Total funding in Saudi Arabia has grown considerably faster than the average across the Middle East and North Africa
Startup funding in Saudi Arabia has risen 102 percent in the first half of the year compared to the same time period in 2019, according to newly released data from startup data platform Magnitt.
According to the data, total funding in Saudi Arabia has grown considerably faster than the average across the Middle East and North Africa.
On average, the 17 countries in the region saw a 35 percent increase in total funding between H1 2019 and H1 2020.
Additionally, the Magnitt data shows that while the greater MENA region saw an 8 percent drop in the number of deals over the same time period, Saudi Arabia saw a 29 percent increase.
“Saudi Arabia has been one of the fastest growing ecosystems in the region for a few years now, which has continued during Covid-19,” said Dr. Nabeel Koshak, the CEO of SVC.
“As part of Vision 2030, many new initiatives have been launched in recent years to spur innovation and startup growth,” he added. “Saudi Arabia has always been an attractive market for local and regional entrepreneurs due to its large market size. In recent years, it has also developed a startup ecosystem to match it.”
The increase in funding comes during the Covid-19 pandemic, which has seen many investors make a shift in their investment mandate, both in terms of stage and industry.
“We are seeing a shift in investor appetite when it comes to startup development stages,” said Philip Bahoshy, Magnitt’s founder.
“There are two key factors at play. First, the full impact of Covid-19 is likely to hit later in the year,” he added. “As we know, it takes an average of 9-12 months to fundraise. Many deals in Q1 2020 will have already been in the works for a period of time.”
Bahoshy added that more later-stage investments with larger round sizes have been taking pace.
This highlights a shift to more established startups, which can provide them a longer runway to weather the challenging time ahead,” he said.
In the first half of the year, Saudi Arabia saw several high-profile funding rounds including Jahez ($36.5m) and Nana ($18m), both of which operate in food and grocery e-commerce. A third notable founding round – Noon Academy – operates in the edtech sector.
As a result, e-commerce was the most active industry, both in terms of total funding (67 percent) and number of deals (22 percent).
Throughout the year, the report also noted that a variety of government initiatives designed to mitigate the impact of the Covid-19 pandemic, including deferred payments, waived fees and bills and salary guarantees for 70 percent of Saudi employees.