The rise of ‘phygital’ — Saudi e-commerce industry sees Ramadan rush

The rise of ‘phygital’ — Saudi e-commerce industry sees Ramadan rush
This ‘phygital’ approach — combining the best of physical and digital shopping — will define the future of Ramadan commerce in the Kingdom. (SPA)
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Updated 15 March 2025
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The rise of ‘phygital’ — Saudi e-commerce industry sees Ramadan rush

The rise of ‘phygital’ — Saudi e-commerce industry sees Ramadan rush
  • Convergence of cultural roots with digital convenience is reshaping consumer expectations across the Kingdom

RIYADH: Embracing the essence of tradition while adapting to the evolving demands of a digital era, Ramadan in Saudi Arabia reflects a fusion of heritage and modernity.

The convergence of cultural roots with digital convenience is reshaping consumer expectations across the Kingdom, which has a population of 38 million, of whom 70 percent are under the age of 35.

Brands are now tasked with infusing core values such as personalization, community engagement, and generosity into the shopping journey to resonate with this tech-savvy and culturally rich demographic.

E-commerce rush in Saudi Arabia during holy month of Ramadan

According to Janahan Tharmaratnam, partner at Arthur D. Little Middle East, the Kingdom’s digital commerce market — valued at $14 billion in 2023 — is projected to reach $20 billion in 2025, a compound annual growth rate of 20 percent.

“The Ramadan period alone accounts for 35-40 percent higher transaction volumes, driven by a surge in demand for groceries, electronics, fashion, and gifting,” Tharmaratnam said. “The post-pandemic shift to online shopping has solidified consumer reliance on e-commerce, with 77 percent of Saudis now preferring digital-first shopping experiences.”

He went on to say that growth is not just focused on demand — it is also about fulfillment. 

The Ramadan period alone accounts for 35-40 percent higher transaction volumes, driven by a surge in demand for groceries, electronics, fashion, and gifting.

Janahan Tharmaratnam, Partner at Arthur D. Little Middle East

“Logistics networks must scale by 40 percent to meet the Ramadan surge, with nighttime deliveries increasing by 50 percent compared to other months,” he explained, adding that successful businesses do not just ramp up promotions; they optimize artificial intelligence-driven demand forecasting, reduce delivery times by 30 to 40 percent, and integrate micro-fulfillment centers across urban hubs to ensure inventory is closer to consumers.

This shift from centralized warehouses to hyper-local distribution is key to sustaining Ramadan’s retail boom, according to Tharmaratnam.

“A prime example is Jahez, Saudi Arabia’s homegrown quick-commerce platform, which experienced a 70-percent surge in Ramadan orders last year. Instead of simply adding more riders, Jahez used AI-driven logistics to optimize routes, reducing delivery times by 25 percent,” he said. “The platform also expanded partnerships with neighborhood retailers, ensuring customers had access to essentials without supply-chain bottlenecks. This kind of data-driven agility will define the next phase of e-commerce in Saudi Arabia.”

Tharmaratnam said that mobile commerce dominates, accounting for over 90 percent of e-commerce transactions during Ramadan, while social commerce, via WhatsApp, Instagram, and TikTok, now drives 30 percent of online sales.

He went on to emphasize that the real disruption is the shift from transactional commerce to culturally embedded, experience-driven engagement, as traditional Ramadan shopping has focused on physical markets and communal buying.

The partner stressed that today, leading e-commerce players curate AI-driven experiences that align with consumer sentiment. From AI-powered gifting suggestions to influencer-led Ramadan livestreams, brands that focus on storytelling rather than hard-selling see higher conversion rates and customer retention beyond Ramadan.

“A great example is Namshi, a leading Saudi fashion e-commerce platform. Last year, Namshi saw a 45-percent boost in sales conversion rates by combining cultural resonance with digital engagement,” Tharmaratnam said. “The platform launched AI-powered Eid styling recommendations, influencer-led ‘Suhoor Lookbooks,’ and interactive content that blended fashion with tradition. By seamlessly integrating Ramadan traditions into the online shopping journey, Namshi transformed shopping from a necessity into a personalized, experience-driven event.”

Ramadan traditions and online shopping behaviors

There is no doubt that the fundamental values of Ramadan, such as generosity, family bonding, and the distinct pattern of late-night gatherings, have a significant impact on online shopping trends in Saudi Arabia.

According to Joe Abi Akl, partner and head of Oliver Wyman’s retail and consumer practice for  India, the Middle East and Africa, there is a significant spike in demand for essential groceries, traditional fashion and thoughtful gifts, with peak activity occurring post-iftar. 

Expect a significant leap in logistics efficiency, with same-day or even instant delivery becoming more prevalent.

Joe Abi, Akl Partner and head of Oliver Wyman’s retail and consumer practice

“Savvy businesses are capitalizing on this by crafting culturally resonant marketing campaigns, curating Ramadan-specific bundles, and ensuring swift, reliable delivery that accommodates the altered daily schedules. This includes leveraging suhoor and iftar time-focused promotions,” Akl said.

Ian Khan, a technology futurist and author, noted that Ramadan is not just a time of spiritual reflection, it is also a season of significant consumer activity — and retailers in Saudi Arabia are capitalizing on this in remarkable ways.

“Take Mazeed, for example — this e-commerce platform has curated products from over 8,000 local merchants, offering items that deeply resonate with Ramadan traditions. 

“This isn’t just about sales; it’s about creating meaningful shopping experiences that align with cultural values,” Khan said.

Opportunities Ramadan e-commerce poses for businesses

Ramadan presents a prime opportunity for Saudi businesses to forge deeper customer connections through bespoke, culturally sensitive campaigns and exclusive loyalty programs.

Oliver Wyman’s Akl said that the heightened online traffic during this period allows for significant brand building and the refinement of operational efficiencies, particularly in fulfillment and delivery.

“This is also the perfect time to explore cutting-edge technologies like AI-powered chat commerce — which offers personalized customer service — and strategic influencer partnerships that resonate with the Saudi audience,” he added.

ADL’s Tharmaratnam suggested Ramadan is an opportunity not just to increase sales, but to build enduring digital-engagement strategies. 

HIGHLIGHT

Mobile commerce accounts for over 90 percent of e-commerce transactions during Ramadan, while social commerce, via WhatsApp, Instagram, and TikTok, now drives 30 percent of online sales.

“The Kingdom’s population growth — 2.5 percent annually — and urban expansion are driving a fundamental shift in how businesses approach fulfillment, customer experience, and personalization. Instead of treating Ramadan as a short-term promotional window, brands that invest in AI-driven customer retention strategies and logistics optimization will see sustained post-Ramadan growth,” Tharmaratnam said.

“The biggest disruption comes from AI-driven conversational commerce. With WhatsApp and chatbot-based shopping now accounting for 25 percent of digital transactions, brands must rethink how they engage customers,” he added.

Moreover, supply-chain transparency is becoming a differentiator. Real-time delivery tracking and blockchain-enabled halal verification will build trust in Ramadan purchases, especially in the $6 billion halal food and fashion market, the ADL partner highlighted.

“An example of this is Cenomi, Saudi Arabia’s largest retail group, which seamlessly blends physical and digital commerce. By integrating augmented reality shopping experiences, in-store pickup for online orders, and AI-driven product recommendations, Cenomi saw a 30-percent Ramadan sales boost in 2023. This ‘phygital’ approach — combining the best of physical and digital shopping — will define the future of Ramadan commerce in the Kingdom,” Tharmaratnam said.

Khan told Arab News that shopping app installations in Saudi Arabia surged by 67 percent during Ramadan in 2024, in what is “clear indicator” of how mobile-first commerce is shaping the future.

He added: “Consumer spending follows this trend. In 2024, 64 percent of foreign nationals in Saudi Arabia reported higher expenditures during Ramadan, reinforcing the economic impact of the season. And across the Middle East and North Africa, e-commerce transactions shot up by 23 percent, with Gross Merchandise Value climbing 13 percent. This is the power of Ramadan in the digital age — blending tradition with technology to fuel unprecedented growth.”

Ramadan e-commerce projections and alignment with Vision 2030

From Oliver Wyman’s perspective, Akl explained that Ramadan e-commerce in Saudi Arabia this year will be driven by sophisticated AI personalization, ensuring shoppers receive highly relevant offers and recommendations.

“Expect a significant leap in logistics efficiency, with same-day or even instant delivery becoming more prevalent. Live shopping and social commerce will be integral, creating interactive and engaging experiences,” he said. “Furthermore, embedded finance solutions will streamline transactions, fostering frictionless purchasing.”

Akl went on to highlight that this evolution directly supports Saudi Vision 2030’s digital-transformation goals, building a robust, tech-enabled retail landscape that prioritizes convenience and expands consumer choice, directly contributing to the Kingdom’s economic diversification.

ADL’s Tharmaratnam noted that in 2025 Saudi Arabia’s e-commerce sector will be worth $20 billion, and the way consumers interact with digital platforms continues to evolve at an exponential pace.

“Ramadan commerce will shift from being reactive to predictive and personalized, driven by AI-powered shopping assistants, voice commerce, and health-integrated marketplaces. Consumers won’t just be browsing for products — they’ll be receiving real-time, AI-curated recommendations based on their dietary preferences, health conditions, and fasting habits,” he said.

Vision 2030 is pushing for a cashless economy, targeting 70 percent digital payments by 2025, as well as the expansion of smart logistics networks and the integration of digital health tools into everyday life. This means Ramadan e-commerce will no longer be just about selling — it will be about enabling better, healthier choices.

The partner explained that virtual dietitians, AI-powered hydration monitoring, and smart pharmacy solutions will be embedded directly into e-commerce experiences.

“A preview of this is already happening with SehhaTech, an AI-driven health-commerce platform in Saudi Arabia. SehhaTech integrates digital pharmacy services, health coaching, and e-commerce, allowing users to buy fasting-friendly supplements, receive medication adherence reminders, and even book telehealth consultations,” Tharmaratnam said.

“During Ramadan, these services saw a 150-percent increase in engagement, proving that consumers aren’t just looking for products — they’re looking for intelligent, personalized health solutions integrated with their shopping experiences,” he added.

Khan believes that as Saudi Arabia pushes toward Vision 2030 and a fully digital economy, the Ramadan rush will only become more sophisticated.

“AI-driven personalization, seamless fintech solutions, and hyper-efficient logistics will redefine the shopping experience. Businesses that understand this intersection of culture and technology will be the ones that thrive,” he said.


IMF projects 3% growth for Saudi economy in 2025

IMF projects 3% growth for Saudi economy in 2025
Updated 16 sec ago
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IMF projects 3% growth for Saudi economy in 2025

IMF projects 3% growth for Saudi economy in 2025

RIYADH: Saudi Arabia’s real gross domestic product is expected to grow by 3 percent in 2025, with further acceleration to 3.7 percent in 2026, according to the latest World Economic Outlook released by the International Monetary Fund.

The forecast marks a downward revision of 0.3 percentage points for 2025 and 0.4 percentage points for 2026 compared to the IMF’s projections issued in January. Despite the slight adjustment, the Kingdom’s anticipated economic performance continues to outpace the global average, which the IMF estimates at 2.8 percent for 2025 and 3 percent for 2026.

“The swift escalation of trade tensions and extremely high levels of policy uncertainty are expected to have a significant impact on global economic activity,” the IMF noted in its report.

Regionally, Saudi Arabia is expected to outperform several of its Gulf neighbors. The IMF projects Bahrain’s GDP to grow by 2.8 percent in 2025, followed by Qatar at 2.4 percent, Oman at 2.3 percent, and Kuwait at 1.9 percent.

The UAE is forecast to lead the Gulf Cooperation Council with a 4 percent growth rate in 2025 and 5 percent in 2026.

The IMF also predicts that inflation in Saudi Arabia will remain contained, with the average annual rate holding steady at 2.1 percent in 2025 and easing slightly to 2 percent the following year.

In a separate analysis released in December, Mastercard Economics estimated a 3.7 percent expansion for the Saudi economy in 2024, driven largely by growth in non-oil sectors.

Underscoring the Kingdom’s economic momentum, ratings agency S&P Global upgraded Saudi Arabia’s sovereign credit rating to “A+” from “A” in March, citing the country’s ongoing social and economic transformation as a key factor for the stable outlook.

Across the broader Middle East and North Africa region, the IMF anticipates economic growth to average 2.6 percent in 2025, before climbing to 3.4 percent in 2026.

Globally, the US is forecast to record GDP growth of 1.8 percent in 2025 and 1.7 percent in 2026.

Among emerging markets, India is expected to lead with projected growth of 6.2 percent in 2025 and 6.3 percent the following year. China’s economy, meanwhile, is expected to expand by 4 percent annually during the same period.


Closing Bell: Saudi main index rebounds to close at 11,586

Closing Bell: Saudi main index rebounds to close at 11,586
Updated 59 min 21 sec ago
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Closing Bell: Saudi main index rebounds to close at 11,586

Closing Bell: Saudi main index rebounds to close at 11,586

RIYADH: Saudi Arabia’s Tadawul All Share Index rebounded on Tuesday, as it gained 37.74 points or 0.33 percent to close at 11,586.40. 

The total trading turnover of the main index was SR5.41 billion ($1.44 billion), with 101 stocks advancing and 136 declining. 

The Kingdom’s parallel market, Nomu, edged down by 1.24 percent to close at 28,281.76. 

The MSCI Tadawul Index gained 8.09 points to 1,474.60. 

The best-performing stock on the benchmark index was Saudi Fisheries Co. The firm’s share price increased by 10 percent to SR112.20. 

The share price of AlJazira REIT also rose by 9.91 percent to SR15.52. 

Alistithmar AREIC Diversified REIT Fund also saw its stock price increase by 9.90 percent to SR8.77. 

Conversely, the share price of Jahez International Co. for Information System Technology declined by 3.33 percent to SR27.55. 

On the announcements front, Aldrees Petroleum and Transport Services Co. revealed that its net profit for the first quarter of this year reached SR100.1 million, representing a rise of 29.32 percent compared to the same period in 2024. 

Compared to the fourth quarter of 2024, Aldrees’ net profit increased by 6.94 percent. 

In a press statement, Aldrees attributed the rise in profit to higher sales from the company’s petrol and transport division. 

The share price of Aldrees edged up by 1.81 percent to SR135. 

In a Tadawul statement, the Saudi National Bank said that its net profit for the first three months of this year witnessed a year-on-year rise of 19.48 percent to reach SR6.02 billion. 

The financial institution said that the rise in profit was driven by a 7.56 percent rise in operating revenue during the first quarter compared to the same period of the previous year. 

The stock price of SNB increased by 3.98 percent to SR35.25.

Al Rajhi Bank said that its net profit for the first quarter of this year reached SR5.9 billion, representing a rise of 34.07 percent compared to the same period in 2024. 

In a Tadawul statement, the bank added that its total operating revenue for the first three months of this year stood at SR9.2 billion, marking a 27.26 percent year on year rise. 

Al Rajhi Bank’s share price increased by 0.41 percent on Tuesday to reach SR98. 


ACWA Power secures $119m loan facility from Alinma Bank for new headquarters

ACWA Power secures $119m loan facility from Alinma Bank for new headquarters
Updated 22 April 2025
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ACWA Power secures $119m loan facility from Alinma Bank for new headquarters

ACWA Power secures $119m loan facility from Alinma Bank for new headquarters

RIYADH: Saudi utility giant ACWA Power has secured an SR750 million ($119 million) Shariah-compliant term loan facility from Alinma Bank to fund its new headquarters in Riyadh.

The seven-year agreement reflects the bank’s confidence in the world’s largest private water desalination company, recognizing its strong financial position and strategic role in supporting the Kingdom’s Vision 2030 and energy transition goals, according to a statement.

This also aligns with the Ministry of Environment, Water, and Agriculture’s goal to meet 90 percent of Saudi Arabia’s water needs through desalination and the remaining 10 percent from ground and surface water by 2030.

In the statement, Abdulhameed Al-Muhaidib, chief financial officer of ACWA Power, said: “This financing from ALINMA Bank highlights our strong financial position and the confidence the market has in our vision.”

He added: “Our new headquarters will be more than just a building; it will be a symbol of our commitment to innovation, sustainability, and the Kingdom’s ambitious goals for a cleaner, more prosperous future.”

Chief Corporate Banking Officer of Alinma Bank Jameel Al-Hamdan said his firm was proud to announce its role as the sole financier of the new office.

Al-Hamdan added: “This landmark project aligns with both organizations’ commitment to driving sustainability and innovation in the corporate sector and with the Kingdom’s net-zero strategy.” 

The statement added that ACWA Power’s new headquarters in Riyadh reflects its role as a national leader in the energy transition, offering a cutting-edge space designed to centralize operations and foster teamwork and innovation.

It is also set to offer an eco-conscious workspace that supports employees in fulfilling their roles while fostering sustainability.

ACWA Power reported a net profit of SR1.75 billion in 2024, representing an annual increase of 5.74 percent, according to a Tadawul statement released in February.

This growth in profit was driven by increased revenue from operations and maintenance, as well as higher earnings from electricity sales. 

The company revealed the rise was attributed to a higher share in net results of equity-accounted investees, gains from capital recycling, and increased net finance income.

The firm’s overall revenue for 2024 was SR6.29 billion, marking a 3.32 percent increase compared to the previous year, according to the statement at the time.

During the same month, ACWA Power signed two agreements with Aramco to accelerate the deployment of renewable energy projects and evaluate the performance of vanadium flow batteries in the Kingdom’s climate.


Saudi crude output hits 8.95m bpd: JODI data 

Saudi crude output hits 8.95m bpd: JODI data 
Updated 22 April 2025
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Saudi crude output hits 8.95m bpd: JODI data 

Saudi crude output hits 8.95m bpd: JODI data 

RIYADH: Saudi Arabia’s crude oil production rose to 8.95 million barrels per day in February, marking a 0.34 percent monthly increase, according to the latest release from the Joint Organizations Data Initiative. 

Crude exports also climbed during the same period, rising 7.81 percent to reach 6.55 million bpd, the report showed.  

Refinery crude exports rose by 5.39 percent month on month in February to 1.41 million bpd, reflecting a 1.29 percent increase compared to the same period last year. The uptick was driven primarily by diesel shipments, which jumped 24.4 percent from the previous month to 668,000 bpd. 

Key refined products included diesel, motor gasoline, aviation gasoline, and fuel oil. Diesel accounted for the largest share of refined product exports at 47 percent, followed by motor and aviation gasoline at 18 percent, and fuel oil at 14 percent. 

Total refinery output reached 2.62 million bpd in February, a 6.6 percent monthly increase, with diesel comprising 40 percent of refined products, motor and aviation gasoline 24 percent, and fuel oil 14 percent. 

Domestic demand for refined petroleum products fell by 69,000 bpd in February compared to the previous month, reaching 1.71 million bpd. On an annual basis, demand dropped by 22.09 percent, equivalent to a decline of 485,000 bpd.  

On April 3, eight OPEC+ countries — including Saudi Arabia, Russia, Iraq, the UAE, Kuwait, Kazakhstan, Algeria, and Oman — reaffirmed their commitment to supporting oil market stability amid a positive demand outlook. 

In a virtual meeting, the group agreed to implement a production increase of 411,000 bpd in May 2025, representing a front-loaded adjustment equivalent to three months of scheduled increments. The move marks the beginning of a phased and flexible reversal of the 2.2 million bpd in voluntary cuts introduced in 2023, in line with the decision reaffirmed in March. 

OPEC+ emphasized that the pace of future increases may be paused or reversed depending on market conditions, with monthly meetings scheduled to assess conformity and decide on subsequent production levels. According to the latest schedule, Saudi Arabia’s required production for May is set at 9.2 million bpd. 

Direct crude usage 

Saudi Arabia’s direct crude oil burn rose to 283,000 bpd in February, reflecting a 2.9 percent increase from January, but showing a 21 percent decline compared to the same month last year. 

The reduction in direct crude oil use for power generation is influenced by multiple strategic and economic factors. 

According to the US Energy Information Administration’s 2024 report, 62 percent of Saudi Arabia’s electricity was generated from natural gas in 2023, up from previous years — a shift that has significantly reduced the country’s reliance on crude oil for power generation. The expansion of gas-fired capacity has played a central role in this transition. 

The International Energy Agency’s 2024 Oil Market Report also highlighted that Saudi Arabia is actively expanding its electricity generation capacity through both natural gas and renewable energy sources, in alignment with Vision 2030. 

Supporting this trend, the Saudi Power Procurement Co. awarded bids in 2023 for four gas-fired power plants, each with a capacity of 1.8 gigawatts, and began accepting bids for four additional projects in early 2024. As of mid-2024, the Kingdom has more than 21 GW of planned renewable energy projects, the majority of which are focused on solar power. 


Saudi Arabia tops emerging markets’ venture capital funding, overtakes Singapore 

Saudi Arabia tops emerging markets’ venture capital funding, overtakes Singapore 
Updated 22 April 2025
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Saudi Arabia tops emerging markets’ venture capital funding, overtakes Singapore 

Saudi Arabia tops emerging markets’ venture capital funding, overtakes Singapore 

RIYADH: Saudi Arabia has overtaken Singapore as the premier destination for venture capital funds across emerging markets after it secured $391 million in the first quarter of 2025.

The 53 percent year-on-year rise helped propel the Kingdom to becoming the highest-performing country across the Middle East, Africa, Pakistan, Turkiye, and Southeast Asia in terms of total funding during the three-month period, as revealed in the latest analysis by venture data platform MAGNiTT. 

While the standout $160 million series E round by fintech unicorn Tabby contributed significantly to the overall figure, the broader investment ecosystem showed resilience with non-MEGA deal funding, which are transactions below $100 million, rising 9 percent quarter-on-quarter. 

“This consistency signals a strengthening pipeline backed by sovereign LPs (limited partners) like SVC (Saudi Venture Capital), a growing cohort of accelerators, and successful exits like Rasan’s IPO (initial public offering),” according to MAGNiTT’s report. 

Saudi Arabia leads MENA funding and deal activity 

Saudi Arabia led the EVMs and continued its dominance in the Middle East and North Africa region. 

The Kingdom captured 58 percent of all MENA venture funding and accounted for 41 percent of transactions, far outpacing regional peers. 

According to MAGNiTT, the Kingdom achieved an 87 percent year-on-year increase in non-mega deal funding and a 437 percent rise in series A and B rounds, supported by sizable transactions such as those by Ula.me and Merit Incentives, each raising $28 million. 

The rise in Saudi venture capital investment comes amid a broader rebound in the MENA region. 

Total funding across MENA reached $678 million in the first quarter of 2025, a 58 percent increase year on year, despite a 21 percent decline in deal count to 133 transactions. 

The surge was supported by improved investor sentiment following late 2024 interest rate cuts across the Gulf, along with sustained sovereign fund activity and flagship ecosystem initiatives such as LEAP 2025. 

In terms of historical share, Saudi Arabia’s ascent has been significant. It expanded its share of MENA venture funding to 58 percent in the first quarter of the year, up from 39 percent in 2024 and 51 percent in 2023. 

This upward trajectory has positioned the Kingdom as the central engine of regional VC activity, reversing a period during which the UAE held the lead. 

The ecosystem shift also reflects a structural change in capital allocation. The first quarter saw non-mega deals rise for the fourth consecutive quarter, and early-stage investments in series A and B rounds increased by 50 percent quarter-on-quarter. 

In contrast, Southeast Asia reported its weakest early-stage quarter in seven years, with Singapore’s funding falling by 61 percent year on year to $377 million. 

The gap signals a shift in global investor preference as capital increasingly flows toward markets like Saudi Arabia, where macroeconomic stability, proactive policy, and institutional backing provide a conducive environment for venture growth. 

With 54 deals completed, the Kingdom reported the smallest year-on-year decline in deal count among the region’s top three markets, supported by a robust early-stage pipeline. 

Fintech dominates sector activity 

Fintech remained the most active and well-funded sector across MENA, particularly in Saudi Arabia, contributing 30 percent of all deals and capturing 57 percent of total regional funding. 

The sector saw a 362 percent year-on-year increase in funding, totaling $384 million, driven by Tabby’s $160 million MEGA round and strong underlying demand for digital finance solutions. 

Notably, 35 percent of all fintech deals in the first quarter of 2025 were in the $5 million to $20 million range, up 24 percentage points from the same period last year, demonstrating increasing maturity and scalability across the sector. 

Enterprise Software was the second most transacted and funded vertical, propelled by activity in Saudi Arabia and the UAE, accounting for 75 percent of all sector deals. 

Within this segment, the productivity apps sub-sector achieved record performance with six deals, including Merit Incentives’ $28 million and Qeen.ai’s $10 million rounds. The enterprise category posted a 112 percent annual growth in funding to reach $61 million. 

Saudi Arabia drives top-tier transactions and investor participation 

While deal volume across MENA dropped 21 percent year on year to just 133 transactions — one of the lowest quarterly figures in five years — Saudi Arabia defied the trend, maintaining strong early-stage momentum.

MAGNiTT noted that deal activity in the up to $1 million bracket declined 8 percentage points year on year to just 31 percent, while deals in the $5 million to $20 million and over $20 million brackets saw increases of 4 percentage points and 3 percentage points, respectively. 

This reallocation of capital reflects investors’ growing appetite for scale-ready startups in more advanced funding stages. 

Pre-seed to pre-series A activity in the Kingdom saw a 14 percent increase, highlighting the nation’s strengthening foundation for long-term growth. 

The shift in capital allocation patterns also reinforced Saudi Arabia’s strategic focus. 

The share of deals in the $1 million to $5 million range rose to 46 percent, the highest proportion in five years, mirroring a broader pivot across MENA toward larger, more scalable investment opportunities. 

Simultaneously, the lowest-value ticket size, $0 to $1 million, fell to 31 percent of deals, down 8 percentage points from the previous year. 

Five of the region’s 10 largest deals originated from the Kingdom, including Tabby’s round, the sole mega deal of the quarter, alongside significant rounds by Zension, with $30 million and Merit Incentives. 

According to MAGNiTT, this concentration of large-ticket transactions underscores the depth of investor confidence in the Saudi startup ecosystem.

Investor engagement in the Kingdom was also evident in the breakdown of top deals. The nation hosted more top-10 deals than any other MENA country, with fintech leading as the most represented industry. 

Blue Pool Capital and Hassana Investment Co. emerged as the most prominent backers, jointly deploying an estimated $53.3 million across key transactions, with fintech accounting for four of the top 10 deals. 

Exit environment strengthens on record M&A activity 

Saudi Arabia’s momentum was further underscored by a robust exit environment, with the MENA region recording 21 exits, up 163 percent year on year, marking the strongest quarter for mergers and acquisitions since MAGNiTT began tracking. 

The Kingdom’s IPO pipeline also improved, adding another layer of attractiveness to its startup ecosystem. 

While the regional rebound was attributed to easing inflation, improved liquidity, and pre-US tariff optimism, MAGNiTT emphasized that: “Saudi Arabia’s IPO and M&A momentum are now integral to the region’s exit environment.” 

Despite this surge, the median time to exit via M&A lengthened to six years, up from five in 2024, reflecting continued challenges for early-stage startup liquidity. 

Geopolitical risks introduce uncertainty to venture outlook 

Despite strong regional performance, MAGNiTT highlighted emerging risks that could disrupt momentum. 

“While Q1 2025 was a positive start to the year … that momentum is now under threat,” said Philip Bahoshy, CEO of MAGNiTT. 

He added that the new US tariff policies have created uncertainty in both the public and private markets over the last couple of weeks, which can create a challenge for decision-makers who are likely to be in a risk-off mindset.

“In venture capital, this uncertainty is likely to impact three areas: the deployment of capital from LPs to VCs, VCs’ willingness to make decisions in uncertain times, and finally, startups’ ability to raise funds,” said Bahoshy.

He noted that while global volatility persists, long-term fundamentals in EVMs remain strong. 

“Despite global headwinds, emerging venture markets continue to present compelling long-term opportunities. MENA, in particular, is uniquely positioned for sustained growth thanks to deep pools of local capital, pro-entrepreneurship policy, and active sovereign support,” Bahoshy added. 

“As global investors diversify beyond traditional markets, regions like MENA and Southeast Asia are poised to attract fresh capital — particularly in tech-led sectors that are strategically positioned and less exposed to tariff volatility,” the CEO said.