Saudi Arabia is one of the fastest-growing start-up and venture capital markets in the Middle East and North Africa, with total funding jumping 82 per cent year-on-year in the first six months, according to a new report.
Deal volumes in the kingdom surged 44 per cent in the six months to the end of June, according to Magnitt, a platform that tracks and reports developments in the Mena entrepreneurship space.
A total of $40 million (Dh146.8m) was invested in start-ups based in the kingdom during the period, which Magnitt said was a record in its ‘H1 2019 Saudi Arabia Venture Capital Snapshot’ released on Monday in collaboration with government-owned body, Saudi Venture Capital.
Among the big deals were Noon Academy, the educational start-up that raised $8.6m in a Series A round, and grocery delivery company Nana raising $6.6m in Series A funding.
“Saudi Arabia is currently witnessing an increase in the quality and quantity of the deal flow of start-ups,” said Nabeel Koshak, chief executive at SVC, the government body set up to boost the start-up ecosystem in the country. The kingdom has seen a rise in “more professional angel investors and venture capital funds” as well, he said.
Start-ups raised a total of $48m last year in 34 venture capital deals, it said. In the first half of this year, 26 start-up investment deals were formalised in Saudi Arabia with new investors such as SVC and MiSK 500 Mena Accelerator emerging on to the scene.
The number of deals has grown as start-up businesses go through accelerator programmes and look for funding from venture capital funds and other institutional investors.
A total of 30 institutions invested in Saudi start-ups during the first six months of the year, with local Saudi venture capital funds including Ra’ed Ventures, Wa’ed Ventures, Riyad Taqnia Fund and SVC participating in funding rounds alongside international investors, the report said.
The number of deals during the second half of the year is expected to increase as more institutions, accelerators and venture capitals line up investment for promising businesses in the kingdom, the report added.
Despite the growth in funds raised, Saudi Arabia is third in Mena for venture capital funding after the UAE, where $311m was raised, and Egypt, where start-ups secured $53m in funding.
In terms of deal volume, the kingdom ranked fourth regionally, trailing the UAE, Egypt and Lebanon, according to Magnitt.
Saudi Arabia accounted for 11 per cent of the number of deals regionally during the survey period, which is 1 per cent higher than the same period last year. The kingdom also accounted for 9 per cent of total fund raised in the region, a 1 per cent year-on year jump, Magnitt said.