Saudi Arabia Leads on VC Funding in MENA in 2023
Saudi Arabia overtook the UAE in VC funding for the first time last year.
Saudi Arabia became the region’s most-funded country in MENA, ahead of the UAE, according to a report by venture capital data platform MAGNiTT. [1]
Almost all countries saw a decrease in funding in 2023, except for Saudi Arabia, which saw a record-breaking 33% year-on-year increase. Startups in the kingdom raised $1.4 billion, amounting to 52% of all funds deployed across MENA. 4 of the 5 largest deals closed in 2023 were made by startups headquartered in Saudi (Tamara, Floward, Tabby, and Nana).
The UAE continued to lead on the number of deals, with 158 deals closed by UAE startups in 2023.
The MENA region raised $2.6 billion across 477 deals in 2023, a 23% decline from the previous year. The number of deals declined by 34%, the lowest since 2018. Fintech continued to dominate funding, with $1.28 billion deployed across 101 deals across the sector.
During the last quarter of 2023, two megadeals were secured by Saudi-headquartered fintechs Tabby and Tamara, both of which emerged from the year as unicorns.
Across the emerging venture markets covered by MAGNiTT, Saudi Arabia was the only MENA country to rank among the top 5 in funding, alongside Singapore, Indonesia, Turkey, and Vietnam.
Saudi Will Continue to Dominate in 2024
Saudi Arabia will continue to dominate deals and funding in 2024, according to the report, following 5 consecutive years of growth, competing with other emerging markets outside of the MENA region.
The report forecasts that all 4 quarters of 2024 will be largely flat in terms of investment across MENA, excluding mega deals, with the potential for an uptake in Q4. It also projects the rise of corporate venture capital, with MENA corporates projected to account for almost 20% of all funding this year, compared to an average of 13% in the past.
The report predicts that we will see more MENA IPOs and consolidations through M&As, particularly in Saudi Arabia, driven largely by a wider recovery in the region and increased international interest.
A report published by MAGNiTT in Q3 2023 noted a decline in VC funding globally and in the Middle East, Africa, Pakistan, and Turkey (MEAPT).