UAE tech startups see difficult quarter as funding falls in Q3
Tracxn, a SaaS-driven global market intelligence platform, has published its latest Geo Quarterly Report: UAE Tech Q3 2024. Drawing from its extensive database, the report offers a snapshot of the tech funding landscape in the UAE.
In Q3 2024, tech startups across the UAE secured a total of $101 million, reflecting a sharp 33.8% fall from the $153 million raised in Q2 2024. The figure also represented a 36.29% drop compared to the $159 million raised during the same period last year (Q3 2023).
Seed-stage funding faced a significant slump, plummeting 70.83% to $20.1 million in Q3 2024, down from $69.1 million in Q3 2023. Meanwhile, early-stage investments bucked the trend, reaching $81.2 million, a 24.92% rise compared to the $65 million raised in Q3 2023. The startup scene in the UAE, however, remained quiet for late-stage rounds this year, with no deals reported.
M&A activity was minimal, with only two acquisitions taking place: AXE Securities took over Forex Funder, and CoinDCX acquired BitOasis. Furthermore, no UAE-based tech startups pursued IPOs during this quarter.
The top sectors in Q3 2024 were FinTech, Enterprise Applications, and Retail. However, funding in the FinTech sector fell by 29% compared to Q3 2023, while the Enterprise Applications segment experienced an even steeper decline, dropping 67% year on year. The Retail sector stood out, with a remarkable 98% funding increase compared to the same quarter in 2023.
In Q3 2024, the unicorn count remained unchanged, with no new entrants, echoing the trend from Q3 2023. The overall funding environment remained subdued, marked by just two acquisitions and a lack of IPOs.
Dubai continued to dominate the UAE’s startup ecosystem, with its companies raising $93.2 million in the third quarter, far outpacing Abu Dhabi startups, which secured a modest $8.2 million.
Wamda Capital, 500 Global and Middle East Venture Partners are the all-time top investors in the UAE Tech ecosystem. Y Combinator, Middle East Venture Partners and 500 Global were the top seed-stage investors in the UAE Tech ecosystem for Q3 2024, while Atinum Investment, Altos Ventures Management and Gobi Partners were the top early-stage investors.
As the UAE’s tech ecosystem navigates through a challenging period, industry stakeholders will watch closely to see how market dynamics evolve in the coming quarters. The resilience of early-stage investments offers a glimmer of hope, even as broader challenges persist.
