Saudi Arabia Is Now the MENA Region’s Leading Nation in Venture Capital Fundraising

Startups in Saudi Arabia raised US$1.38 billion through venture capital (VC) funding in 2023, marking a 33% increase from 2022. This accounted for just over half of all VC funds raised in the MENA region in 2023, according to a report released by Magnitt, a Dubai-based data platform. With this achievement, the Kingdom has secured the first place in terms of VC investments in the region.

According to Magnitt, the surge in VC funding in Saudi Arabia has been driven by government-backed funds increasing their expenditure, particularly in the tech sector. The report highlights the government’s focus on innovation, a dedicated unicorn project, and investments from sovereign funds such as the Saudi Venture Capital Company (SVC), Jada, and Sanabil as key factors contributing to the sector’s growth. Notably, the Public Investment Fund (PIF), Saudi Arabia’s primary sovereign wealth fund, has been actively investing in tech firms and startups. Aiming to foster a VC industry that encourages entrepreneurship, the PIF, valued at $700 billion, has established a $1 billion fund of funds for VC firms and also invests directly through its subsidiary, Sanabil.

 In the fourth quarter of 2023, two major VC deals involving the nation’s leading fintech unicorns, Tabby and Tamara, helped Saudi Arabia secure a top-five spot for emerging market funding along- side Singapore, Turkey, Indonesia, and Vietnam. “It has been quite remarkable to witness the growth of the Saudi VC ecosystem, especially considering the Kingdom’s late start in the VC space relative to other MENA countries,” said Philip Bahoshy, founder and CEO of Magnitt. “Closing the year at almost $1.4 billion with two new unicorns headquartered in the Kingdom sets an exciting stage for development into 2024 and beyond.” Magnitt’s report also compares Saudi Arabia’s performance with the rest of the region, noting that funding across the wider MENA region dropped by almost a quarter in 2023. This downturn was attributed to rising inflation, global interest rate hikes, and curbs on oil production. Despite initial interest from Silicon Valley and global investors in the region, 45% of investors originated from outside the MENA, according to Magnitt.