Riyadh. A record 104 investors backed Saudi Arabia-based start-ups in 2022, up by 30 per cent annually. Reuters
Riyadh. A record 104 investors backed Saudi Arabia-based start-ups in 2022, up by 30 per cent annually. Reuters
Riyadh. A record 104 investors backed Saudi Arabia-based start-ups in 2022, up by 30 per cent annually. Reuters
Riyadh. A record 104 investors backed Saudi Arabia-based start-ups in 2022, up by 30 per cent annually. Reuters

Saudi Arabia’s start-ups record 72% increase in funding to $987m in 2022, Magnitt says


Deepthi Nair
  • English
  • Arabic

Start-ups in Saudi Arabia recorded a 72 per cent annual increase in venture capital funding to $987 million across 144 deals in 2022, a report has indicated.

The kingdom was the second-most funded geography after the UAE in the Middle East and North Africa for last year. It also accounted for 31 per cent of total capital invested in the region, according to start-up data platform Magnitt’s Venture Capital Report compiled in collaboration with Saudi Venture Capital.

Start-ups in the UAE raised $1.19 billion in 2022, while those in third-placed Egypt attracted $517 million in funding.

The Arab world’s biggest economy ranked third in terms of total VC transactions in Mena and accounted for 23 per cent of total deals in the region, the Magnitt report said.

“This is not to say that the VC ecosystem did not see the impact of the economic slowdown like its peer Mena markets,” said Philip Bahoshy, founder and chief executive of Magnitt.

“If we look at the quarterly breakdown, a similar trend as the other emerging markets was seen over the year, with funding and deals seeing a gradual retreat. Despite this, the Middle Eastern region has been making vigorous efforts to drive investment in the region with Saudi Vision 2030 being one of them.”

Saudi Arabia is seeking to grow its start-ups and small and medium enterprise sector as part of its push to diversify its economy from oil, create jobs and attract high-skilled talent into the kingdom.

Technology is a strong pillar of Saudi Vision 2030, the national strategy aimed at diversifying the country's economy and steering away from dependence on oil. Riyadh is encouraging entrepreneurship and seeking investment from both local and foreign entities to develop the sector.

FinTech was the industry of choice for investors in terms of the number of deals as well as total funding in Saudi Arabia last year, accounting for 24 per cent of funding with $239 million raised across 28 deals, according to Magnitt.

F&B was the second-most funded industry in the kingdom after start-ups raised $187 million, followed by transport and logistics, which raised $180 million.

The world’s top oil exporter recorded three mega deals (more than $100 million) last year closed by food and beverage start-up Foodics, FinTech Tamara and transport and logistics start-up TruKKer. These three mega deals accounted for 37 per cent of total capital deployed, the report added.

A record 104 investors backed Saudi Arabia-based start-ups in 2022, up by 30 per cent annually, with 79 per cent of investors hailing from the kingdom itself.

500 Global, Sanabil 500 and Impact 46 were among the kingdom’s most active backers, the Magnitt report said.

“Saudi Arabia’s venture capital market has been evolving at a very fast pace, especially on the regulatory and legal fronts,” Haifa Bahaian, chief legal officer at SVC, said.

“The issuance of the new Companies Law by the Ministry of Commerce and the Investment Funds Regulations by the Capital Market Authority is a very important step in developing the ecosystem and helping entrepreneurs and local fund managers.”

The kingdom also recorded the highest number of mergers and acquisition activity, with 10 exits last year. This accounted for 14 per cent of all Mena exits, according to Magnitt.

Early stage deals secured the lion’s share of transactions in Saudi Arabia at 84 per cent, the research found.

Saudi Arabia mega projects in 2023 — in pictures

  • The Line is one of 10 districts in Saudi Arabia's $500 billion Neom megacity. Photo: Neom
    The Line is one of 10 districts in Saudi Arabia's $500 billion Neom megacity. Photo: Neom
  • Sindalah Island is set to be the first destination open to the public within the Neom mega project. Photo: Neom
    Sindalah Island is set to be the first destination open to the public within the Neom mega project. Photo: Neom
  • Trojena, a mountain tourism destination, will be the first major outdoor skiing site in the GCC. Photo: Neom
    Trojena, a mountain tourism destination, will be the first major outdoor skiing site in the GCC. Photo: Neom
  • Oxagon, part of the Neom mega project, is a futuristic new industrial city in the sea. Photo: Neom
    Oxagon, part of the Neom mega project, is a futuristic new industrial city in the sea. Photo: Neom
  • AlUla is a budding tourist magnet in the north-western Madinah region. AFP
    AlUla is a budding tourist magnet in the north-western Madinah region. AFP
  • When it opens in 2023, Nujuma, a Ritz-Carlton Reserve, will form part of The Red Sea project. Photo: Marriott International
    When it opens in 2023, Nujuma, a Ritz-Carlton Reserve, will form part of The Red Sea project. Photo: Marriott International
  • Amaala has unveiled the design for its Triple Bay Yacht Club. Photo: Amaala
    Amaala has unveiled the design for its Triple Bay Yacht Club. Photo: Amaala
  • Qiddiya City is an entertainment development project to be established in Riyadh.
    Qiddiya City is an entertainment development project to be established in Riyadh.
  • Salwa Palace is the largest standing structure in the historic city of Diriyah. Photo: Diriyah Gate Development Authority
    Salwa Palace is the largest standing structure in the historic city of Diriyah. Photo: Diriyah Gate Development Authority
  • A screen grab of aerial footage of the King Salman Park in Riyadh. The project is set to become the world’s biggest urban park.
    A screen grab of aerial footage of the King Salman Park in Riyadh. The project is set to become the world’s biggest urban park.
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Ten tax points to be aware of in 2026

1. Domestic VAT refund amendments: request your refund within five years

If a business does not apply for the refund on time, they lose their credit.

2. E-invoicing in the UAE

Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption. 

3. More tax audits

Tax authorities are increasingly using data already available across multiple filings to identify audit risks. 

4. More beneficial VAT and excise tax penalty regime

Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.

5. Greater emphasis on statutory audit

There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.

6. Further transfer pricing enforcement

Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes. 

7. Limited time periods for audits

Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion. 

8. Pillar 2 implementation 

Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.

9. Reduced compliance obligations for imported goods and services

Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations. 

10. Substance and CbC reporting focus

Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity. 

Contributed by Thomas Vanhee and Hend Rashwan, Aurifer

UPI facts

More than 2.2 million Indian tourists arrived in UAE in 2023
More than 3.5 million Indians reside in UAE
Indian tourists can make purchases in UAE using rupee accounts in India through QR-code-based UPI real-time payment systems
Indian residents in UAE can use their non-resident NRO and NRE accounts held in Indian banks linked to a UAE mobile number for UPI transactions

Ten10 Cricket League

Venue and schedule Sharjah Cricket Stadium, December 14 to 17

Teams

Maratha Arabians Leading player: Virender Sehwag; Top picks: Mohammed Amir, Imad Wasim; UAE players: Shaiman Anwar, Zahoor Khan

Bengal Lions Leading player: Sarfraz Ahmed; Top picks: Sunil Narine, Mustafizur Rahman; UAE players: Mohammed Naveed, Rameez Shahzad

Kerala Kings Leading player: Eoin Morgan; Top picks: Kieron Pollard, Sohail Tanvir; UAE players: Rohan Mustafa, Imran Haider

Pakhtoons Leading player: Shahid Afridi; Top picks: Fakhar Zaman, Tamim Iqbal; UAE players: Amjad Javed, Saqlain Haider

Punjabi Legends Leading player: Shoaib Malik; Top picks: Hasan Ali, Chris Jordan; UAE players: Ghulam Shabber, Shareef Asadullah

Team Sri Lanka Cricket Will be made up of Colombo players who won island’s domestic limited-overs competition

Classification of skills

A worker is categorised as skilled by the MOHRE based on nine levels given in the International Standard Classification of Occupations (ISCO) issued by the International Labour Organisation. 

A skilled worker would be someone at a professional level (levels 1 – 5) which includes managers, professionals, technicians and associate professionals, clerical support workers, and service and sales workers.

The worker must also have an attested educational certificate higher than secondary or an equivalent certification, and earn a monthly salary of at least Dh4,000. 

Our family matters legal consultant

Name: Hassan Mohsen Elhais

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The finalists

Player of the Century, 2001-2020: Cristiano Ronaldo (Juventus), Lionel Messi (Barcelona), Mohamed Salah (Liverpool), Ronaldinho

Coach of the Century, 2001-2020: Pep Guardiola (Manchester City), Jose Mourinho (Tottenham Hotspur), Zinedine Zidane (Real Madrid), Sir Alex Ferguson

Club of the Century, 2001-2020: Al Ahly (Egypt), Bayern Munich (Germany), Barcelona (Spain), Real Madrid (Spain)

Player of the Year: Cristiano Ronaldo, Lionel Messi, Robert Lewandowski (Bayern Munich)

Club of the Year: Bayern Munich, Liverpool, Real Madrid

Coach of the Year: Gian Piero Gasperini (Atalanta), Hans-Dieter Flick (Bayern Munich), Jurgen Klopp (Liverpool)

Agent of the Century, 2001-2020: Giovanni Branchini, Jorge Mendes, Mino Raiola

Mica

Director: Ismael Ferroukhi

Stars: Zakaria Inan, Sabrina Ouazani

3 stars

Company profile

Name:​ One Good Thing ​

Founders:​ Bridgett Lau and Micheal Cooke​

Based in:​ Dubai​​ 

Sector:​ e-commerce​

Size: 5​ employees

Stage: ​Looking for seed funding

Investors:​ ​Self-funded and seeking external investors

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What is blockchain?

Blockchain is a form of distributed ledger technology, a digital system in which data is recorded across multiple places at the same time. Unlike traditional databases, DLTs have no central administrator or centralised data storage. They are transparent because the data is visible and, because they are automatically replicated and impossible to be tampered with, they are secure.

The main difference between blockchain and other forms of DLT is the way data is stored as ‘blocks’ – new transactions are added to the existing ‘chain’ of past transactions, hence the name ‘blockchain’. It is impossible to delete or modify information on the chain due to the replication of blocks across various locations.

Blockchain is mostly associated with cryptocurrency Bitcoin. Due to the inability to tamper with transactions, advocates say this makes the currency more secure and safer than traditional systems. It is maintained by a network of people referred to as ‘miners’, who receive rewards for solving complex mathematical equations that enable transactions to go through.

However, one of the major problems that has come to light has been the presence of illicit material buried in the Bitcoin blockchain, linking it to the dark web.

Other blockchain platforms can offer things like smart contracts, which are automatically implemented when specific conditions from all interested parties are reached, cutting the time involved and the risk of mistakes. Another use could be storing medical records, as patients can be confident their information cannot be changed. The technology can also be used in supply chains, voting and has the potential to used for storing property records.

The past Palme d'Or winners

2018 Shoplifters, Hirokazu Kore-eda

2017 The Square, Ruben Ostlund

2016 I, Daniel Blake, Ken Loach

2015 DheepanJacques Audiard

2014 Winter Sleep (Kış Uykusu), Nuri Bilge Ceylan

2013 Blue is the Warmest Colour (La Vie d'Adèle: Chapitres 1 et 2), Abdellatif Kechiche, Adele Exarchopoulos and Lea Seydoux

2012 Amour, Michael Haneke

2011 The Tree of LifeTerrence Malick

2010 Uncle Boonmee Who Can Recall His Past Lives (Lung Bunmi Raluek Chat), Apichatpong Weerasethakul

2009 The White Ribbon (Eine deutsche Kindergeschichte), Michael Haneke

2008 The Class (Entre les murs), Laurent Cantet

Updated: January 21, 2023, 12:39 PM