- Saudi Arabia’s startups saw $95M of venture funding (up 102%) invested in 45 deals (up 29%) in H1 2020, both a record high;
- Total funding in H1 2020 already surpassed full-year 2019’s $67M funding, making 2020 the top year by total funding in startup ventures in the Kingdom;
- Saudi Arabia ranks third in the MENA region by both deals and total funding;
- Against the backdrop of COVID-19, E-commerce secured the top spot as the top industry by both total funding (67%) and number of deals (22%), as investors focus on industries ‘positively impacted’ by the pandemic.
Dubai, July 15, 2020 – MAGNiTT, MENA’s most comprehensive startup data platform, released its H1 2020 Saudi Arabia Venture Capital Snapshot report today, sponsored by Saudi Venture Capital Company (SVC), the Saudi government VC. The report provides an in-depth analysis of startups and venture capital (VC) investment in one of the fastest growing regional ecosystems, Saudi Arabia, with H1 2020 seeing a 102% surge in total funding compared to H1 2019.
With this increase, total funding in Saudi Arabia has grown significantly faster than the average in MENA: the 17 countries in the region saw a 35% increase in total funding from H1 2019 to H1 2020 according to MAGNiTT’s H1 2020 MENA Venture Investment report, while Saudi Arabia’s funding grew 102%. Moreover, while the MENA region saw an 8% drop in number of deals from H1 2019 to H1 2020, Saudi Arabia saw a 29% increase.
“Saudi Arabia has been one of the fastest growing ecosystems in the region for a few years now, which has continued during COVID-19,” says Dr. Nabeel Koshak, CEO of SVC. “As part of Vision 2030, many new initiatives have been launched in recent years to spur innovation and startup growth. Saudi Arabia has always been an attractive market for local and regional entrepreneurs due to its large market size. In recent years, it has also developed a startup ecosystem to match it.”
The increase in funding and deals comes amid the COVID-19 crisis, which has affected startups’ cash flows and revenues significantly, according to a MAGNiTT & INSEAD report. As a result of the crisis, many investors have made a shift in their investment mandate, both in terms of stage and industry.
"We are seeing a shift in investor appetite when it comes to startup development stages,” explains Philip Bahoshy, CEO and founder of MAGNiTT. “There are two key factors at play. First, the full impact of COVID-19 is likely to hit later in the year. As we know, it takes an average of 9-12 months to fundraise. Many deals in Q1 2020 will have already been in the works for a period of time. Second, what we see is that more later-stage investments with larger round sizes have been taking place. This highlights a shift to more established startups, which can provide them a longer runway to weather the challenging times ahead."
In H1 2020, Saudi Arabia saw several high-profile funding rounds which included Jahez ($36.5M), Nana ($18M), and Noon Academy ($13M). Each of these startups is notably active in industries that have seen a significant increase in adoption amid COVID-19: Jahez and Nana are active in food and grocery e-commerce, respectively, while Noon Academy focuses on the EdTech space. As a result, E-commerce obtained the top spot as the most active industry by both total funding (67%) and number of deals (22%).
Throughout the year, there have been many government initiatives focused on alleviating the burden of the COVID-19 outbreak, including deferred payments, waived fees and bills, paid vacation, and salary guarantees for 70% of a company’s Saudi employees.
“A healthy and flourishing entrepreneurial ecosystem takes years, if not decades, to build and develop. Supporting founders and encouraging investors now will benefit the ecosystem for many years to come,” states Philip Bahoshy.
The infographic report is available online to download for free in English and Arabic.
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About Saudi Venture Capital Company (SVC)
Saudi Venture Capital Company (SVC) is a Government Venture Capital (GVC) established in 2018, part of the Private Sector Stimulus (PSS). The entity aims to minimize current equity funding gaps for Startups by investing SAR 2.8 Billion ($750 Million). SVC aims to develop the Venture Capital Ecosystem in Saudi Arabia to support startups by co-investing along with angel investors, venture capitalists, and sophisticated investors in startups, as well as investing in funds.