Venture capital funding in Saudi to jump ten-fold by 2025

Venture capital (VC) investments in Saudi Arabia has the potential to surge to $500 million annually in 2025 from $50 million in 2018, Saudi Technology Ventures (STV), a local venture capital firm, said in a new report.

Of that total, it estimated that $350 million will target early-stage ventures, while the rest will be deployed across the ecosystem, from Series A to late-stage ventures.

The $500 million annual VC ticket size is set to align Saudi Arabia to countries such as France, South Korea and UAE where the VC industry has played a significant role in the economy, contributing 0.1 percent to the GDP.

“The Saudi VC sector has reached a positive inflection point,” Abdulrahman Tarabzouni, CEO, STV, said, referring to the considerable amount of new policies and regulations rolled out to make the next growth phase very real.

Success stories such as Careem were fueling optimism in the start-up space, he noted.

According to the report, surge in VC activity is driven by several favorable factors such as strong demand for tech products from consumers, businesses and the government, recent exits, maturity ecosystem and ease of doing business improving significantly in line with new entrepreneur-friendly regulations.

However, challenges persist with the primary one being lack of available talent.

“Demand for talent is not unique to Saudi Arabia, however, the gap between the supply of talent and the demand from both local and global tech companies is widening fast,” the report noted.

Write to Parag Deulgaonkar at parag.d@argaamplus.com