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Saudi Arabia’s startup ecosystem has grown at an unprecedented pace, from just a few small and medium-sized enterprises before Vision 2030 was announced, to groundbreaking technology startups improving lives six years later, during the pandemic. In 2022, Saudi Arabia ranked second in the Arab world in terms of total funding, with US$1.2 billion in venture, corporate and equity funding going to Saudi startups. Saudi Arabia also ranks third in the region in terms of the number of agreements signed (91), after the UAE and Egypt.
Saudi Arabia may be relatively new in the entrepreneurship and digital economy journey, but the kingdom’s focus on developing a strong entrepreneurial ecosystem has helped startup activity grow rapidly. It’s helpful. Historically, Saudi Arabia has always lagged behind the UAE and Egypt’s startup ecosystems, but that all changed in 2021 with Saudi Arabia ranking second in the Arab world in venture funding. Saudi Arabia strengthened its position in second place in 2022, moving further away from Egypt and closing in on the UAE.
Image courtesy of Lucidity Insights.
Startup funding in Saudi Arabia skyrocketed in 2022, growing more than 20 times in five years, reaching $1.2 billion in 57 disclosed deals (out of 90 total). Funding in 2018 remained at $50 million across 54 disclosed deals (out of 71 total deals). This also means that Saudi’s average deal size has increased significantly from less than $1 million per deal in 2017 to more than $20 million per deal in 2022. It’s an amazing feat for a Saudi startup to raise more than his $1. The United Arab Emirates, which reigns as the start-up capital of the Arab world, took nearly a decade to cultivate startup activity in Dubai before breaking the $1 billion cap in 2021. Reaching $1 billion. This speaks to the speed of change and growth in the world. The Saudi startup ecosystem is driven by the ability of startups to emerge in Saudi Arabia and expand across the Kingdom and abroad.
It’s not just the amount of money raised in Saudi Arabia that’s increasing. Over the past four years, the overall ticket size for a round has increased significantly. Average seed rounds increased from an average of $500,000 in 2017 to $1.9 million in 2022, at a compound annual growth rate (CAGR) of 30.5%. Average early stage funding (Series A and Series B) rounds have increased at a CAGR of 37.2% since 2017. From an average of $5 million to an average of $23 million in 2022. Late-stage investing was a nearly non-existent category in 2017, but has grown the most, with a CAGR of over 100% since 2019. Although only one has been disclosed, what is encouraging about the Series C rounds in 2019, 2021, and 2022 is that the amount raised has increased from $20 million in 2019 to $170 million in 2022. This is an increase of more than 8 times.
Considering that four of the top 10 funded startups in Saudi in 2022 were fintech companies, with the top two (Tamara and STC Pay) raising over $200 million each. It is no surprise that fintech has emerged as the most funded sector in Saudi Arabia. Kingdom. This is a trend we are seeing around the world, as fintech is considered the backbone infrastructure for many other technology industries to commoditize and accept digital payments. From e-commerce to restaurant technology to delivery aggregators, fintech is always involved.
Image courtesy of Lucidity Insights.
Fintech experienced tremendous growth in 2022. The number of registered and licensed fintech companies operating in the Kingdom has increased from 80 to 147 startups. These 147 fintech companies that are licensed represent only 30% of the total fintech companies that exist in the Kingdom. In August 2022, Tamara, a buy now, pay later platform that allows users to pay in installments, raised a Series B round of $100 million, bringing the total amount of funds raised to $200 million. It became the company that raised the most funds, exceeding $15 million. A fintech startup in the Kingdom that has surpassed STC Pay, which raised $200 million in November 2020.
Unlike other industries that still face some hurdles due to lack of funding, there are now investors funding fintech startups at every stage in Saudi Arabia. Top 10 Saudi startups that raised the most funding (based on public figures) shows that fintech and foodtech are the two broadest sectors in the Saudi startup ecosystem that are attracting the most funding. .
For more information, saud languageCheck out the report and launch your ecosystem, Evolution of the Saudi startup ecosystem 2010-2022.
This article was first published clarity insightEntrepreneur Middle East’s partner in the development of a special report on the technology and entrepreneurial ecosystem in the Middle East and Africa.
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