According to Tenet Consulting, the subdued M&A activity witnessed in 2023, marked by its lowest step-up in a decade across numerous venture capital markets worldwide, raised concerns about the health of the investment landscape. However, anticipation is brewing for a potential turnaround in 2024, fueled by the expected drop in interest rates. This impending shift has the potential to breathe new life into Initial Public Offerings (IPOs) and M&A deals, reigniting investor confidence and deal-making momentum. Tenet Consulting presented its study on Global Startup Valuation Trends during the third edition of VC Weekend by Gingo Partners.
“The forecasted interest rate decline carries significant implications for valuation dynamics. Lower interest rates generally translate to cheaper borrowing costs, incentivizing businesses to pursue expansionary strategies such as mergers and acquisitions,” says Alexey Bogdanov, Partner at Tenet Consulting. “Moreover, the prospect of reduced borrowing expenses could entice more companies to go public, tapping into the equity markets to fuel growth initiatives.”
The slowdown in VC investments was not unique to the MENA region, as it mirrored a global trend preceding the decline witnessed last year. However, the region had previously stood out due to the significant support from government-related entities, keen on fostering their local tech ecosystems by heavily backing regional VC funds. Expectations are high for a resurgence in investment activity across the Middle East and North Africa this year, following a dip in 2023. Forecasts indicate that startups based in Saudi Arabia and the United Arab Emirates will likely continue to take center stage in dealmaking.
As the curtains closed on VC Weekend 2024, participants departed with a renewed sense of optimism and determination to contribute to the continued success of the Middle Eastern venture capital ecosystem. The event may have wrapped up, but its impact will undoubtedly be felt for months to come as attendees leverage the connections made and insights gained to propel their ventures forward. Gingo Partners has announced to host VC Weekend twice a year with the next upcoming one during GITEX 2024.
