The latest report from the Observatory for Medium and Small Enterprises indicates that, for the first time, Saudi Arabia has become the leading destination for venture capital investments in the Middle East and North Africa (MENA) region in 2023. This success can be attributed to ongoing support from both public and private sectors. In 2023, Saudi startups amassed a notable 5.2 billion riyals, surpassing the significant milestone of 53.7 billion riyals for the second consecutive year.
Robust growth in venture capital investments within the Kingdom is a testament to the vibrancy of the Saudi economy, suggesting that strategic policies are paving the way for startups and the small and medium enterprise (SME) sector to explore new horizons of growth and prosperity.
In 2023, Saudi Arabia accounted for 52% of the total venture capital in the MENA region. The annual growth in venture capital funding reached 33%, with approximately 114 investors backing Saudi startups that year. Furthermore, the Kingdom witnessed about 9 mergers and acquisitions in 2023.
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A total of 125 venture capital deals were struck in the Kingdom, ranking it second in the MENA region for such investments. The FinTech sector in Saudi Arabia claimed nearly half of the total venture capital funding in 2023, driven by two large deals. ‘Tamara’ secured 1.3 billion riyals in its Series C funding round, and ‘Tabby’ raised 937.5 million riyals in its Series D round. Additionally, three transactions in the e-commerce sector totaled 1.3 billion riyals, showcasing global investor confidence in the Kingdom’s startup ecosystem.
As for SME financing in the private sector, data from the Saudi Central Bank revealed that credit facilities from the private sector to SMEs increased by 17.8% year-on-year. From the third quarter of 2022 to the same period in 2023, the amount rose from 228.03 billion riyals to 268.57 billion riyals, indicating enhanced private sector confidence in SMEs within the Kingdom.
Medium-sized enterprises (with 50 to 249 employees) remained the primary beneficiaries of financing, receiving 59% of the total funds allocated to SMEs.
