Tracxn, a leading global SaaS-based market intelligence platform, has released its Geo Annual Report: UAE Tech 2023. The report, based on Tracxn’s extensive database, provides insights into the UAE Tech space.
The UAE is the fourth largest economy in the MENA region and is ranked seventh globally in terms of per capita income. The startup ecosystem in UAE witnessed its highest funding in 2022 after which there has been a steady decline in funding in this region.
The UAE Tech space witnessed total funding of $638 million in 2023 to date, a decline of 65% compared with $1.83 billion raised in the same period in 2022, making 2023 the least funded year since 2020. The number of funding rounds in 2023 to date also fell 21% compared with the same period in 2022. Funding into UAE tech startups in 2022 was almost similar to 2021, but the region has seen a significant drop in funding in 2023.
This sector attracted seed-stage investments worth $223 million in 2023 YTD, 7% lower than the $241 million raised in 2022. However, this is a rise of 47% from the $152 million raised in 2021. This sector secured early-stage funding of $240 million in 2023 to date, a 66% drop compared with the same period in 2022, and 30% lower than the amount raised in the same period in 2021. Late-stage funding stood at $175 million in 2023 YTD, an 80% plunge from $881 million raised in 2022, and 86% lower than $1.29 billion in 2021.
FinTech, Environment Tech and Blockchain Technology were the top-performing segments in this sector in 2023. The FinTech segment raised $174 million, followed by the Environment Tech and Blockchain Technology spaces which raised $168 million and $167 million respectively.
The number of $100M+ rounds too, fell to one in 2023, from seven in 2022 and two in 2021. No new Unicorns emerged from the UAE Tech space in 2023, as against one new Unicorn in 2022 and two in 2022. The number of acquisitions recorded in this sector fell to 16 in 2023 YTD, from 18 acquisitions in 2022 and 13 in 2021.
Among the cities, Dubai took the lead in terms of funding this year. Tech startups headquartered in Dubai raised $579 million in 2023, while those based in Abu Dhabi and Umm Al Quwain raised $54 million and $5 million, respectively.
In5, Hub71 and MBRIF were the overall most investors in the UAE Tech space in 2023 till date. Flat6Labs, Y Combinator, and Wamda Capital were the top investors in terms of seed-stage funding during the period, while e&, S3 Ventures and SC Ventures were the top investors in early-stage investments. Bankai Ventures was the most active investor in the late stage of 2023.
The Covid pandemic created an unprecedented economic crisis for the UAE, similar to other economies. Despite the challenges, the UAE’s economy has still been able to perform well and is showing recovery post covid. The government of the UAE is actively pursuing economic diversification and implementing regulatory changes to foster private sector growth, reduce dependence on oil revenues, and establish a knowledge-based economy driven by innovative technology and sustainable energy. The country is committed to substantial investments in advanced industry sectors and technology education, which will result in sustained growth in the future.
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