PHOTO
The ‘funding winter’ appears to have hit investments in the UAE’s startup ecosystem, with a new report stating that the country’s tech space witnessed a decline of 65% in capital inflows in 2023, compared to the previous year.
The Tracxn ‘Geo Annual Report: UAE Tech 2023’ stated funding in tech startups dipped to $638 million in 2023, a significant drop compared to $1.83 billion raised in the same period in 2022, making 2023 the least funded year since 2020.
According to findings by the SaaS-based market intelligence platform, the number of funding rounds for tech startups to date in 2023 also fell 21% compared with the same period in 2022.
This sector attracted seed-stage investments worth $223 million in 2023 year-to-date, 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 also 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.
Meanwhile, 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, raising $174 million, $168 million and $167 million respectively.
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.
The sharp decline witnessed in the UAE is in line with the global trend, with higher interest rates and fluctuating capital markets subduing investor appetite worldwide, according to experts.
(Reporting by Bindu Rai, editing by Daniel Luiz)
