Saudi Arabia’s startups attracted $67 million worth of investments in 2019, an increase of 35 percent from the previous year, a new report shows.
The stand-out year for entrepreneurship in Saudi Arabia also saw 71 investment deals, which represents a rise of 92 percent since 2018, and a record number in comparison to any other year, according to startup platform MAGNITT.
“There are several factors that contribute to the growth of the Saudi startup ecosystem in general: the size of its economy and population, as well as a high income per capita and internet penetration,” Philip Bahoshy, MAGNiTT's Founder and CEO told Zawya.
“This, combined with the increased government focus on the entrepreneurship sector through Funds of Funds, capital matching programs, accelerator programs, licensing schemes and other initiatives, contribute to the growth of the startup sector as a whole,” he added.
The rise in venture capital funding and number of deals in Saudi placed it at the third highest spot for both categories in the Middle East and North Africa, following UAE and Egypt.
The kingdom accounted for 12 percent of the total deals in the region, and 9 percent of the total funding. It also recorded the region’s fastest year-on-year growth in venture funding deals in 2019. Read more here
In terms of industries, e-commerce and delivery & transport were the top two sectors in terms of the number of deals and amount of venture capital (VC) funding.
Data analytics has been a rising sector accounting for the third highest number of VC deals in the kingdom. Education was also gaining momentum and was the third highest recipient of amount of VC funding.
Historically, nascent and quickly growing ecosystems saw industries such as logistics, transport, and e-commerce rise as a first wave of startups and venture capital funding, Bahoshy said.
“To a certain extent, this is still the case in Saudi Arabia and the wider MENA region. Hence, it is expected that these sectors remain prominent,” he said.
However, more high-tech sectors such as FinTech and IT Solutions / Data Analytics have seen a recent surge in the wider MENA region in terms of number of deals, with certain governments focusing specifically on FinTech as a sector, according to him.
“This trend is expected to become more prevalent in Saudi Arabia in 2020 as well, with government initiatives such as FinTech Saudi aiding the growth and adoption,” he added.
(Writing by Nada Al Rifai firstname.lastname@example.org, editing by Seban Scaria)
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© ZAWYA 2020