Tracxn, a leading global SaaS-based market intelligence platform, has released its Geo Quarterly Report: UAE Tech – Q3 2023. The report, based on Tracxn’s extensive database, provides insights into the UAE Tech space.
The UAE Tech space is the second highest-funded sector in the Middle East and North Africa (MENA) region, followed by Saudi Arabia and Egypt. Funding in this space saw a peak in 2021 after which it has observed a decline in quarterly funding since Q4 2022.
UAE Tech startups witnessed total funding of $112 million in the third quarter of 2023, a decline of 23% from $145 million raised in Q2 2023 and a decline of 49% compared with $219 million raised in Q3 2022. This decline is largely due to a drop in late-stage funding to $25 million in Q3 2023, a 75% plunge from $100 million raised in the corresponding quarter last year (Q3 2022). There was no late-stage funding in the previous quarter (Q2 2023) in this sector.
A downward trend was observed in seed-stage funding as well. In Q3 2023, seed-stage funding worth $26.6 million was recorded, a drop of 57% and 66% compared with Q2 2023 and Q3 2022 respectively. Early-stage funding worth $60 million was observed in Q3 2023, 28% lower than the amount raised in Q2 2023, but a growth of 50% from Q3 2022.
FinTech, Enterprise Applications, and HealthTech were the top funded segments in Q3 2023. Startups in the FinTech space secured investments worth $78 million in Q3 2023, a sharp spike of 358% from the previous quarter, but 12% lower than the funds raised during the corresponding quarter last year.
No IPOs have taken place in 2023 so far in the UAE Tech startup ecosystem. Further, no new Unicorns emerged in the third quarter of this year. However, four acquisitions have taken place, a dip from six in Q2 2023 and 10 in Q3 2022.
Among UAE cities, Dubai took the lead in terms of funding. Companies headquartered in Dubai raised $82.7 million, accounting for 71% of the total funds raised in the UAE Tech space.
Wamda Capital, 500 Global and Hub71 are the most active investors in the region. Global Founders Capital, B&Y Venture Partners and Preface Ventures were the top seed-stage investors in Q3 2023, while SC Ventures, S3 Ventures and e& are the top early-stage Investors in Q3 2023. Bankai Ventures was the top late-stage investor in the region in Q3 2023
