2021 was a bumper year for EM VC funding: Among emerging markets, 2021 saw soaring increases in the number of venture capital agreements signed and the sheer scale of funding channeled into startups, according to Magnitt’s recently-released 2022 State of Startup Funding Report for Emerging Markets (pdf). Records were smashed across the board in the Middle East, North Africa, Sub-Saharan Africa, Turkey and Pakistan — the markets reviewed by Magnitt.

The bottom line? 2021 saw a 228% y-o-y increase in EM VC funding, which came in at USD 6.9 bn, according to the report. Every quarter in 2021 saw more funding and agreements signed than any other previous quarter recorded, the report notes.

Crunching the numbers: The Middle East as a whole saw a total of USD 1.9 bn in VC funding in 2021 (up 132% y-o-y), with the number of agreements signed rising 5% y-o-y to 410. North Africa saw investment of USD 581 mn — a 162% y-o-y increase — with 180 agreements signed, up 23% y-o-y. Sub-Saharan Africa saw USD 2.1 bn in funding (+285% y-o-y) with 392 agreements signed (+26% y-o-y). Pakistan drew 132% more funding than the year prior, hitting USD 332 mn from 78 agreements signed, a 63% y-o-y increase.

But the biggest leap was in Turkey, which saw a whopping 375% y-o-y increase in VC funding, coming in at USD 1.8 bn, as 269 agreements were signed — up 77% y-o-y.

How did Egypt do? Last year, Egypt’s startups locked down somewhere between USD 373-502 mn. Many startups don’t publicly disclose precise data about their investments, we noted.

Egypt also landed one of MENA’s five largest agreements: The USD 120 mn investment in Egypt’s MNT-Halan was one of the five largest investments closed in MENA last year — which collectively counted for 31% of the region’s total capital in 2021, Magnitt tells us. It came in behind the USD 415 mn that went to the UAE’s Kitopi and the USD 125 mn awarded to KSA’s Unifonic, but ahead of the USD 75 mn that went to KSA’s Sary and the USD 65 mn that went to the UAE’s Pure Harvest Smart Farms, Magnitt notes.

And among active investors in EM-based startups, Egypt’s Flat6Labs tops the scoreboard: Out of the ten most active VCs, accelerators and angel investors targeting EM-based startups, Flat6Labs leads the pack, having closed 51 investments in 2021 — 22% of which were in the Middle East and 78% in North Africa, Magnitt reports. It’s followed by US accelerator Y Combinator, which made 34 investments — the majority of which (53%) went towards Sub-Saharan Africa, followed by 29% in North Africa. The UAE’s Global Ventures came in sixth, having made 23 investments — 57% in the Middle East, 35% in North Africa, and 9% in Sub-Saharan Africa.

At the MENA-wide level, 2021 VC funding rose 138% y-o-y to exceed USD 2 bn: This was driven by increased appetite from regional and international investors, the Magnitt report notes.

Several MENA countries saw sharp upswings in investment activity by both value and volume: The UAE saw investment of USD 1.2 bn, up 93% y-o-y; KSA saw investment of USD 548 mn, up 270% y-o-y; Jordan saw investment of USD 119 mn, up 499% y-o-y; and Bahrain saw investment of USD 52 mn, up 167% y-o-y. The UAE signed 155 agreements, up 12% y-o-y; KSA signed 139, up 54% y-o-y; Jordan signed 46, down 6% y-o-y; and Morocco signed 17, up 55% y-o-y, according to Magnitt.

Fintech and e-commerce startups accounted for one-third of all 2021 MENA transactions: Fintech startups in MENA raised USD 448 mn in VC funding, up 183% y-o-y, on 108 agreements, up 44% y-o-y. The region’s e-commerce startups raised USD 442 mn, up 235% y-o-y, having signed 87 agreements, up 16% y-o-y.

Interestingly, five of 2021’s ten most active investors in MENA startups were headquartered in KSA, Magnitt tells us.

And the region saw a record number of exits, which more than doubled between 2020 and 2021: 35 exits were announced across MENA in 2021, 11 of which were announced by UAE-based ventures, Magnitt notes. This is up from 16 exits in 2020 and 11 in 2016. The high number of exits “validates the market for investors,” the report adds.

Many trends identified in MENA are also being seen in the broader EM region — including more agreements, more fintech, and more exits: Over 1.3k agreements were signed in total in 2021 — a 27% increase over rounds closed in 2020. Fintech saw the lion’s share of investment among EMs overall, with fintech startups landing 21% of agreements signed and 31% of funding awarded. And altogether, 87 startups announced exits — over double the 41 exits announced in 2020 — which is “a sign of increased liquidity,” Magnitt notes.

Among the EMs reviewed by Magnitt, 2021 saw mega-rounds taking center stage as never before: Agreements worth USD 10 mn made up 8% of total agreements signed by startups in these EMs — their highest ever share. And a record 12 agreements worth USD 100 mn or more were signed — up from the previous record of three, in 2019 — with four of these closed by startups based in Turkey, the report notes. This indicates a shift by investors towards late-stage investing, Magnitt tells us.

Still, let’s not forget it’s all a drop in the ocean compared to global VC investment, which exceeded USD 675 bn in 2021: Globally, total VC funding last year doubled 2020’s all-time high, CNBC notes. US startups saw funding of USD 328.8 bn, while Chinese startups raised some USD 61.8 bn, compared to USD 39.8 bn awarded to startups in the UK. “But VC investment in the UK and Europe is growing faster than it is in the US and China,” CNBC adds.