come to fruition,” explains Philip Bahoshy, MAGNiTT’s founder & CEO. “We will most likely not see the full impact of COVID-19 on the venture funding space yet for a few months. However, early indications have already shown a slowdown in funding announcements, as start-ups and investors re-evaluate their positions in this new environment.”

The report adds that start-ups in grocery delivery, healthcare, e-commerce, and edu-tech sector are seeing an increase in both customers and investments.

MAGNiTT’s weekly webinar poll, that included more than 100 start-up founders, revealed that 59 per cent already feel the impact of the coronavirus crisis, while 48 per cent have raised major concerns over revenue generation. According to the poll, 25 per cent feel fundraising is definitely the cause for sleepless nights and 41 per cent anticipate lower-than-expected revenue growth rates in 2020, with 29 per cent anticipating revenue below 2019 figures

However, all does not seem to be lost with both investors and start-ups shifting to finding new ways to fundraise on digital platforms. According to MAGNiTT, its fundraising tool has seen a 117 per cent increase in applications, month-over-month since January.