[ad_1]
CAIRO: Saudi Arabia’s startup ecosystem ranks first in regional venture funding activity in 2023, accumulating an unprecedented $1.38 billion in capital.
As reported in MAGNiTT’s Saudi Arabia 2023 report, this achievement puts the Kingdom at the forefront of venture capital funding in the Middle East and North Africa, surpassing $1 billion for the first time.
During the year, funding into Saudi Arabia’s startup ecosystem increased by 33 percent from $987 million in 2022, indicating a strong growth trajectory.
Moreover, Saudi Arabia’s share of total venture capital funding in the MENA region has also increased significantly, jumping from 30 percent in 2022 to 52 percent in 2023.
MAGNiTT’s report highlights that Saudi Arabia’s venture capital sector has grown consistently since 2019, achieving a compound annual growth rate of 86 percent in 2023.
Notably, Saudi Arabia raised $879 million in mega-rounds (separate funding deals over $100 million), reflecting strong investor interest in the region’s startup scene.
Breakdown by department
Saudi Arabia achieved impressive growth in the fintech sector in 2023, securing $704 million, an increase of 181% from the previous year.
This surge was largely driven by the emergence of two Saudi-based “unicorns”, Tabby and Tamara. Each received large funding rounds, increasing their valuations to more than $1 billion.
Tabby, the prominent “buy now, pay later” platform in the MENA region, has achieved the milestone of becoming the first fintech company in the region to achieve unicorn status.
This was achieved through a Series D funding round in November that raised $200 million and boosted the company’s valuation to $1.5 billion.
Tabby was originally founded in the UAE, but recently moved its headquarters to Saudi Arabia in line with plans for an initial public offering there.
Moreover, Tamara, another important player in the BNPL sector, was the first Saudi-born fintech startup to reach a valuation of $1 billion.
This achievement comes after securing $340 million in a Series C funding round in December.
These two major funding events played a key role in strengthening Saudi Arabia’s position in the fintech funding landscape and represented the top two investment rounds of the year.
The e-commerce sector also recorded strong performance in 2023, raising $428 million, up 153% year-on-year.
![](https://www.arabnews.com/sites/default/files/userimages/444656/7597664138103382.jpg)
This highlights Saudi Arabia’s rapidly evolving digital commerce landscape, along with the growth of the fintech ecosystem.
Saudi Arabia’s e-commerce sector experienced significant growth in 2023, with major contributions from online flower marketplace Flowward and digital supermarket Nana.
Floward, a Saudi-based online flower and gift platform, started the year with a significant capital increase of $156 million through a Series C pre-IPO round.
The funding was secured during the company’s participation in LEAP, a startup and technology conference held in Riyadh in February.
Following this, grocery delivery startup Nana also announced a hefty $133 million Series C funding round in the same month. These investments highlight continued investor interest and potential in the online retail market.
Additionally, Sary, a Saudi Arabian business-to-business e-commerce marketplace, successfully raised $50 million in one year. The combined effect of these three funding rounds helped boost the growth and attractiveness of the Saudi e-commerce sector.
Analysis of investment transactions
Although Saudi Arabia saw a notable surge in funding in 2023, the number of deals decreased by 20% compared to the previous year.
Despite this, Saudi Arabia accounted for 26% of all transactions within the MENA region, up from 22% in 2022.
Saudi Arabia’s trading environment is dominated by early-stage startups, accounting for 81% of all deals. This was followed by his Series A funding of 11%, followed by Series B and subsequent stages with 4% each.
Saudi Arabia’s exit numbers remained relatively stable in 2023, with nine acquisitions recorded in the year, just one less than the previous 12 months.
In terms of M&A across the MENA region, Saudi Arabia accounted for 21% of these deals, ranking second after the UAE.
Venture highlights
In addition to funding, 2023 saw significant progress in the Saudi venture capital and startup environment through a variety of initiatives.
Notably, the Makken Fintech program was launched by the Saudi Central Bank, the Capital Market Authority, and Saudi Fintech.
The program is designed to support the growth of 150 financial services startups over three years.
Additionally, the Saudi Venture Capital and Private Equity Association, in collaboration with the SVC, has introduced three programs aimed at developing the sector.
These programs focus on strengthening the management of venture capital and private equity funds to stimulate industry growth.
Public Investment Fund Jada also contributed to these advances by launching the fourth edition of its Emerging Fund Managers Program and further strengthening its support for venture capitalists in the region.
A glimpse of regional characteristics
According to MAGNiTT’s FY23 MENA Report, funding conditions across the MENA region declined by 23% year-on-year, primarily due to cautious investor sentiment.
Total funding for the region will be $2.6 billion in 2023, a notable decrease from $3.4 billion in 2022. Furthermore, investment transactions decreased to 477 from 718 a year ago.
The fourth quarter of 2023 has emerged as the most important period for fundraising, with $1.19 billion raised thanks to a large funding round by Tabby and Tamara. The first quarter saw the most transactions with a total of 141 transactions.
In terms of country funding, the UAE came in second place with $691 million, down 45% year-on-year. This is the first time that Saudi Arabia has surpassed the UAE in this regard.
Nevertheless, the UAE recorded the highest number of transactions in the MENA region, with a total of 158 transactions throughout the year.
Egypt has seen a decline in capital deployment, with Egyptian startups raising $378 million in 2023, down 30% from the previous year.
Morocco, on the other hand, made remarkable progress and entered the top five by raising $81 million, marking an increase of 193 percent compared to 2022.
Fintech and e-commerce continued to be the most popular sectors in the region, securing $1.27 billion and $502 million in funding, respectively.
As for venture capital firms, Egypt’s Flat6Labs, US’s 500 Global and UAE’s Shorooq Partners lead the region in terms of number of deals.
In terms of capital deployment, UAE-based Chimera Capital topped the list with $260 million allocated, followed by Saudi Arabia’s STV with $128 million and Shorooq Partners with $98 million.
[ad_2]
Source link