Coronavirus: MENA startups hit as deals plunge 67 pct in March, says report
Startup investment deals in MENA plummeted 67 percent in March as the coronavirus pandemic hits investor appetite, according to a report from startup data platform MAGNiTT.
The coronavirus, officially known as COVID-19, has impacted business across the world as countries enter lockdowns which curtail economic activity. While Middle East and North African (MENA) startups had a blockbuster year in 2019, they too have been hit by the worldwide slowdown in 2020 – with MAGNiTT’s CEO suggesting the worst could be yet to come.
“Since the fundraising exercise takes an average of 6 months for startups and investors to close a funding round, we will most likely not see the full effects of COVID-19 for another few months … It is too early to tell whether the worst has already passed,” said MAGNiTT's CEO & founder Philip Bahoshy.
A survey conducted by MAGNiTT found that around 59 percent of startup founders have already had their business impacted by the coronavirus, with nearly half citing revenue generation as their major concern.
Over 40 percent expect lower-than-expected revenue growth rates in 2020, and 29 percent anticipate that their revenue will fall below 2019 figures.
Prior to the pandemic, MENA startups started 2020 very positively. Over the first quarter of 2020, including March, funding rose 2 percent year-on-year, with big funding rounds for Kitopi, a cloud kitchen platform, Vezeeta, an Egyptian online medical scheduling service, and SellAnyCar, a Middle East car buying service, leading the way.
These initial successes for the sector later slowed as the coronavirus took hold, prompting widespread business slowdown. Despite these struggles, some startups could benefit from an increased reliance on technology for business under lockdown conditions.
“We are increasingly seeing investors using online, tech-enabled tools to continue to look for the best opportunities,” explained Bahoshy.
“More venture investors than ever before are processing startup applications online, as COVID-19 increasingly makes meeting in-person and cross-border more difficult in the short term.”
The number of coronavirus cases has continued to rise across the world, with over 1.85 million infected, and nearly 115,000 dead. Over 435,000 have recovered.