Saudi Arabia has demonstrated unmatched consistency in venture capital (VC) growth over the past four years, according to recent analysis. Unlike other major emerging markets, the Kingdom experienced uninterrupted annual increases in VC activity from 2020 to 2023, even as global funding patterns became more volatile.
This steady progress is credited to government-led initiatives and robust support from sovereign investors, aligning with Saudi Arabia’s Vision 2030 goals to diversify its economy. While overall funding dipped slightly in 2024 amid worldwide tightening, the country’s long-term upward trend highlights a strong commitment to fostering innovation.
Data shows Saudi Arabia averaged a VC-to-GDP ratio of 0.07 percent over five years. Though this level is still below mature markets like Singapore, the consistent rise points to growing local investment capacity. The Kingdom, along with the UAE, is recognized as a “Growth Market” due to its substantial GDP and expanding consumer base, making it an attractive destination for startups seeking regional scale.
Across the Middle East and North Africa (MENA), VC activity has varied. The UAE remains a leading innovation hub, maintaining a five-year average VC-to-GDP ratio of 0.20 percent, while Saudi Arabia has shown more reliable growth. Egypt also advanced, increasing its VC-GDP ratio to 0.11 percent, though its deal flow remains sensitive to large, isolated investments.
Regional stability has been tested by fluctuating oil prices and geopolitical tensions, but both Saudi Arabia and the UAE managed to maintain stable monetary policies. MENA’s total venture funding over five years reached $12.52 billion, with the region leading in deal count compared to Southeast Asia and Africa, despite funding being concentrated in a few sectors and cities.
In Southeast Asia, Singapore sets the global benchmark for VC efficiency, with a five-year average VC-to-GDP ratio of 1.3 percent—surpassing both emerging and developed nations. Indonesia, while larger in total funding, posts a lower relative ratio due to weaker purchasing power. Other markets, such as Thailand and Nigeria, saw funding surges tied to single large deals, underscoring the episodic nature of VC in developing economies.
Globally, rising interest rates and geopolitical uncertainty have dampened venture activity, with domestic capital in regions like MENA offsetting some decline in international investment. However, these local funds tend to be more cautious, potentially slowing deal flow unless foreign capital returns or new exit opportunities emerge.
Despite these challenges, Saudi Arabia’s clear policy direction and growing institutional investment continue to support its ambitions for a diversified, innovation-driven economy. Closing the gap between available capital and its effective use remains the key challenge for the Kingdom and other emerging markets as they adapt to a shifting global environment.