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๐๐๐๐จ๐ซ๐-๐๐ซ๐๐๐ค๐ข๐ง๐ ๐ ๐ฎ๐ง๐๐ข๐ง๐
Saudi Arabia reached a new peak in venture capital (VC) funding in 2023, surpassing $1.4 billion, up by 33% from 2022. This marked the second consecutive year the Kingdom crossed the $1 billion threshold.
๐๐๐๐๐ข๐ง๐ ๐๐๐๐ ๐๐๐ ๐ข๐จ๐ง
For the first time, Saudi Arabia ranked first in the MENA region for total VC funding, contributing 52% of the region’s total capital deployed. This is a significant rise from its 30% contribution in 2022.
Decline in Number of Deals:
Despite the increase in funding, the number of deals dropped by 20% YoY, indicating larger deal sizes with fewer transactions. The average deal size rose by 73% to $12.8 million.
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Mega deals (over $100 million) reached an all-time high of $879 million, with major contributions from BNPL startups like Tamara and Tabby, and E-commerce/Retail startups like Floward and Nana.
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FinTech was the top industry, accounting for $704 million across 30 deals, followed by E-commerce/Retail with $428 million across 19 deals. These two sectors captured 67% of the total capital deployed.
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A total of 114 investors backed Saudi-based startups in 2023, with 56% being domestic investors. This indicates a healthy interest from both local and international investors despite a regional decline.
๐๐ฑ๐ข๐ญ ๐๐ฏ๐จ๐ฅ๐ฎ๐ญ๐ข๐จ๐ง
Exit activity remained stable with nine M&A transactions in 2023, making Saudi Arabia second in the MENA region after the UAE. Notable exits included Delivery Heroโs acquisition of HungerStation for $297 million.
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๐๐จ๐ฏ๐๐ซ๐ง๐ฆ๐๐ง๐ญ ๐๐ฎ๐ฉ๐ฉ๐จ๐ซ๐ญ
The impressive growth in Saudi Arabiaโs VC ecosystem is heavily supported by government initiatives under the Saudi Vision 2030. These initiatives aim to foster entrepreneurship and create a favorable regulatory environment.
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The Kingdom aims to position itself as a global hub for startups, with ambitions extending beyond regional leadership. The groundwork laid by the government and private investors sets a promising stage for further growth and innovation.
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The decline in the number of deals highlights a potential risk of market concentration in fewer, larger deals. However, this also presents an opportunity to diversify investment across more sectors and early-stage startups.
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The report highlights a transformative period for Saudi Arabia’s VC ecosystem, marked by significant growth and strategic milestones. Continued government and private sector support is crucial for sustaining momentum and achieving Vision 2030’s goals.
