Recently, Saudi-based company “Tabby” announced its acquisition of startup “Tawq,” drawing significant attention from investors eyeing opportunities in the kingdom.
The acquisition by Tabby, one of the Middle East’s pioneering fintech startups, of a digital wallet operator for an undisclosed amount, highlights the rapid growth of Saudi Arabia’s startup ecosystem. This development could provide new exit strategies for venture capital investors, as discussed at the recent “Fintech 24” conference in Riyadh.
Global venture capitalist and Fluent Ventures founder Alexander Lazarow emphasized, Successful startup ecosystems have self-sustaining momentum, and exits are crucial for returning capital to investors and motivating new generations of funders.
IPOs
Lazarow noted the increasing number of tech IPOs and M&A activities in Saudi Arabia, particularly in fintech, stressing the importance of viable exit paths for investors in the early stages of market development.
Saudi Arabia has emerged as one of the fastest-growing markets for venture capital in recent years, ranking second after Singapore in the first half of 2024 by raising over $400 million. It also became the top destination for venture capital in the Middle East and North Africa, surpassing the UAE last year.
One of the early local fintech companies to go public in Saudi Arabia is “Rasan,” managing online insurance platforms like “Tameeni” and “Treza.” The company raised $224 million last June, with its stock price increasing by over 43% since its initial trading.
Historically, the UAE has been the most developed investment market in the region, accounting for about 45% of all M&A deals in the Middle East and North Africa since 2019, according to Magnitt.
However, Saudi Arabia is catching up, securing 19% of last year’s regional M&A deals, as reported by Magnitt.
Market Exits
Magnitt CEO Philip Bahoshy predicted that Saudi Arabia could see exit opportunities within the next two to three years, noting that it typically takes 7 to 8 years for a company in the MENA region to reach an exit stage.
Saudi startups have benefited significantly from local funds, including the Saudi Technology Ventures (STV) and Sanabel Investment, a subsidiary of the Public Investment Fund. These investments aim to build a robust venture capital sector and encourage young entrepreneurs to establish companies contributing to the kingdom’s economic diversification efforts.
Tabby, which offers “buy now, pay later” solutions, agreed to relocate its headquarters from the UAE to Saudi Arabia last year. The company plans to go public on the Saudi stock exchange in late 2025 or 2026, as revealed to local media platform “Argaam.”
Having raised funds from regional and global investors like Wellington Management, Mubadala Investment, and PayPal Ventures, Tabby stated that Tawq would continue to operate independently after the acquisition is finalized.
