The H1 2023 Saudi Arabia Venture Capital Report examines the evolution of the VC space in the Kingdom in light of the global economic challenges that are materializing at the level of the ecosystem globally and in the MENA region.
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Despite a 27% yearly drop in capital deployed compared to H1 2022, Saudi Arabia still aggregated $446M in H1 2023. This amassed a share of 44% of the total funding reported in 2022, the best-performing year for the Kingdom yet. The slower performance came along with slower activity globally and in the MENA region which saw Saudi Arabia as the biggest contributor to funding in H1 2023. The number of deals was also on a decline with a 44% annual retreat in H1 2023. This trend mirrored that of transactions in the MENA region which saw a drop by an annual 49%.
The fact that the startup ecosystem in the Kingdom has experienced rapid growth over the past five years and positioned itself as a strong competitor in the region is a data-backed reality, however 2023 did not keep up the 2022 growth pace. While the slower performance is a reality for the country, it still surpassed its MENA peers in total capital deployed in the first half of the year. Saudi Arabia ranked first in terms of the funding value with $446M driven by two MEGA deals amounting to $156M and $133M by E-commerce/Retail startups Floward and Nana. Egyptians startups were the second largest recipients of capital deployed with $305M thanks to Egypt’s Halan $260M MEGA round. UAE came as a distant third, with the gap between the country and KSA shifting from $85M in favor of the UAE in H1 2022 to $207M in surplus for Saudi Arabia in the first half of 2023.
According to the IMF, the economy of Saudi Arabia is experiencing a remarkable surge, driven by the combination of elevated oil prices, robust private investment, and successful implementation of reforms. As a result, the current account surplus has reached its highest level in a decade, and inflation is under control in the Kingdom. However, given the uncertainties in the global economy, including financial conditions and oil price fluctuations, it is essential to maintain efforts in building economic reserves and diversifying the economy. Hence, the country is moving forward with its diversification strategies.
At the level of the VC space, the government's commitment to supporting startups is helping to create a more vibrant startup ecosystem in Saudi Arabia and is attracting investment from both local and international sources. As a result, Saudi Arabia is becoming a more attractive destination for startups and is well-positioned to become a leading hub for innovation in the Middle East. Several initiatives to support the VC space were launched in the country.
Looking at the industries, all top five industries reckoned a double-digit fall in their number of deals YoY in the first half of 2023. E-commerce/Retail was the most preferred among industries in deals and funding capturing a share of 20% and 83% respectively of the Kingdom’s metrics. In the same context, the e-commerce industry in Saudi Arabia reported tangible growth as the Ministry of Commerce reported, an annual increase of over 32% in Q1 of 2023. The growth of the E-commerce ecosystem is one of the objectives of the National Transformation Program, which favors the realization of Saudi Vision 2030 due to the importance of E-commerce in boosting the national economy.
What’s In The Report?
The H1 2023 Saudi Arabia Venture Capital Report offers strategic insights covering the VC space in Saudi Arabia. This report covers a 5-year analysis of Saudi Arabia’s funding evolution, with a country comparison spanning MENA peers along with an industry performance covering H1 2023. You will get access to precious information such as:
Saudi Arabia’s Venture Funding Evolution: Get an overview of the past five years, highlighting the growth and development of venture funding in Saudi Arabia with a focus on the performance in 2023.
Key metrics such as split of investors by deals, Top 5 funding rounds, and 5-Year exit evolution of Saudi Arabia Startups.
Who is it for?
Whether you’re a private investor, a VC, an investment company, a CVC, or working in corporate, this report gives an overview of the ecosystem and caters to a diverse audience including any curious minds who want to use the yearly, quarterly and monthly charts in this report to track investment activity.
You can also see in which country and industry the investment activity focused in terms of deals and capital deployed, allowing you to leverage insights and make wise choices.
The report can also be used by consultants looking to identify technology innovation trends and who will find it valuable to look at the evolution of M&A activity and concentration of acquirers/acquired startups.
Last but not least, government entities searching for investment opportunities will also find valuable information to make informed decisions.
Where is this information from?
The report was 100% created using data from MAGNiTT. MAGNiTT is the leading VC verified data platform and offers a comprehensive directory of technology innovation trends. Our unique SaaS solution includes investment directories listing startup venture funding across the Middle East, Africa, Pakistan, and Turkey, and now Singapore. By using MAGNiTT, you will also get access to market sizing tools to visualize investment growth and trends across various industries, geographies, and stages, as well as comparison tools for benchmarking geographies, industries, and investor performance. Furthermore, MAGNiTT offers exit comparisons by examining mergers and acquisitions.
Learn more about MAGNiTT's Data Methodology.
Saudi Venture Capital (SVC) is a government investment company ($1.6 billion AUM) established in 2018 and is a subsidiary of the SME bank, one of the development banks affiliated to the National Development Fund. SVC aims to stimulate and sustain financing for startups and SMEs from pre-seed to pre-IPO through the investment in funds and co-investment in startups and SMEs. Since inception, SVC has backed 34 Private Capital (Venture Capital, Private Equity, Venture Debt, Private Debt) Funds that supported 674 startups and SMEs.