Riyadh – Sharikat Mubasher: Saudi Arabia recorded $240 million in venture capital (VC) funding during the first quarter (Q1) of 2024, indicating a 42% year-on-year (YoY) drop, according to a recent report by the kingdom’s Small and Medium Enterprises General Authority (Monsha’at).
The report revealed that the total VC funding dipped across the MENA region in Q1 2024, however, Saudi Arabia continued to lead with 35 deals, led by Salla app’s $130 million pre-IPO fundraising.
Around 65% of total VC capital deployed in MENA was routed to Saudi-based firms.
“While funding saw a downturn, the deal flow in Saudi Arabia remained nearly flat, posting a modest 13% decrease on Q1 2023. Digging deeper, it becomes evident that while the overall funding has diminished, the kingdom’s entrepreneurial ecosystem continues to attract investors. The disparity between the decrease in funding and the relatively stable deal flow underscores a shift towards smaller average ticket sizes, reflecting a recalibration rather than a retreat in investor sentiment,” the report said.
“A favorable business environment combined with strong government support for SMEs has unlocked significant flows of private sector capital for small businesses across Saudi Arabia,” the report added.
Further, total credit facilities provided to micro and SMEs in the fourth quarter of 2023 reached $73.5 billion, according to the report, indicating a 20.4% y-o-y uptick. This was split across $68.9 billion in credit facilities provided by banks, with the remaining $4.6 billion provided by private finance companies.
