Rabat – Morocco’s economic capital Casablanca is emerging as a leading challenger for the biggest startup ecosystems in the Middle East and North Africa (MENA) region.
According to Startup Genome’s 2022 Global Startup Ecosystem Report, Casablanca ranked third top regional challenger of MENA’s biggest startup hubs such as Tel Aviv, Dubai, Cairo, Riyadh, and Abu Dhabi, in respective order.
The list of emerging startup ecosystems in MENA includes Amman, Sharjah, Bahrain, and Tunis.
In 2021, investments in MENA startups reached an all-time-high record of $13 billion and year-on-year growth of 104% resulting from the sealing of 890 deals.
The investment growth is driven by the region’s proximity to Africa, Europe, and Asia markets as well as its large, young population, Startup Genome argued.
“In a context of geopolitical instability and high unemployment, many of these young people are increasingly seeking new opportunities and looking to improve the world via entrepreneurship,” the report explained.
Notably, small and medium-sized enterprises (SMEs) make up 94% of registered companies in the region which reflects their vital role in the regional economy. However, only 3% of them have access to global funding.
In 2021, MENA recorded a 60% increase in early-stage funding compared to 2020 as well as a 23% year-on-year growth in Series B+ deals that attracted a total of $2.8 billion in funding. Meanwhile, startups in Series C and D+ raised $2.7 billion and $4.3 billion in funding, respectively.
Read Also: Report: Morocco Has Africa’s Sixth Best Startup Ecosystem
Israel, a rising “startup nation,” has collected the most investments and startup ecosystem growth in the MENA — with Tel Aviv being a consistent leader in the GSER ranking.
Valued at $100 billion, the Israeli ecosystem ranks 7th worldwide. In 2021, it contributed to 84% of the region’s share in venture capital funding. The UAE follows in second place, with an 8% market share with Dubai and Abu Dhabi serving as regional hubs for rising startups.
Saudi Arabia and Egypt have also leading MENA ecosystems, with Cairo recording a 156% year-on-year increase in total funding. The Egyptian capital hosts numerous Fintech startups such as digital payment startup Paymob which secured $18.5 million in Series A rounds in 2021.
The Fintech sector has continued to dominate the emerging venture markets throughout this year; Fintech startups concluded 210 deals worth $1.6 billion in the first half of the year.
In the early months of 2022, African startups operating in the Fintech sector attracted 68% of the continental investments while their peers in the MENA only succeeded to secure a 36% share.
In June, Moroccan fintech startups received $1 million in funding, marking a sharp month-on-month drop of 50%. Experts have argued that this decline is associated with the uncertainty looming over venture capitals as investors take a more cautious approach to investments amid an impending global recession.
Still, the Moroccan startup ecosystem continues to boom with local businesses attracting funds from African, Middle Eastern, European, and American entities to expand their operations in Francophone Africa.
