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KSA Startups Have Raised More in H1 2020 Than All of 2019, According to MAGNiTT Report

The Dubai-based startup platform sheds light on all the trials and tribulations that the Saudi economy has faced, and yet managed to triumph in spite of it.

MAGNiTT has just released a comprehensive report of the ecosystem in Saudi Arabia, detailing the biggest trends, funds and landscape shifts seen among the kingdom’s startups and venture capital firms.

The total of funding Saudi startups have raised in H1 2020 is up 102%, beating out the total raised during the entirety of 2019. The in-depth report details that while 17 of the region’s countries did in fact excel when it comes to investments, with an average of 35% increase in the first half of 2020, none have seen a growth as steep as Saudi’s. For context, while the MENA region saw an 8% drop in the number of deals from the 2019 to H1 2020,  Saudi boasts a 29% increase.

“Saudi Arabia has been one of the fastest growing ecosystems in the region for a few years now, which has continued during COVID-19,” says Dr. Nabeel Koshak, CEO of Saudi Venture Capital (SCV). “As part of Vision 2030, many new initiatives have been launched in recent years to spur innovation and startup growth. Saudi Arabia has always been an attractive market for local and regional entrepreneurs due to its large market size. In recent years, it has also developed a startup ecosystem to match it.”

While the Coronavirus crisis has ravaged economies the world over, for certain industries there’s been a surge and striking boom. Regionally, these have been fintech, edtech and the service industries, particularly tech-enabled delivery services. While investors are gravitating towards more later-stage startups in these industries during their limelight moment, the full impact of COVID-19 is still yet to be seen later in the year, and most of the deals struck in Q1 2020 had been in the works prior to the pandemic.

"We are seeing a shift in investor appetite when it comes to startup development stages,” explains Philip Bahoshy,  Founder and CEO of MAGNiTT. “As we know, it takes an average of 9-12 months to fundraise. Many deals in Q1 2020 will have already been in the works for a period of time. Second, what we see is that more later-stage investments with larger round sizes have been taking place. This highlights a shift to more established startups, which can provide them a longer runway to weather the challenging times ahead." 

Saudi Arabia’s biggest funding rounds included food delivery app Jahez ($36.5M), grocery shopping app Nana ($18M) and edtech startup Noon Academy ($13M). All of these deals fall in line with the peak in investor interest within these industries - both regionally and internationally. Nabbing the top spot in terms of total funding and deals in KSA is e-commerce, totalling at about 67% of all funds in H1 2020.

Siice the start of the pandemic, and the world’s economies started trembling from the onslaught of the crisis, Saudi Arabia started implementing a variety of initiatives and relief packages for startups and SMEs to curb the consequences, such as deferred payments, waived fees and bills, paid vacation, and salary guarantees for 70% of a company’s Saudi employees.


“A healthy and flourishing entrepreneurial ecosystem takes years, if not decades, to

build and develop,” adds Philip Bahoshy. “Supporting founders and encouraging investors now will benefit the ecosystem for many years to come.

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