Revealed: Surge in MENA IPOs gas VC funding in capital market infrastructure startups 

Nuwa Capital’s aggressive transfer on the capital market infrastructure section comes amidst a surge in IPOs in MENA, particularly in Saudi Arabia, which has seen 9 out of the ten new listings in GCC within the first half of 2024.

There have been as many as 48 IPOs within the MENA area in 2023, elevating $10.7 billion.

“Saudi Arabian capital markets’ infrastructure enterprise has seen unimaginable momentum in latest months and years, with Tadawul’s market cap surging to $2.9 trillion at the moment from $2.4 trillion in 2020,” to $2.9 trillion as we speak,” Khaled Talhouni, Managing Accomplice, Nuwa Capital, informed Arabian Enterprise.

“We additionally added to our portfolio in Saudi Arabia – it alone accounts for 35 % of Nuwa Capital’s portfolio at the moment,” he mentioned.

Talhouni mentioned Saudi Arabia might be one market that the VC might be carefully.

The flurry of latest firm listings have additionally led to a surge in buying and selling volumes on UAE inventory exchanges, with the market cap of ADX rising to over $724 billion.

Focusing on tech, shopper startups

Talhouni mentioned Nuwa Capital can be upbeat about funding alternatives within the early-stage tech ecosystem ventures as additionally corporations servicing particular features of the regional financial system, comparable to shopper credit score, which has seen vital development within the UAE and KSA.

“So we’re feeling very bullish and we’re additionally deploying fairly aggressively.

“We’re seeking to make investments $41 million (AED150 million) over the following 18 months or so,” he mentioned.

Talhouni mentioned the Nuwa group really believes the markets are ripe for funding now, and is able to assist the following wave of innovation throughout the MENAT area.”

“We’ve been aggressively investing since Q3-This fall 2023 – we’ve really deployed round $10 million in almost 11 corporations – all unannounced for the second.

“Seven of those are new portfolio corporations, and 4 are follow-ons,” he mentioned.

In addition to the Saudi capital market infrastructure ventures, Nuwa has invested in a GCC-based SaaS enterprise, focusing on the US and international markets. a shopper credit score enterprise enterprise, backed a variety of robust founding groups in Turkey, apart from doubling down on its current portfolio corporations.

“Companies specializing in servicing shopper credit score has seen vital enlargement within the latest previous with bank card functions surging by 65 % yearly since 2017 within the UAE and bank card loans growing by 17 % yearly in Saudi Arabia, pushed largely by corporations within the BNPL area like Tabby and Tamara,” Talhouni mentioned.

The VC senior govt mentioned coming into 2023, the market was contemporary off of the bull run of 2021-2022 and issues had began to settle down.

“We held off from deployment initially, and I believe we have been very cautious about investing via the hype as we had anticipated a correction,” he mentioned.

Evolving funding panorama

The Nuwa Capital Managing Accomplice mentioned VCs and traders are additionally observing {that a} rising variety of corporations attain a sure stage of maturity the place they require funding post-Collection A and past.

“Various these are exploring enterprise debt because it provides non-dilutive capital,” he mentioned, including that because the ecosystem matures, enterprise debt turns into more and more enticing because it supplies versatile financing options that assist development with out the instant want for fairness dilution.

Talhouni, nevertheless, mentioned the demand for development stage capital, i.e. greater funding rounds at round or post-Collection B, will turn into extra evident.

“This hole exists as a result of a number of causes. Partially, early-stage has been to a sure diploma de-risked which has resulted in additional corporations being funded, the calibre of founders is unprecedented and extra corporations are graduating from early to later phases, however on the similar time, there aren’t any specialised growth-stage funds and monetary devices tailor-made for this stage,” he mentioned.

MENA traders must evolve with the market’s calls for and provides founders entry to new capital merchandise that may really propel the sector ahead, Talhouni mentioned.