Startups in Saudi Arabia, particularly in the tech and e-commerce space, continue to defy the odds and demonstrate their resilience during the coronavirus pandemic, with funding from various investors surging significantly in recent months.
From January to June this year, the kingdom’s start-ups raised a record high of $95 million in funding, up by 102 percent compared with the same period last year.
The increase in capital inflows into the start-up ecosystem in Saudi is significantly higher than what the rest of the region has reported during the same period, according to the data compiled by MAGNiTT and INSEAD.
“The 17 countries in the region saw a 35 percent increase in total funding from [the first half of] 2019 to [the first half of] 2020, while Saudi Arabia’s start-up funding grew by 102 percent,” the report stated.
The whole Middle East and Africa (MENA) region also witnessed an eight percent decline in the number of deals from the first half of 2019 to the first half of 2020, while Saudi Arabia posted a 29 percent increase.
“The increase in funding and number of deals comes amid the COVID-19 crisis, which has affected start-ups’ cash flows and revenues significantly…As a result of the crisis, many investors have made a shift in their investment mandate, both in terms of stage and industry,” the report added.
The funding rounds in the kingdom have been dominated by start-ups in the technology and e-commerce sectors. These are the firms that offer services and goods with the end view of making daily life easier during a pandemic.
“E-commerce has been among the top invested industries in Saudi Arabia and the entire MENA region historically. A specific segment within e-commerce that has seen the majority of this funding is grocery e-commerce,” the report said.
“While COVID-19 has had a significant impact on the everyday lives of Saudi’s citizens, certain start-ups have seen a significant increase in traction and have helped ease everyday life of Saudi consumers,” the report added.
The biggest performer in terms of raising capital this year so far is Jahez, a food delivery platform based in Riyadh. The firm raised a total of $36.5 million fresh capital through several high-profile funding rounds this year.
Following closely behind is Nana, another Riyadh-based platform focusing on the grocery business. The firm raised $18 million in a Series B funding round led by Saudi Technology Ventures (STV) and Middle East Venture Partners (MEVP)in March.
Edtech Noon Academy had the third-highest capital raised during the same period, at $13 million, followed by Sary, a B2B ecommerce marketplace that raised $6.6 million in seed funding last April.
(Reporting by Cleofe Maceda; editing by Seban Scaria)
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