Saudi Arabia sees 55% surge in tech startup funding

Saudi Arabia sees 55% surge in tech startup funding
Large buildings equipped with the latest technology, King Abdullah Financial District in Riyadh, Saudi Arabia. A study by data research platform Magnitt found that the Kingdom accounted for 18 percent of the 496 investment deals across the Middle East and North Africa last year. (Shutterstock)
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Updated 13 January 2021

Saudi Arabia sees 55% surge in tech startup funding

Saudi Arabia sees 55% surge in tech startup funding
  • Volume of deals also up 35% as Kingdom defies pandemic slowdown

RIYADH: Saudi Arabia recorded a 35 percent year-on-year increase in the number of investment deals in the technology startup sector last year, according to a new industry report.

A study by data research platform Magnitt found that the Kingdom accounted for 18 percent of the 496 investment deals across the Middle East and North Africa last year.

Saudi Arabia, the UAE and Egypt were the largest markets, accounting for 68 percent of total deals. However, while the Kingdom saw the number of investment deals increase by over a third, the UAE and Egypt saw their volume decrease by 17 percent and 10 percent, respectively.

When it comes to the monetary value of the deals, the UAE and Egypt still dominated overall, but Saudi Arabia recorded a surge of 55 percent year-on-year to $152 million. By comparison the value of deals in the UAE rose 5 percent and Egyptian funding increased 31 percent.

Nabeel Koshak, CEO at Saudi Venture Capital Company, said: “Saudi Arabia is witnessing an increase in the quality and quantity in the deal flow of startups. I am thrilled by the distinguished entrepreneurs who are creating fast growth and scalable startups. Despite the slowdown of COVID-19, Saudi Arabia saw a record increase in venture capital funding (55 percent) in 2020 compared with 2019.”

Overall, across the Middle East and North Africa, 2020 saw a record of just over $1 billion invested in start-ups, an increase of 13 percent year-on-year. This is despite the volume of deals decreasing by 13 percent over the same period. 

The impact of the pandemic can be clearly seen in the data. In the first half of the 2020, $725 million of funding was raised, an increase of 29 percent compared with $563 million in the first six months of 2019. In the second half of the year, $306 million was raised, a decrease of 35 percent compared with the last six months of 2019.

Philip Bahoshy, CEO and founder at Magnitt, said: “Exactly one year ago when we published Magnitt’s 2019 annual venture report, I predicted that — barring war or natural disaster — we would see $1billion invested in MENA’s startups in 2020. We saw neither war nor natural disaster. Instead, a global pandemic changed the world.

“It has been a difficult year for all of us  in many ways, and it is likely that the pandemic will continue to affect the global population as well as the macroeconomic outlook for our region long into 2021,” he added.

The report also identified a clear change in the allocation of capital away from early-stage ventures.

Pre-seed investments — deal sizes of less than $100,000 — represented 47 percent of transactions in 2019, while in 2020 it fell to 27 percent. This revealed that last year investors were showing a preference for bigger-ticket Series A investments, or deals of between $100,000 and $3 million.

In terms of sector focus, the impact of COVID-19 can be clearly seen. Funding for the food and beverage and healthcare startups tripled to $122 million and $72 million, respectively.

Courtney Powell, chief operating officer at California-based 500 Startups, said that 2021 would be a turning point for entrepreneurship in the Middle East and North Africa.

“It’s the culmination of years of work by key stakeholders. Deal flow is healthy and getting stronger every day, there is more capital available than ever, and there is an intense hunger to see the region diversify away from historical drivers of gross domestic product and become a leading knowledge economy.”

In its predictions for 2021, Magnitt has forecast that Saudi Arabia will overtake Egypt by total number of investments and total capital deployed and become second only to the UAE in the rankings.


IMF: Iraq has requested emergency assistance

IMF: Iraq has requested emergency assistance
Updated 13 min 45 sec ago

IMF: Iraq has requested emergency assistance

IMF: Iraq has requested emergency assistance
  • The OPEC member’s economy has only a small manufacturing base and almost all goods are dollar-priced imports

Iraq has requested emergency assistance from the International Monetary Fund and talks are ongoing between the parties, the IMF said late on Sunday.
Iraqi Finance Minister Ali Allawi told Bloomberg News earlier that Iraq was in talks with the IMF for a $6 billion loan package.
“The Iraqi authorities have requested emergency assistance from the IMF under the Rapid Financing Instrument, and indicated their intention to also request a longer-term arrangement with the Fund in support of planned economic reforms,” an IMF representative said in an emailed statement.
“Discussions of the authorities’ request for emergency assistance are ongoing.”
The IMF’s Rapid Financing Instrument provides quick financial assistance, which is available to all member countries facing an urgent balance-of-payments need.
Financial assistance under the RFI is provided without the need for a full-fledged program or review, according to the IMF website.
Iraq may ask for an additional $4 billion in low-cost loans through another program linked to government reforms, Allawi said on Sunday.
Iraq devalued the dinar last month after a collapse in global oil prices, a major source of Iraq’s financial resources.
Allawi told Bloomberg that Iraq also planned other types of funding to help plug the budget gap. Once the spending plan was approved, the government would move to issue $5 billion in domestic bonds to expand its financial base.
The OPEC member’s economy has only a small manufacturing base and almost all goods are dollar-priced imports.