MAGNiTT Intelligence: The number of investors in Saudi-based startups increased more than tenfold over last 5 years

We recently launched our H1 2020 Saudi Arabia Venture Capital Snapshot (in collaboration with SVC), which provides an in-depth analysis of startups and venture capital investment in one of MENA's fastest-growing regional ecosystems over the first half of a very unpredictable year.

According to the 2019 Saudi Arabia Venture Investment Report, the Kingdom ranked 3rd by number of investment deals in 2019 (69), accounting for 12% of total deals in the MENA region, mainly in the country's capital, Riyadh. Moreover, the country took the 3rd spot by total funding ($67M), behind the United Arab Emirates (UAE) and Egypt, accounting for 10% of total MENA funding raised.

The Saudi Arabian startup ecosystem has been constantly evolving, signifying an up-and-coming environment, mostly due to the launch of numerous initiatives with the purpose of giving Saudi and MENA-based startups the boost they need. The main areas of focus are ease of doing business for both local and international startups, as well as talent and capital availability. Over the past 5 years alone, the number of investors in Saudi-based startups has increased more than tenfold, with a significant increase in mostly Saudi and MENA-based investors – this number is expected to increase for two reasons: more local interest, and the attraction of foreign capital.

Many local companies, family offices, and other entities are slowly warming up to venture as an asset class, and investing in startups for the first time. Moreover, aside from established companies turning to venture, there are new funds and accelerators being set up in the country as well. In 2019, there were 4 funds and initiatives have been introduced the country, including the two accelerators by Misk Innovation: the Misk 500 MENA Accelerator in parnership with USA-based venture capital firm 500 Startups, a 16-week early stage accelerator program for the MENA region, and the Misk Growth Accelerator, which was established in partnership with Seedstars and Vision Ventures, with the aim to support 11 MENA-based startups.

Aside from the 2 accelerator programs, 2019 also saw the launch of Jada, a $1.07B Fund of Funds launched by the Public Investment Fund (PIF), dedicated to the investment in both startups and SMEs, and the launch of the Digital Partnership Program by Riyad Bank, which includes a venture fund of $26.6M to invest in the local FinTech industry.

This, combined with initiatives by entities like the Ministry of Investment (previously SAGIA) to attract foreign venture capital firms to the Kingdom, have seen a significant impact on the growth of the number of investors. Of course, the current oil and COVID-19 crisis certainly poses a challenge for startups and investors, as March 2019 showed the first signs of a slowdown in the Middle East and North Africa. However, anecdotal evidence shows that government agencies are planning ahead to launch several initiatives once the crisis has been resolved.

Despite a rocky first half of the year, Saudi Arabia’s startup funding increased by 102% from H1 2019 to H1 2020, with H1 2020 already surpassing full-year 2019 by the amount of funding. Discover more data by downloading our FREE H1 2020 Saudi Arabia Venture Capital Snapshot.

هذا التقرير متوفّر أيضاً باللغة العربية على الرابط التالي: تقرير الاستثمار الجريء في المملكة العربية السعودية في النصف الأول من عام ٢٠٢٠