Over the past year, data reflected a strong position for Saudi Arabia’s ecosystem which neared the $1Bn mark, cementing its position among top MENA peers. Along the same lines, the Kingdom started 2023 strongly backed by $289M in MEGA funding pushing the first QTD’23 to surpass all previous quarters and report an all-time high. Along the lines of growth in the country’s ecosystem, round size evolution adjusted its stance to cater to the expanding market.
*Data in this article is as of March 1st, 2023.
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MAGNiTT’s Advanced Analytics tool, providing real-time data, tracked the round size evolution of deals in the Kingdom and revealed that deal share by round size reflected a rising focus on $5M+ deals whose share ameliorated from 17% in 2022 to 26% in 2023 YTD. Despite the skewness due to $100M+ deals, non-MEGA deals of values ranging between $5M-$20M also gained momentum. Furthermore, extending the post-pandemic trend, round size $1M-$5M remained the sweet spot, capturing close to half the number of deals reported so far this year. Startups funded in 2023 are mostly in their SEED or growth developmental stage, hence emphasizing the focus on rounds concentrated between $1M and $5M. Deals with less than $1M were less interesting with their share declining from 37% in 2022 to 27% in 2023 YTD, as the risk of the very early stage still lingers amidst unstable geopolitical tensions and stringent monetary policies.
*Data in this chart is as of March 1st, 2023.
According to real-time data, in absolute terms, round size $0K-$1M QTD saw the number of deals at par with the third quarter of 2022, the lowest reported last year, yet, lagged behind other quarters. In round size $1M-$5M, the number of transactions QTD was close to those reported in the quarters of 2022’s second half. Funding, however, stood at $25M QTD, already above what was reported in Q3 and Q4 of 2022, extending the concentration on the aforementioned round size in the growth of the Kingdom’s startups. A similar performance was seen in round size $5M-$20M which already went beyond funding in Q3 and Q4 of last year. Funding in the $20M+ round size was from the two MEGA deals reported and while funding surpassed all previous quarters for this round size, deals of more than $20M and less than $100M were absent so far in 2023.
*Data in this chart is as of March 1st, 2023.
As a top MENA performer, the Kingdom jumped off the bandwagon of the round-size evolution of MENA overall and top MENA peers as well. $0K-$1M remained the highest contributor to the MENA region’s deals. While $1M-$5M continued to have a contribution in line with its 2021 and 2022 levels, the round size lost some of its share to smaller-sized deals which captured half of the transactions closed in MENA in 2023 QTD. UAE, Saudi Arabia’s Middle Eastern fellow, saw a reshuffle in round size distribution as well in 2023 YTD with a retained focus on deals of less than $1M. The share of round size $0K-$1M improved from 31% in 2022 to 53% in 2023 YTD, a distribution mirroring the overall MENA region. Alongside, Egypt, which closed only seven deals QTD had most of its deals concentrated in the less than $1M round size.
Hence, this intensifies the point that Saudi Arabia continued the funding share pattern seen throughout the post-pandemic era as the country’s growing ecosystem continued to focus on early-stage funding with bigger ticket sizes retaining $1M-$5M as the most valued round size, contrary to the image seen so far in the MENA region and peer countries.
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