Saudi Arabia’s start-ups record 72% increase in funding to $987m in 2022, Magnitt says

Start-ups in Saudi Arabia recorded a 72 per cent annual increase in venture capital funding to $987 million across 144 deals in 2022, a report has indicated.

The kingdom was the second-most funded geography after the UAE in the Middle East and North Africa for last year. It also accounted for 31 per cent of total capital invested in the region, according to start-up data platform Magnitt’s Venture Capital Report compiled in collaboration with Saudi Venture Capital.

Start-ups in the UAE raised $1.19 billion in 2022, while those in third-placed Egypt attracted $517 million in funding.

The Arab world’s biggest economy ranked third in terms of total VC transactions in Mena and accounted for 23 per cent of total deals in the region, the Magnitt report said.

“This is not to say that the VC ecosystem did not see the impact of the economic slowdown like its peer Mena markets,” said Philip Bahoshy, founder and chief executive of Magnitt.

“If we look at the quarterly breakdown, a similar trend as the other emerging markets was seen over the year, with funding and deals seeing a gradual retreat. Despite this, the Middle Eastern region has been making vigorous efforts to drive investment in the region with Saudi Vision 2030 being one of them.”

Saudi Arabia is seeking to grow its start-ups and small and medium enterprise sector as part of its push to diversify its economy from oil, create jobs and attract high-skilled talent into the kingdom.

Technology is a strong pillar of Saudi Vision 2030, the national strategy aimed at diversifying the country’s economy and steering away from dependence on oil. Riyadh is encouraging entrepreneurship and seeking investment from both local and foreign entities to develop the sector.

FinTech was the industry of choice for investors in terms of the number of deals as well as total funding in Saudi Arabia last year, accounting for 24 per cent of funding with $239 million raised across 28 deals, according to Magnitt.

F&B was the second-most funded industry in the kingdom after start-ups raised $187 million, followed by transport and logistics, which raised $180 million.

The world’s top oil exporter recorded three mega deals (more than $100 million) last year closed by food and beverage start-up Foodics, FinTech Tamara and transport and logistics start-up TruKKer. These three mega deals accounted for 37 per cent of total capital deployed, the report added.