What Are the Future Trends in the Saudi Start-up Investment Landscape?

As the world continues to pay attention to the dynamic investment landscape in Saudi Arabia, we sought the insights of prominent investors in the country. We spoke to key investors in the Kingdom, from venture capitalists, angel investors, and fund managers, with one particular question: “What future trends can we expect out of the Saudi investment ecosystem?” 

Here is what we heard:

 

1. More maturity in the market means more growth-stage investing to come. 

We heard from start-ups, VCs and government-bodies alike that there is a major gap in Series B+ growth-stage funding, which will continue to widen as Saudi’s start-ups continue to mature at breakneck speeds. Some local and regional VCs are actively looking to raise growth-stage funds, while many also believe that this is a role that international VCs can increasingly play in the Saudi market, like Softbank and Sequoia have recently done. 

 

2. Bigger Deal Sizes = Bigger cheque sizes. 

As the market matures, investors need to be careful to allocate larger portions of their funds to invest in subsequent rounds with their startups, or to raise additional funds to write bigger cheques. 

 

3. Entrance of Specialized Funds.

The Saudi market is already seeing specialized funds form to support investments in deeptech, AI, health tech, biotech, crypto and the metaverse, etc. There is also the expectation that many global investors will start making investments in the market with their global specialized funds. 

 

4. More Interest from International Investors. 

Eight out of 10 local investors we spoke to expected to see more international investors take interest in Saudi startups. The unit economics in the region is too good for investors to ignore. The ROI per $1 million invested in startups in the MENA region today is far greater than any other region in the world. Couple that with improvements in government regulations, strong centralized support for entrepreneurship, access to capital, and smart globally-minded, internationally educated local founders – and it becomes clear why Sequoia Capital, Softbank Vision Fund and Founders Fund have already made their first investments in Saudi startups. 

 

5. Global Startups moving HQs or opening satellite operations in the Kingdom.

With multiple VCs starting to look outward to invest in global startups with a mind to help them enter and provide its products and services to the Kingdom, an influx of international startups with Saudi offices is expected in the coming 24 months.

 

Read Next: What Are the Latest Trends in Saudi’s Startup Ecosystem?

 

Learn more about the perspectives of some of the most prominent VCs in Saudi, in the most comprehensive report on the topic to date, The Evolution of Saudi Arabia's Start-Up Ecosystem 2010-2022.