Saudi Startups Record Best Quarter Ever for Third Quarter Fundraising, Magnitt Says

Start-ups in Saudi Arabia recorded their best quarter of fundraising in the three months ending September 30, attracting $ 205 million in 34 deals, according to data platform Magnitt.

Venture capital investments in the kingdom’s start-ups more than quadrupled in the third quarter of 2021, compared to the same period last year, according to the Q3 KSA Venture Investment Report prepared in cooperation with the Saudi Venture Capital Company .

Total venture capital investment has reached $ 376 million since the start of the year in 2021, more than double the funding invested in the year 2020. The Series B round of funding is worth of $ 125 million by the customer communications platform Unifonic accounted for one-third of the total funding raised. in Saudi Arabia by the third quarter of 2021.

The number of deals made by start-ups in the kingdom quintupled in the quarter, compared to the same period in 2020, to 34 deals, according to the report.

Saudi start-ups have completed 91 deals since the start of 2021, more than a three-fold increase in venture capital deals compared to a year ago and surpassing the number of deals concluded last year , Magnitt said.

Saudi Arabia is seeking to develop its start-up and small and medium-sized business sector as part of its efforts to diversify its oil economy, create jobs and attract highly skilled talent to the kingdom.

The kingdom’s FinTech startups closed the most deals, while the IT sector accounted for 39% of the capital deployed in Saudi Arabia-based startups, ranking first in the industry by amount of funding. . However, 82 percent of the sector’s capital was raised thanks to the Unifonic funding round.

E-commerce was the only sector in the top five in Saudi Arabia to experience a decline in both transactions (15%) and funding (27%). Despite this, the sector attracted the second highest funding since the start of the year in 2021.

First rounds fell sharply in the third quarter, since the start of the year, in favor of rounds of between $ 500,000 and $ 3 million, which accounted for 53% of all transactions in Saudi Arabia, Magnitt said.

Funding rounds under $ 500,000 have fallen from 66% of all deals in 2020 to just 26% of deals in 2021 since the start of the year.

“While other geographies of Mena have gained overseas attention, the activity of Saudi Arabia’s venture capital ecosystem has been driven by local investors,” the Magnitt report said. .

Only 17% of the 53 investors who funded Saudi start-ups were based outside the Middle East and North Africa region, compared to 46% in the United Arab Emirates and 44% in Egypt.

Almost two-thirds of investors who have actively supported start-ups in Saudi Arabia were based in the country.

The Saudi venture capital ecosystem saw three exits in 2021 at the end of the third quarter, Magnitt said.

The startups to be released included two from the media and entertainment industry, and one from the advertising and marketing industry. Two years is the time it took the most for these start-ups to come out of their training. Egypt has announced four exits and the United Arab Emirates seven.

In the region, Egypt led with 96 deals so far in the year, five more than the UAE and Saudi Arabia, which were both tied at 91 deals.

Egyptian company Flat6labs tops list of most active investors after supporting most start-ups in emerging venture capital (EVM) markets in 2021.

Egyptian company Flat6labs tops the list of most active investors, propelling the most important venture capital activity among emerging market start-ups in 2021.

Updated: December 19, 2021, 12:09 PM

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