Saudi Arabia Leads MENA in VC Funding in H1-2024

Saudi Arabia continued to rank first across the Middle East and North Africa (MENA) region in terms of total Venture Capital funding in the first six months of 2024.

According to a report entitled “H1 Saudi Arabia Venture Capital,” which was published by Saudi Venture Capital Company (SVC) and MAGNiTT, an enterprise SaaS solution provider headquartered in the Dubai International Financial Centre (DIFC), Saudi Arabia’s VC ecosystem aggregated $412 million in funding, a slight 7% y-o-y downtick. Nearly one third of the funding came from a single $130 million deal in Salla, the only MEGA round across the MENA region so far in 2024.

Deal flow activity remained relatively flat with a 3% y-o-y reduction in H1 of 2024, as Saudi Arabia remained the second most transacted MENA country. Saudi Arabia now accounts for 30% of total deals across MENA in H1 of 2024, rising from 25% in the same period a year earlier. The Kingdom’s contribution to the MENA region’s total funding expanded from 38% in H1 of 2023 to 54% in H1 of 2024.

The gap between the UAE, the second-ranked country by funding, and Saudi Arabia rose from $166 million in H1 of 2023 to $187 million in H1 of 2024. However, the UAE recorded 20 more deals than Saudi Arabia in H1 of 2024, higher than the 10-deal gap reported in H1 of 2023.

FinTech continued to lead as the industry of choice for investors in the Kingdom by transactions, while E-Commerce/Retail led in funding. In line with the MENA wider trend, FinTech remains the most popular sector for investors by transactions, further developing the FinTech Ecosystem.

E-Commerce/Retail continued to dominate in funding in Saudi Arabia, with 2 of the top 5 deals closed in Saudi Arabia in H1 of 2024 from the sector. Investors’ participation in the Kingdom remained robust in 2024 as 72 entities backed Saudi-based start-ups, up from 62 investors during the corresponding period in 2023.

As Saudi Arabia continues to drive global interest in the VC space locally, the share of international investors participating in the Saudi start-ups saw a17 Percentage Points increase, with international investors capturing 28% of total investors in Saudi Arabia’s VC space in H1 of 2024.

M&A activity thus far in 2024 has remained relatively muted with only two transactions compared with four in the same period of 2023.

“Despite growing interest in IPO and M&A activity in Saudi Arabia, M&A transactions were concentrated in the first quarter of 2024, while the second quarter of 2024 saw no deals. However, Saudi Arabia came second in exit activity in the MENA region after the UAE in H1 2024, reflecting a wider regional trend,” the report added.

Remarkable Growth

Athary Almubarak Chief Strategy Officer at SVC, said that the VC landscape in Saudi Arabia has been witnessing remarkable growth and evolution, signalling a bright future for innovation and entrepreneurship in the region.

Observing the Kingdom’s evolution, it is evident that Saudi Arabia is not just keeping pace with global trends but is also setting new benchmarks in the MENA region. The increasing participation of both local and international investors underscores the global confidence in Saudi Arabia’s VC landscape, she said.

“The rise in international investor interest highlights the Kingdom’s growing reputation as a hub for innovation and high growth potential. Saudi Arabia once again led the MENA region in venture capital funding, demonstrating the robustness and maturity of its VC ecosystem,” she said.