Saudi Arabia’s Arbitration System Transformation Should Help Boost Investment

RIYAD: Saudi Arabia dominated the startup investment market in the Middle East and North Africa (MENA) region in May, figures revealed.

About $ 110 million was raised in 35 deals during the month, according to data from entrepreneurship platform Wamda.

And the majority were from Saudi Arabia, where nine startups raised $ 46.6 million, most thanks to $ 30.5 million Series B funding from Sary, a business-to-business (B2B) marketplace that connects small businesses and wholesalers.

Wassim Basrawi, managing director of Wa’ed, the entrepreneurial arm of Saudi Aramco, told Arab News: “It’s no surprise that venture capital deals are growing in the Saudi market. We’ve been watching this for months now as the Kingdom emerges from the COVID-19 pandemic (the coronavirus disease). “

So far, during the second quarter of this year, Wa’ed has announced venture capital investments in Saudi firms such as blockchain artificial intelligence firm IR4LAB, drone maker FalconViz and the company of Red Sea Farms hydroponic technology.

“Public sector support for Saudi entrepreneurs has actually increased during the pandemic, and many Saudi startups, like Red Sea Farms, are also starting to attract international investors,” Basrawi added.

The B2B e-commerce sector generated the most interest, raising $ 37.6 million across the MENA region. Financial technology (fintech) is second most popular among investors with $ 18.5 million, while logistics raised $ 10 million, education technology $ 6.9 million and tourism $ 6 million. of dollars.

Hussain Al-Alawi, international partner and member of the global advisory board of Zurich-headquartered mergers and acquisitions firm Millenium Associates, told Arab News: “Saudi Arabia’s dominance in raising capital for startups is no surprise.

“What we are seeing in the region and globally is that investments – especially from VCs (venture capitalists) – are led by tech companies, with financial, medical and agricultural technologies being particularly in demand. . “

He said the tech sector has been the driving force behind around 70% of the company’s transactions this year across all markets, which is also true in Saudi Arabia.

“Saudi Arabia’s commitment to technology is clear and led from the highest level, which helps boost both the culture of tech startups and investment in the sector.

It is not surprising that the conclusion of venture capital deals is growing in the Saudi market. We’ve been watching this for months now as the Kingdom emerges from the COVID-19 pandemic (the coronavirus disease).

Wassim Basrawi, Managing Director of Wa’ed

“Projects like NEOM, and the excellent work done by the Public Investment Fund to help achieve Vision 2030, act as a stimulus for startups looking to disrupt and innovate, with the support of progressive funds supporting entrepreneurs. local as well as individuals and institutions.

“The Kingdom’s young and highly connected population, as well as the evolution of the sector driven by the COVID-19 pandemic, are also both opportunities and investments,” Al-Alawi added.

Saudi Arabia was also the source of the month’s only investment in a women-led startup, the $ 6 million backing to Gathern, a Saudi platform similar to Airbnb. This compares to more than $ 100 million invested in male-led startups across the MENA region.

“It’s not just a regional problem, it’s global. Female-led startups received just 2.6% of venture capital funding in 2019, according to Crunchbase, although they typically outperform their male counterparts.

“But I believe that is changing. We are already seeing a significant increase in women-led businesses, including startups. In successful family businesses, and especially in e-commerce, we see women starting their own businesses, but many of them are self-funded or family funded rather than looking for venture capital investments, ”said Al-Alawi.

He added that a number of his clients in Saudi Arabia were female family office entrepreneurs who were starting to look beyond their own businesses and potential investment opportunities in female-led startups.

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