65% Saudi Increase, in Venture Capital Investment

Saudi Arabia’s venture capital ecosystem grew by 65% in the first half of 2021, reaching its largest semi-annual VC amount, despite deals falling by 7% year on year basis, Saudi firms received $168 million (SR630 million) in the first half.

This is equivalent to 94% of the value of venture capital in Saudi Arabia in 2020, putting the system on track to set a new annual record for venture capital development, according to “Maginty” with a semi-annual compound annual growth rate of 33%.

Early-stage investment accounted for 82% of the 54 deals made in the first half of 2021, the first half of 2018, while advanced stage deals increased by seven percentage points year on year.

Since the first half of 2020, the Kingdom has advanced in the rankings, claiming the second highest proportion of the value of venture capital in the region in the first half of 2021.
After the Emirates, it accounts for the second biggest share of overall venture capital investment in the region.

This was owing to a 77% in average round size year over year, with Saudi-based start-ups boosting their share of total deals conducted in the region, by two percentage points, with Saudi Arabia coming in third place after the UAE and Egypt, and Tunisia coming in fourth.
In terms of the annual increase in the number of deals between the first half of 2020 and the first half of 2021, just two nations are among the top seven in the area.

Fintech businesses had a 1,700% increase in venture capital funding over the previous year, while e-commerce investment fell by 54%.

Fintech companies accounted for a quarter of all deals and the value of the brave investment invested in the Kingdom of Saudi Arabia, in the first half of 2021, in addition to being a leading sector in the MENA region.

In the meantime, e-share commerce’s of total transactions has decreased (19% lower, and Venture Capital 46% lower year-on-year).

However, the concentration of venture investment in the top five transactions in Saudi Arabia fell by 34 percentage points year on year in the first half of 2021, and the disbursement of venture investment in Saudi Arabia improved steadily, with the top five deals accounting for 47 percent of the total.

The value of venture capital in the Kingdom increased to 81% compared to 2020, bringing the Kingdom of Saudi Arabia closer to the Middle East and North Africa region’s trend of distribution of venture capital, where the top five deals account for 45% of venture capital.

Only one accelerated deal was recorded in Saudi Arabia in the first half of 2021, despite Business Accelerator Programs accounting for 13% of Middle East & North Africa deals.
The drop in the number of businesses graduating from accelerator programs started in 2020, when associated deals dropped from 22% to 5% year over year.