Saudi Arabia experienced a historic high in venture capital (VC) deal count in 2024, even as the broader MENA region saw a downturn for the third consecutive year.
According to PitchBook’s H2 2024 MENA Private Capital Breakdown, Saudi Arabia secured 143 VC deals, marking a 40% increase from 2023. In contrast, the MENA region as a whole faced a 9% decline in total deals.
The kingdom overtook Turkey as the second-largest VC market in the region, capturing 22.2% of MENA’s total deal count. However, it still trails the UAE, which recorded 240 deals, accounting for 37.2% of the regional total.
VC Deal Value Drops Despite Increased Rounds
Although deal volume rose, total investment value in Saudi Arabia dropped 14.6% year-over-year to approximately $700 million. The MENA region saw an even steeper decline, with total capital raised falling 30.7%.
The primary reason for this drop was the lack of mega-deals—transactions exceeding $100 million. In 2024, Saudi Arabia saw just one such deal: ecommerce platform Salla’s $130 million pre-IPO fundraise.
Shift Toward Early-Stage Startups
Investor focus in Saudi Arabia has shifted towards early-stage startups, with 54.9% of all deals occurring at the pre-seed and seed stages, a significant jump from 41.4% in 2023. Meanwhile, late-stage investments declined by nearly 30%, accounting for only 19% of total deals.
Despite the overall drop in deal value, Q4 2024 saw a resurgence, breaking a three-quarter downward trend. The quarter witnessed $193.2 million in VC investments, reflecting a 77% increase from Q3.
Government Initiatives Fuel Startup Growth
Saudi Arabia’s VC boom has been largely driven by government support and economic diversification efforts. As part of Vision 2030, the kingdom has prioritized startups and venture capital to reduce reliance on oil revenues.
At the heart of this initiative is the Public Investment Fund (PIF), Saudi Arabia’s $925 billion sovereign wealth fund. PIF has actively invested in domestic and international startups and, in 2019, launched a $1 billion fund-of-funds to support private market investments in small and medium enterprises (SMEs).
Saudi Arabia’s Push for AI Investment
Looking ahead, Saudi Arabia is ramping up investments in artificial intelligence (AI). The kingdom recently unveiled plans for an AI hub, with a potential investment of up to $100 billion. This initiative aims to develop data centers, AI-driven startups, and supporting infrastructure, positioning Saudi Arabia as a leader in AI innovation within the region.
Despite a regional downturn, Saudi Arabia’s record-breaking VC deal count underscores the kingdom’s growing prominence in the startup ecosystem. With strong government backing, increasing AI investments, and a focus on early-stage funding, the country is poised for sustained growth in venture capital investments.
