Key Capital, an organisation dedicated to empowering founders by unlocking liquidity, and simplifying growth, has completed a comprehensive analysis of the past two years investment transactions announced across LinkedIn, MAGNiTT, Wamda ومضة, and other media outlets.
From the results Key Capital shared via a statement on their LinkedIn page, it is clear that secondaries have become a vital component of the MENA region’s venture capital landscape. Please see their findings below:
- Among 14 of the largest funding rounds that Key Capital analyzed, which collectively totaled $1.4 billion raised, an impressive $680 million—nearly 49%—was attributed to secondary transactions. This means that those companies actually raised only $720m in fresh capital, while nearly half went to existing investors.
- Without naming specific companies, these secondaries were primarily driven by early investors, employees, and founders seeking liquidity. On average, these transactions occurred with discounts ranging between 20% and 40% (some transactions we analyzed had much bigger discounts), providing much-needed flexibility for sellers. For new investors, secondaries offered an opportunity to enter high-growth companies at a blended valuation, balancing risk and potential returns.
- Geographically, the bulk of these secondary transactions took place in key markets such as Saudi Arabia (KSA) and the UAE, which continue to dominate the regional startup ecosystem. Notably, the volume of secondaries in 2022 outpaced that of 2024, even as valuations peaked during the latter period. This underscores a strong demand for liquidity, regardless of market highs or lows.
Besides the obvious returns to early investors and employees, Key Capital noted that this liquidity has many other ecosystem benefits, like:
1. Increased Market Efficiency: Secondary transactions enabled the recycling of capital back into earlier-stage opportunities, fueling the ecosystem’s growth.
2. Investor Accessibility: New entrants into the market could leverage secondary deals to gain exposure to leading companies, often at favorable valuations and with less dilution risk.
3. Validation of Success: The presence of secondaries in a funding round signals strong interest in the company’s equity, enhancing its credibility and market position.
