Saudi Arabia Dominates MENA Venture Debt Financing with $400 Million Raised in 2023

In 2023, Saudi Arabia's startup ecosystem became the leader in the MENA region, capturing 53% of venture debt financing. According to MAGNiTT's latest report, the country raised a staggering $400 million in venture debt, marking an impressive 602% growth from the previous year.

This surge in venture debt financing is part of a broader trend in the MENA region, which saw a total of $750 million in MEGA deal facilities, posting a 650% year-over-year increase in total venture debt MEGA deal value. The Gulf IPO boom is also expected to bring in billions of dollars, further boosting the region's economic outlook.

The UAE followed Saudi Arabia closely, raising $353 million in venture debt financing in 2023, a 222% yearly increase. Egypt, however, experienced a significant drop, securing only $4 million, an 86% annual decline. In terms of deal count, the UAE led with six transactions, while Saudi Arabia saw four transactions, doubling its count from the previous year.

Why this matters: Saudi Arabia's dominance in venture debt financing has significant implications for the region's economic growth and development. This surge in investment could lead to increased innovation, job creation, and competitiveness in the MENA region.

Fintech emerged the most attractive sector for investors, accumulating $601 million in financing, a 325% yearly increase. Transport and logistics came in second with $150 million, a 162% year-on-year increase, while e-commerce saw a significant drop, securing only $3 million, a 57% decline.

The leading investors by capital deployed were primarily foreign, with the top three being Goldman Sachs, Partners for Growth, and Atalaya from the US. They were followed by CoVentures from South Africa and Shorooq Partners from the UAE. Notable deals included Agritech startup iyris closing a $16 million series A round led by US-based Ecosystem Integrity Fund and TVM Capital Healthcare closing a $250 million Afiyah Fund LP to support health tech startups.

BIM Ventures and SBI Holdings launched a $100 million joint investment fund to support Saudi startups, while Growdash closed a $1.8 million seed round led by Oryx Fund and Oraseya Capital. Other significant deals included GrubTech securing $15 million in series B funding led by Jahez, and Proptech startup Holo securing an undisclosed amount in a pre-Series A funding round led by Dubai Future District Fund and Oryx Fund.

Saudi Arabia's remarkable growth in venture debt financing highlights its burgeoning startup ecosystem and its potential to drive economic growth in the region. With substantial foreign investment and a surge in sector-specific funding, the country is well-positioned to continue its upward trajectory in the coming years.

Key Takeaways

• Saudi Arabia leads MENA region in venture debt financing with $400 million in 2023, a 602% growth.
• MENA region sees 650% year-over-year increase in total venture debt MEGA deal value, reaching $750 million.
• Fintech emerges as most attractive sector, accumulating $601 million in financing, a 325% yearly increase.
• Foreign investors dominate, with Goldman Sachs, Partners for Growth, and Atalaya as top three investors.
• Saudi Arabia's growth in venture debt financing highlights its potential to drive economic growth in the region.