Saudi Arabian startups have been attracting a lot of funding in recent years, growing more than 20x in the past five years to reach $1.2 billion in 2022.
Before you think that it is the Cristiano Ronaldo effect, it is worth mentioning that the country's two most notable startups and fintech giants – Tamara raised $215 million in August 2022, and STC Pay raised $200 million in November 2020 – making them the most funded startups to date in the Kingdom of Saudi Arabia.
Interestingly, Saudi startups achieved this feat in less number of years when compared to the United Arab Emirates, which broke the $1 billion funding mark in 2021 after nearly a decade of fostering startup activity in Dubai, according to data from Techloy research. While other sectors are attracting significant funding such as Enterprise, eCommerce, Blockchain, and Agtech, the two largest sectors with the most venture capital in the Saudi startup ecosystem remain Fintech and Foodtech.
For this reason, Saudi Venture Capital (SVC) is betting big on Saudi Arabia's startup scene with a $7.5 million investment in a fund that will back early and late-stage companies. Managed by Endeavor Catalyst, the investment arm of Endeavor Global, this funding initiative is part of SVC's broader objective to infuse $1.6 billion into startups and small and medium enterprises.
SVC operates as a subsidiary of SME Bank, which is affiliated with the National Development Fund, one of the country's development banks. The subscription agreement was signed by SVC CEO Nabeel Koshak and Allen Taylor, managing partner at Endeavor Catalyst.
Koshak in a statement, emphasized the significance of the investment in the Endeavor Catalyst IV Fund, attributing it to the recent support from SME Bank to augment SVC's investment capital, resulting in a cumulative investment capital of $1.6 billion.
Clearly, there is potential in the Saudi tech ecosystem and investors are noticing. Although Saudi Arabia may be relatively new in the startup world, the Kingdom has been positioning itself as a global tourist destination, with opportunities for digital nomads and remote workers.
Besides that, Saudi's flare for attracting investments and focus on developing a strong entrepreneurial ecosystem over the years has helped its startup ecosystem grow. It would be interesting to see what the next five years hold for the Kingdom of Saudi Arabia, as it rivals the UAE and Egypt in the MENA Region.