• New report provides investors with a guide to Artificial Intelligence, highlighting application layer as key area of growth for venture capital funds, offering a framework for venture investors on the AI opportunity as Saudi Arabia advances its Year of Artificial Intelligence

RIYADH, Saudi Arabia – As Saudi Arabia intensifies its push to become a global leader in artificial intelligence, Merak Capital has released a new industry report offering a private-sector perspective on where value is being created across the AI ecosystem.

The report, “Venture Capital Guide to Artificial Intelligence,” comes at a pivotal moment for the Kingdom's Vision 2030 progress, with 2026 designated as the Year of Artificial Intelligence and over $40 billion committed to AI investments through national initiatives.

While public-sector ambition continues to scale, the report addresses a gap in the market: how to deploy private capital effectively as AI adoption accelerates across industries.

Global trends reinforce the urgency of this shift. Investment in AI-first companies exceeded $110 billion in 2024, up 62% year-on-year, while 88% of organizations globally have already adopted AI in at least one function.

Merak’s analysis finds that the greatest opportunity for venture capital investments lies in the application layer, where companies use AI to solve real business problems, integrate proprietary data, and build solutions that are difficult to replicate.

The report also highlights how AI is compressing company-building timelines. Leading AI-native companies are now reaching $1 billion in revenue in as little as two to three years, compared to seven to eleven years for cloud-era businesses.

Abdullah Altamami, Founder and CEO of Merak Capital, said: “Saudi Arabia is establishing itself as a global pillar for AI infrastructure. In publishing this report, we highlight the opportunity to build on this foundation by backing the businesses that will translate AI into real economic value. It reflects how we think about deploying venture capital to support the Kingdom’s long-term growth ambitions across the value chain”

The report further notes that more than 90% of AI startups globally do not develop their own models, instead adapting existing technologies to specific use cases. This trend underscores the growing importance of execution, domain expertise, and data ownership in building competitive advantage.

“As the race for AI accelerates across foundational model providers and cascades through the rest of the stack, venture capital investors must focus on allocating capital where the risk-reward profile is in line with the asset class’s size and return characteristics,” said Abdulelah Alshareef, Principal of Venture Capital at Merak Capital. “The largest opportunity in early stage investment now lies in building the data and application layers, where foundational models are a utility, innovation is driven by proprietary data, and moats are built through high-quality products deeply embedded in customer workflows, reinforced by compounding data loops.”

Developed in Riyadh, the report reflects Saudi Arabia’s increasing role in shaping the global AI conversation, with the Kingdom positioning itself as both a major investor and a growing hub for innovation.

“Saudi Arabia has the capital, the policy momentum, and the ambition to lead in artificial intelligence,” AlShareef added. “The next phase is channeling venture capital into the right parts of the ecosystem, where it can drive sustainable growth and long-term value creation.”

Merak Capital manages over SAR 3.5 billion across 10 funds spanning venture capital, private equity, credit financing, and real assets, with a strong focus on technology investments. The firm combines market insight with hands-on investment experience to support companies as they scale across regional and global markets.

The “Venture Capital Guide to Artificial Intelligence” report is available via download on Merak Capital’s website [https://www.merak.capital/ai-report#download-form].

About Merak Capital

Merak Capital is a Saudi-based multi-strategy investment firm focused on opportunities across multiple stages and industries. Licensed by the Capital Market Authority, the firm manages over SAR 3.5 billion across 10 funds spanning venture capital, private equity, credit financing, and real assets. Merak is built on deep technological insight and market research, staying at the forefront of digital trends and identifying investments aligned with adoption cycles across sectors locally, regionally, and globally.

The firm partners with visionary founders and enterprises driving transformation, unlocking new markets, and enabling sustainable growth. Merak takes an active approach to value creation, supporting portfolio companies through governance enhancement, operational development, and strategic growth initiatives as they scale toward market leadership.