Saudi Arabia records highest startup deals, investments since 2015: MAGNiTT

Saudi Arabia closed 71 startup deals worth SAR 251 million in 2019, the highest in the past 5 years, supported by government initiatives, accelerator programs and a surge in investors, startup data platform MAGNiTT said in its latest report on Wednesday.

The total number of startup investments and deals in 2019 grew year-on-year by 35% and 92%, respectively.  Among its MENA-based peers, the Kingdom is now ranked third by both deals and total funding, following the UAE and Egypt.

Read: Saudi Arabia home to 957 startups, says MAGNiTT CEO

In comparison, the Kingdom registered 37 startup funding deals worth SAR 184 million in 2018 and mere 16 deals worth SAR 26 million in 2015.

The evolving small and medium enterprise (SME) ecosystem encouraged 41 institutions to invest in Saudi-based startups last year, with accelerators accounting for 32% of the overall investments. The majority of investors (68%) were local firms, while the remaining 32% were based out of the country, mainly in the UAE. In addition, 48 Saudi investors pumped money into MENA-based startups.

The Kingdom further saw the establishment of new accelerator programs, in line with Vision 2030 program, such as the Misk 500 MENA Accelerator, the Misk Growth Accelerator, and Funds of Funds by entities such as Public Investment Fund’s (PIF) Jada and Saudi Venture Capital Company, which played a key role in the development of the startup ecosystem last year.

Saudi Arabia is one of the fastest-growing ecosystems in the region, said Philip Bahoshy, founder and CEO, MAGNiTT.

“Strong growth is expected in 2020 on the back of growing interest from the public and private sector, including matching programs, the new Fund of Funds and accelerators,” he added.

Top startup industries

E-commerce remained the most active industry by number of deals, accounting for 27% of all transactions, thanks to the region's buoyant economy and digitally-savvy population. Delivery and transport registered 9% of the deals, followed by data analytics and business intelligence (7%,) HR & Recruitment (7%) and consumer services (6%).

Meanwhile, the delivery and transport industry accounted for the highest amount of funding for any industry at 26%. E-commerce came in second place with 25%, followed by education (13%), IT solutions (8%), and food and beverage (6%).

Largest funding deal

Noon Academy, a Riyadh-based EdTech startup, closed the largest deal, raising SAR 32 million ($8.6 million) from Saudi-based investor group led by STV, Ra’ed Ventures and Alsamiah Investment.

Nana, online grocery platform, received a SAR 25 million ($6.6 million) funding, while Foodics, restaurant management system startup, received investments worth SAR 15 million ($4 million).

Most active accelerator

Meanwhile, Misk Innovation was among the most active investment facilitators in 2019, with 500 Startups investing in 20 Saudi startups.

Wa’ed Ventures, the venture capital arm of Saudi Aramco Entrepreneurship Centre (Wa’ed), topped the corporate venture capital list, while OQAL, the Saudi angel group, invested in 18 local startups to become the most active angel group by number of deals, the report noted.