Saudi Arabia ranked second across the emerging-market venture capital space in the first half of 2024, trailing only Singapore, according to VC data firm Magnitt.
Software startup Salla raised $130 million in the period, boosting the kingdom’s venture capital fundraising to $412 million — the highest in the Middle East and North Africa, the Dubai-based company said.
However, startup funding in both the MENA region and emerging markets including Southeast Asia fell by more than a third from a year earlier as investors sought more early-stage deals that raise less money.
Venture capital investment in MENA alone amounted to $768 million, the worst first-half performance since the Covid-19 pandemic, Magnitt said. Deal count also dropped, by 18% to 211.
The data reflects a broader slowdown in the industry as investors shift attention toward funding rounds of $1 million to $5 million, according to Magnitt. So-called mega-rounds of $100 million or more have been on the decline.
“They have shifted away from late stage to early stage investments because of the high cost of capital,” said Magnitt Chief Executive Officer Philip Bahoshy. “Startups now have to be cost efficient, they cannot just rely on another investment round to raise funds.”
Saudi Arabia was a notable standout for Magnitt, which said VC fundraising there was down 7% from a year ago — far less than its peers. Saudi startups like Salla have received a significant boost from investments by local VC fund STV and Sanabil, a unit of the kingdom’s sovereign wealth fund known as the PIF.
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