In the first nine months of 2024 alone, the MENA tech ecosystem recorded $1.3billion in grants across the various funding stages and industries. From pre-seed to seed to series A to even G funding stage.
We reported the story of at least one successful company in each of these funding stages and thought to ourselves: “Why not take a look at these various levels so our audience can benefit from it?” Look where that got us.
For those with groundbreaking solutions, ready to launch next year, you may want to focus on the pre-series/seed stage so you can get your money up. Startups that have been in existence for about 1-2 years should give more attention to the Series A-C rounds.
While the OGs who have been here a little longer but still need funding will find the Series D-G very helpful. Now let’s get into why we’re here. Shall we?
Funding Stages for Startups
- Pre-seed funding stage
This usually refers to the earliest stage of funding for any startup and some founders even skip it all together. At this stage, it is possible that the founder is working on the product all by himself or with just a few number of people. The funding here also comes from personal savings or the goodwill of friends and family so the amount you can get varies.
Questions you want to ask yourself at this stage includes:
- Is my idea viable?
- Has my idea been done before?
- How costly is my venture?
- What kind of business model will I use?
- How will I get started?
Case study: JARAS Hospitality, a Saudi Arabia-based hospitality startup, closed a $666,000 pre-Seed in October. Although the startup was initially founded in 2023, it was able to secure this funding led by undisclosed angel investors.
- Seed funding stage
The seed stage is self-explanatory and it refers to the first money or ‘seed’ that investors put in to fund your idea. At this point, your startup has gone beyond being just an idea to an actual company with customers. Seed funding may be raised from family and friends, angel investors, incubators, and venture capital firms that focus on early-stage startups.
Startups usually use the fund realised from this stage to launch the product; market it; get new employees; and also conduct market research on how the well the product is doin among its target.
Case study: Nowlun, A digital shipping platform operating in the MENA region secured $1.7 million in a seed funding round led by Nama Ventures and A15.
- Series A funding stage
Now this is the stage that marks the beginning of Venture Capitalist investments for most startups. Once you make it past the seed funding stage, it is expected that your product already has some traction and high potentials for growth. It should also be valued around $10million to $15million.
VCs will offer significant sums of money in exchange for shares so they need to be sure of your success ratio. With the investment gotten at this stage, the next points of action should be:
- Optimizing your business;
- Offsetting financial losses or shortfalls;
- Further developing your product or service; and
- Creating a scalable blueprint for growth.
Case study: Aanaab, a platform specializing in digital professional development for teachers, announced the completion of a $7 million Series A funding round. This funding will enhance Aanaab’s role in supporting digital education and raising the skills of teachers in the Arab region.
- Series B funding stage
At this stage, your startup should have grown to having a database and realible stream of revenue. Once you get here, it means you have found your product-market fit and need the funds to expand their operations to serve more customers. The investment gotten from VCs during this round will help you increase your market share.
Case study: Lean Technologies, a Riyadh-based fintech infrastructure provider, secured $67.5 million in Series B funding led by General Catalyst. The new funding will be used to scale the app’s Pay-by-Bank and Open Banking offerings.
- Series C funding stage
If you get to the series C funding stage, it means your startup has recorded significant progress and needs help expanding to other markets or countries. It is often very easy to get investors for this round because you already have a track record and people trust you to succeed.
This is often the last round of investment for most startups who wants to increase their valuation to either buy another similar startup or prepare for a public offering. The investors here are called late-stages-investors and are often private equity firms and investment bankers.
Case study: Eyewa, the Dubai and Riyadh-headquartered eyewear retailer, has raised $100 million in a Series C funding round led by General Atlantic. It plans to use the latest funds to add another 100 stores in 2025, including expansion to Qatar.
- Series D funding stage
Any startup who gets to this stage has two likely reasons. The first is that a new opportunity for expansion presented itself; and the second is that the company failed to achieve its Series C funding round goals.
Investment in this stage helps a startup to get through tough times and becasue very few companies get to this point, the amount given varies greatly.
Case study: Cresta, a U.S.-based generative AI platform got a $125 million Series D funding round from the Qatar Investment Authority (QIA). With this new funding, the company plans to accelerate its research and development efforts by establishing new engineering hubs in Romania and India, complementing its offices in Palo Alto, San Francisco, New York, Berlin, and Toronto.
- Series E funding stage
If a series D round could not help the startup bounce back, it can raise funds from a series E. But like it’s preceeding stage, this is a bad sign because it reduces trust and devalues the shares of the company. Investors will only grant Series E funding only if the company has been unable to raise sufficient capital and is still struggling to remain active and private.
Case study: TrueLayer, a leading pay-by-bank network in Europe, secured an extra $50 million, extending its Series E to aid profitability.
- Series F funding stage
Fewer people ever need a series F funding round but popular finance services have gotten here. Sometimes, the goal of a startup at this stage could be to generate pre-IPO funding, expand or acquire other firms. Investments could come from large institutional investors or sovereign wealth funds.
- Series G funding stage
This stage is rare but not impossible to reach. Startups resort to this when they postpone IPO, or have long term initiatives to sustain market leadership. Like with the other later startup funding stages, however, it is typically not the best look.
Case study: Rebel Foods, an Indian company specializing in cloud kitchens, closed a $210 million Series G funding round, ahead of its Initial Public Offering (IPO). The funding will support the startup in expanding its operations and strengthening its portfolio of brands by issuing both new and existing shares.
- IPO
The Initial Public Offering (IPO) is the pinnacle of success for most startups as it is the first time company shares are offered to the general public. If a growing startup organizes an IPO, it is to generate funds; but if an established company goes the IPO route, then it is the startup owners trying to cash out all or some of their remaining shares.
Case study: Talabat, the food delivery company in Dubai, increased its IPO size to 20%, up from 15%, raising up to AED 7.5 billion ($2 billion) due to the demands from investors.
