Saudi Arabia, the Arab world’s largest economy, has jumped from third to second place in the region’s venture capital market, according to the latest Venture Capital Investment Report by MAGNiTT.
Last year was a “positive year” for venture capital investment in the Kingdom, but 2021 was the year to show record-breaking investment flows into Saudi start-ups, according to the report, compiled in cooperation with the Saudi Venture Capital Company (Sventure Capital).
Value of capital raised in the Kingdom for the first half (H1) of 2021 accounted for 14 percent of MENA venture capital funding and 21 percent of the region’s venture capital transactions.
Funding for start-ups in Saudi reached SAR 630 million ($168m) in the first half of the year, signaling a record-setting growth of 65 percent compared to the same period last year.
The $168m in startup investments amounted to around 94 percent of the total value of investments in Saudi emerging ventures last year.
The Kingdom is witnessing a growth in the volume and quality of start-up investments coupled with an increase in the number of venture capital funds and angel investor groups, Dr Nabeel Koshak, CEO of Sventure Capital, told Arabian Business.
He noted that a number of new initiatives have been launched lately to stimulate the sector in line with the Saudi Vision 2030, the country’s ambitious diversification agenda.
Dr Nabeel Koshak, CEO of Sventure Capital.
The MAGNiTT report also revealed that venture capital investments in fintech start-ups witnessed a surge of 1,700 percent in the first half of 2021 compared to the same period last year.
The Saudi fintech landscape looks set to see substantial growth, said Jorge Camarate, partner at Strategy& Middle East.
“Regional governments have spotted the opportunity and have introduced regulation to advance the fintech market. International companies have also taken note. This news is likely to stimulate further investment and accelerate the development of the market,” Camarate said.
About three-quarters of the investors in Saudi start-ups during H1 2021 were from the Kingdom, the report added.
Jorge Camarate, partner at Strategy& Middle East.
“As the MAGNiTT report shows, not only are the quantity of deals increasing, but so too are the value of these transactions. The economic headwinds and greater investment mark the signs of a buoyant tech scene. With the continued support of regulators, we expect to see MENA more broadly become a new center of excellence for fintech globally,” said MENAP regional manager at Checkout.com, Mohammed Ali Yusuf.
Checkout.com earlier this year led a $110m funding round for Saudi payments firm Tamara, one of the Middle East’s largest-ever startups.
Proceeds of the Series A capital raise, which included both equity and debt, will be used to bankroll Tamara’s expansion across the Gulf markets by the end of this year and then the rest of the Middle East.
“In powering many of the region’s largest and fastest-growing technology businesses, we’ve served as an enabler of the digital economy and supported its foundational growth. We are proud to have invested in this market in our record-breaking lead investment of $110m in Tamara, Saudi’s leading buy now pay later firm,” Yusuf added.
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