Saudi Arabia leads the MENA in H1 2024 Regarding venture capital investment
Posted on Jul 25, 2024 at 09:07 PM
Venture capital analytics provider Magnitt reports that in the first half of 2024, Saudi Arabia was the second-most popular country in the emerging-market venture capital field, after only Singapore.
Dubai-based software firm Salla received $130 million in venture capital fundraising from the kingdom, making it the most successful in the Middle East and North Africa.
Startup investment declined by over a third in MENA and developing economies, including Southeast Asia, due to investors shifting to early-stage projects raising less money.
Small-Scale Funding Spikes
Magnitt reports a decrease of 18% in deals in MENA, with venture capital invested at $768 million, marking the lowest first-half performance since the Covid-19 pandemic.
Magnitt reports a general downturn in the investment sector, with a decrease in mega-rounds worth $100 million or more, as investors focus on investment rounds ranging from $1 million to $5 million.
According to Philip Bahoshy, chief executive officer of Magnitt, “They have shifted away from late-stage to early-stage investments because of the high cost of capital. Startups now have to be cost-efficient; they cannot just rely on another investment round to raise funds.”
Magnitt's study reveals a 7% decrease in VC financing in Saudi Arabia, highlighting the country's unique status and the significant benefits of investments from Sanabil and STV.
Emerging Venture Capital Markets
The Saudi Public Investment Fund is investing heavily in startups and digital companies to develop the venture capital sector, inspire young entrepreneurs, and diversify the economy.
The UAE ranked second in MENA fundraising, raising $225 million, down 19% from the previous year, but the market remained resilient as the deal count increased.
The MENA region's venture capital industry is gaining attention, with a 30% increase in investors in regional startups compared to the previous year.
The e-commerce and retail industry received the most funding, with fintech claiming the highest number of deals, according to the firm.
Saudi-based startups saw a strong increase in investor engagement, with 72 entities supporting them, and international investors' share in Saudi Arabia's venture capital space increased by 17 percentage points to 28 per cent in 2024.
A Little of Soberness
Three massive acquisitions let Singaporean firms secure an additional $1.3 billion in funding across Asia.
Magnitt figures reveal that overall fundraising in Southeast Asia, the Middle East, Pakistan, Turkey, and Africa reached $3.5 billion in the first half of the year, a 34% decrease from the previous year.
Alexandre Lazarow, founder of Fluent Ventures, attributed lower levels of investment to more practical investing strategies.
Lazarow predicts a return to blitz scaling, where investors invest with little diligence in larger rounds, with the market expected to rebound in early 2025.
All in all, both internal efforts and increased interest from abroad have contributed to Saudi Arabia's success in venture capital, with long-term investments being essential in drawing in both investors and businesses.
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