Latest news with #MAGNiTT
Gulf Business
20-05-2025
- Business
- Gulf Business
From idea to impact: How MENA startups can stand out in a global arena
Image: Supplied The startup ecosystem in the MENA region continues to evolve, with growing numbers of overseas arrivals intensifying competition in the market, particularly in the UAE and Saudi Arabia. It means founders must take their thinking to a new level in order to stand out. The incentives are clear and obvious. In a report highlighting why 2025 will be an important year for MENA as an emerging venture market, MAGNiTT said it expects AI funding to double due to increased investor attention to innovative AI startups. Dubai has solidified its position as a hub for international tech startups, attracting founders and investors from Europe, while Abu Dhabi emerged last year as the fastest-growing emerging ecosystem in the region, marking a 28% in ecosystem value. Saudi Arabia's growth as a startup magnet is driven by government initiatives like Vision 2030, which are fostering a supportive environment for both regional and global companies. As the country transitions to a knowledge-based economy, tech startups have a key role to play. All this places an even bigger emphasis on local founders to develop a comprehensive understanding of the maturing market, and demonstrate value and innovation. They can take heart from the $100m raised in a Series C funding round a few months ago by The capital will play a pivotal role in the company plans to invest in R&D and talent acquisition, and open at least 100 new stores in 2025. It highlights how selective investors are becoming. Only startups with a clear value proposition, a solid business model, and a strong potential for growth, are able to attract significant funding. Have a clear plan to scale Having a great idea is no longer enough. Entrepreneurs need a clear plan to scale their business. They must demonstrate a deep understanding of their market, and that their product or service can not only survive, but thrive, in a rapidly changing economic landscape. Today's investors are more cautious, prioritising startups with proven track records, scalable business models, and clear paths to profitability. Tech entrepreneurs need to focus on building a strong brand, creating a loyal customer base, and demonstrating their ability to adapt to market changes. In addition to creating a strong product and business model, startups must also be prepared to showcase their resilience. The general decline in funding this year is a reminder of how quickly market conditions can change. Entrepreneurs need to be flexible, ready to pivot when necessary, and be prepared to weather economic downturns. Building a startup is a long-term journey, and those who can adapt to challenges and stay focused on their goals are more likely to succeed. An influx of international players has increased the competitive nature of the MENA startup scene. The UAE 's emergence as a hub for innovation is built on government initiatives like business accelerators and funding to attracting entrepreneurs from around the world. Local entrepreneurs are no longer competing only with their regional peers, but also with startups from more established markets like Europe and the U.S. This places an even bigger emphasis on them to develop a comprehensive understanding of the market, and be able to position their company as a leader in that space. Customer experience is another critical area. Startups that prioritise the needs of their customers and work to build strong relationships with them are more likely to gain loyalty and positive word of mouth, which can be invaluable in attracting new customers and investors. Continuous learning is crucial in a fast-changing world. Entrepreneurs need to keep up with the latest trends, technologies, and strategies. By attending industry events, reading industry news and taking online courses, founders can stay informed and ready to adapt to market shifts. Building a strong team is just as important. Hiring talented people who believe in the company's goals can help overcome challenges and achieve success. Patience and perseverance are essential traits for any founder. The funding process shows that success takes time. Entrepreneurs need to be ready for setbacks and keep pushing toward their long-term goals. While the path ahead may be difficult, those who are able to navigate these challenges with resilience and vision will have the best chance to thrive. A clear view of where you want your company to go is essential. It's not just about making money; it's about creating something that will make a difference. Focus on the following Intuition: While data and numbers are important, sometimes you need to trust your gut. Your intuition can help you make good decisions, especially when things get tough. Courage: The tech world is full of risks and uncertainties. You need to be brave and willing to take chances to succeed. Motivation: Having a strong reason for starting your company can help you stay motivated, Foresight: It's important to think about the future and be prepared for what's to come. This means staying up-to-date on trends and technology. Inspiration: Building a successful company can be inspiring, but it's also important to be inspired by others. Look for role models and mentors who can help you on your journey. The
The National
14-05-2025
- Business
- The National
Economic progress in the Gulf is partly down to private equity
Private capital investments in the GCC have grown dramatically over the past few years, supporting economic diversification goals of member nations that have been the backbone of broader strategic plans led by their governments. The region has witnessed sustainable growth and evolved at a record pace, which has led to increased foreign direct investment. Private capital financing in the Gulf countries has seen a rise from $10.4 billion between 2015 and 2019 to $54.8 billion between 2020 and 2024, as reported by S&P Global. Furthermore, the combined value of private equity transactions in Saudi Arabia alone went from $523 million in 2019 to a record $4 billion in 2023, a compound annual growth rate of 66 per cent, as reported by MAGNiTT and Saudi Venture Capital Company. Many global private equity firms have cemented their presence in the Gulf, in financial hubs such as the DIFC, alongside an increasing number of local private equity firms. We must credit governments' economic diversification initiatives, one key element of which has been reduced dependency on oil revenues. Other critical initiatives have led to the nations working towards measures that enhance the ease of doing business, such as establishing free zones, introducing legislature to support and protect investors and developing user-friendly infrastructures. The increased presence of institutional investors, local and foreign, has coincided with a corresponding increase in demand from high-net-worth individuals and family offices seeking access to private market investments. For example, private equity offers an alternative to traditional asset classes that is increasingly attractive to investors, allowing them access to new and emerging sectors. Furthermore, private equity has brought funding and fresh perspectives to various sectors in the region, leading to growth and contributing to national diversification goals. Investments in fintech, AI and digital infrastructure have boosted the tech and innovation space in the Gulf, positioning the region as a growing hub. The healthcare sector is another example of an industry that has benefitted from private investment. The sector has experienced robust growth, driven by rising populations, boost in income levels and increased interest towards health and wellness. Alpen Capital reported that the current healthcare expenditure in the Gulf grew at a compound annual growth rate of 9.5 per cent between 2020 and 2022, reaching $104.1 billion. It is projected to reach $135.5 billion in 2027. The industry has been able to adapt to fast-growing populations and market demand with private equity-backed expansions in medical facilities, pharmaceutical companies and health tech startups, leading to improvements in overall access and quality. Across the Gulf, additional areas of opportunity including real estate, infrastructure and energy have reaped the benefits of private equity investments, contributing to urbanisation, the development of modern and smart cities, renewable energy projects, waste management, and sustainable agriculture. These developments have made an undeniable impact on the socio-economic landscape in the region, improving quality of life, providing employment and business opportunities, improving infrastructure and enabling both governments and private sector players to fund additional investments for the future. There are plenty more private equity deals in the pipeline, including Investcorp's multi-million-dollar fund, backed by China's sovereign wealth fund CIC, which is investing across the Gulf in sectors including health care, consumer goods, logistics and business services. While few can doubt the vitality, diversification and capital that private equity firms have brought to the Gulf, one must also be aware of potential challenges that may arise in coming years. Investors may be deterred by some geopolitical factors in the future, affecting the flow of capital. Also, fluctuations in oil prices and global economic conditions could affect the Gulf economies as well as the stability of private equity returns. Therefore, it is important to remain cautious and avoid counting the eggs before they hatch. The region also has an opportunity to build offerings based on global trends and allow room for flexibility so that the market can adapt to external changes beyond its control. Diversification is a powerful way to reduce risk and achieve strong overall returns, so it is useful to work on widening the pool of global private equity investments in the region in order for it to face a relatively smaller impact of changing external environments and economic factors. Governments can also look into regulatory frameworks that protect their national economies, promote regional integration and collaboration while maintaining political stability. Strengthening institutions and fostering a culture of innovation will be crucial in maintaining the momentum of private equity growth. Private equity has transcended its traditional role as a source of finance to a strategic player in the story of the Gulf's transformation. From pumping capital into myriad sectors, catalysing innovation and digitisation, improving the quality of life for citizens, providing enriching portfolios to local investors and fostering sustainable development, private equity firms are not only boosting economic activity but also driving the development of resilient and increasingly diversified economies. As GCC member nations continue to work in synchrony and build on past successes, private equity will continue to be a strong force shaping the economic landscape and paving the way for generations to come.
Arabian Post
25-04-2025
- Business
- Arabian Post
Saudi Arabia Emerges as Leading Venture Capital Hub in Emerging Markets
Saudi Arabia has surpassed Singapore to become the top destination for venture capital funding among emerging markets, securing $391 million in the first quarter of 2025. This 53 percent year-on-year increase positions the Kingdom ahead of regions including the Middle East, Africa, Pakistan, Türkiye, and Southeast Asia, according to data from venture analytics platform MAGNiTT. The Kingdom accounted for 58 percent of all venture funding in the Middle East and North Africa region during this period, with 41 percent of the total transactions. This performance reflects a significant shift in investor confidence, driven by a combination of strategic government initiatives, active sovereign wealth fund participation, and a focus on early-stage investments. Notably, there was an 87 percent year-on-year increase in non-mega deal funding and a 437 percent rise in Series A and B rounds. Key transactions included $28 million raises by and Merit Incentives, indicating robust support for startups at critical growth stages. The broader MENA region also experienced a resurgence in venture capital activity, with total funding reaching $678 million in the first quarter—a 58 percent increase compared to the same period last year. This growth occurred despite a 21 percent decline in the number of deals, which totaled 133 transactions. The uptick is attributed to improved investor sentiment following interest rate cuts across the Gulf in late 2024, as well as sustained activity from sovereign funds and flagship ecosystem initiatives like LEAP 2025.
Arab News
22-04-2025
- Business
- Arab News
Saudi Arabia tops emerging markets' venture capital funding, overtakes Singapore
RIYADH: Saudi Arabia has overtaken Singapore as the premier destination for venture capital funds across emerging markets after it secured $391 million in the first quarter of 2025. The 53 percent year-on-year rise helped propel the Kingdom to becoming the highest-performing country across the Middle East, Africa, Pakistan, Turkiye, and Southeast Asia in terms of total funding during the three-month period, as revealed in the latest analysis by venture data platform MAGNiTT. While the standout $160 million series E round by fintech unicorn Tabby contributed significantly to the overall figure, the broader investment ecosystem showed resilience with non-MEGA deal funding, which are transactions below $100 million, rising 9 percent quarter-on-quarter. 'This consistency signals a strengthening pipeline backed by sovereign LPs (limited partners) like SVC (Saudi Venture Capital), a growing cohort of accelerators, and successful exits like Rasan's IPO (initial public offering),' according to MAGNiTT's report. Saudi Arabia leads MENA funding and deal activity Saudi Arabia led the EVMs and continued its dominance in the Middle East and North Africa region. The Kingdom captured 58 percent of all MENA venture funding and accounted for 41 percent of transactions, far outpacing regional peers. According to MAGNiTT, the Kingdom achieved an 87 percent year-on-year increase in non-mega deal funding and a 437 percent rise in series A and B rounds, supported by sizable transactions such as those by and Merit Incentives, each raising $28 million. The rise in Saudi venture capital investment comes amid a broader rebound in the MENA region. Total funding across MENA reached $678 million in the first quarter of 2025, a 58 percent increase year on year, despite a 21 percent decline in deal count to 133 transactions. The surge was supported by improved investor sentiment following late 2024 interest rate cuts across the Gulf, along with sustained sovereign fund activity and flagship ecosystem initiatives such as LEAP 2025. In terms of historical share, Saudi Arabia's ascent has been significant. It expanded its share of MENA venture funding to 58 percent in the first quarter of the year, up from 39 percent in 2024 and 51 percent in 2023. This upward trajectory has positioned the Kingdom as the central engine of regional VC activity, reversing a period during which the UAE held the lead. The ecosystem shift also reflects a structural change in capital allocation. The first quarter saw non-mega deals rise for the fourth consecutive quarter, and early-stage investments in series A and B rounds increased by 50 percent quarter-on-quarter. In contrast, Southeast Asia reported its weakest early-stage quarter in seven years, with Singapore's funding falling by 61 percent year on year to $377 million. The gap signals a shift in global investor preference as capital increasingly flows toward markets like Saudi Arabia, where macroeconomic stability, proactive policy, and institutional backing provide a conducive environment for venture growth. With 54 deals completed, the Kingdom reported the smallest year-on-year decline in deal count among the region's top three markets, supported by a robust early-stage pipeline. Fintech dominates sector activity Fintech remained the most active and well-funded sector across MENA, particularly in Saudi Arabia, contributing 30 percent of all deals and capturing 57 percent of total regional funding. The sector saw a 362 percent year-on-year increase in funding, totaling $384 million, driven by Tabby's $160 million MEGA round and strong underlying demand for digital finance solutions. Notably, 35 percent of all fintech deals in the first quarter of 2025 were in the $5 million to $20 million range, up 24 percentage points from the same period last year, demonstrating increasing maturity and scalability across the sector. Enterprise Software was the second most transacted and funded vertical, propelled by activity in Saudi Arabia and the UAE, accounting for 75 percent of all sector deals. Within this segment, the productivity apps sub-sector achieved record performance with six deals, including Merit Incentives' $28 million and $10 million rounds. The enterprise category posted a 112 percent annual growth in funding to reach $61 million. Saudi Arabia drives top-tier transactions and investor participation While deal volume across MENA dropped 21 percent year on year to just 133 transactions — one of the lowest quarterly figures in five years — Saudi Arabia defied the trend, maintaining strong early-stage momentum. MAGNiTT noted that deal activity in the up to $1 million bracket declined 8 percentage points year on year to just 31 percent, while deals in the $5 million to $20 million and over $20 million brackets saw increases of 4 percentage points and 3 percentage points, respectively. This reallocation of capital reflects investors' growing appetite for scale-ready startups in more advanced funding stages. Pre-seed to pre-series A activity in the Kingdom saw a 14 percent increase, highlighting the nation's strengthening foundation for long-term growth. The shift in capital allocation patterns also reinforced Saudi Arabia's strategic focus. The share of deals in the $1 million to $5 million range rose to 46 percent, the highest proportion in five years, mirroring a broader pivot across MENA toward larger, more scalable investment opportunities. Simultaneously, the lowest-value ticket size, $0 to $1 million, fell to 31 percent of deals, down 8 percentage points from the previous year. Five of the region's 10 largest deals originated from the Kingdom, including Tabby's round, the sole mega deal of the quarter, alongside significant rounds by Zension, with $30 million and Merit Incentives. According to MAGNiTT, this concentration of large-ticket transactions underscores the depth of investor confidence in the Saudi startup ecosystem. Investor engagement in the Kingdom was also evident in the breakdown of top deals. The nation hosted more top-10 deals than any other MENA country, with fintech leading as the most represented industry. Blue Pool Capital and Hassana Investment Co. emerged as the most prominent backers, jointly deploying an estimated $53.3 million across key transactions, with fintech accounting for four of the top 10 deals. Exit environment strengthens on record M&A activity Saudi Arabia's momentum was further underscored by a robust exit environment, with the MENA region recording 21 exits, up 163 percent year on year, marking the strongest quarter for mergers and acquisitions since MAGNiTT began tracking. The Kingdom's IPO pipeline also improved, adding another layer of attractiveness to its startup ecosystem. While the regional rebound was attributed to easing inflation, improved liquidity, and pre-US tariff optimism, MAGNiTT emphasized that: 'Saudi Arabia's IPO and M&A momentum are now integral to the region's exit environment.' Despite this surge, the median time to exit via M&A lengthened to six years, up from five in 2024, reflecting continued challenges for early-stage startup liquidity. Geopolitical risks introduce uncertainty to venture outlook Despite strong regional performance, MAGNiTT highlighted emerging risks that could disrupt momentum. 'While Q1 2025 was a positive start to the year … that momentum is now under threat,' said Philip Bahoshy, CEO of MAGNiTT. He added that the new US tariff policies have created uncertainty in both the public and private markets over the last couple of weeks, which can create a challenge for decision-makers who are likely to be in a risk-off mindset. 'In venture capital, this uncertainty is likely to impact three areas: the deployment of capital from LPs to VCs, VCs' willingness to make decisions in uncertain times, and finally, startups' ability to raise funds,' said Bahoshy. He noted that while global volatility persists, long-term fundamentals in EVMs remain strong. 'Despite global headwinds, emerging venture markets continue to present compelling long-term opportunities. MENA, in particular, is uniquely positioned for sustained growth thanks to deep pools of local capital, pro-entrepreneurship policy, and active sovereign support,' Bahoshy added. 'As global investors diversify beyond traditional markets, regions like MENA and Southeast Asia are poised to attract fresh capital — particularly in tech-led sectors that are strategically positioned and less exposed to tariff volatility,' the CEO said.
Arab News
04-03-2025
- Business
- Arab News
Saudi Arabia's private equity deals soar with $2.8bn in investments in 2024
RIYADH: Saudi Arabia's private equity market reached $2.8 billion in total investments across 15 transactions in 2024, maintaining its billion-dollar scale despite a slowdown, according to MAGNiTT's latest report. This represents a 27 percent year-on-year decrease from $3.9 billion in 2023, signaling a shift in capital allocation amid evolving economic conditions. The number of private equity deals also dropped significantly, falling 60 percent from 37 transactions in the previous year. This decline follows three consecutive years of growth from 2020 to 2023, during which the market saw a compound annual growth rate of 67 percent. Factors such as higher interest rates, inflationary pressures, oil price fluctuations, and regional geopolitical tensions played a role in the slowdown observed in 2024. Philip Bahoshy, CEO of MAGNiTT, told Arab News that the Saudi private equity market had experienced 'significant growth' between 2020 and 2024, with investment value surging from $215 million in 2020 to a peak of $3.9 billion in 2023. '2024 saw a 27 percent year-on-year decline in investment value and a 60 percent drop in transaction volume, driven by a market recalibration toward higher-quality, mid-market growth opportunities over large-scale buyouts,' he said. Despite the overall market contraction, growth-stage private equity transactions emerged as the most active segment, accounting for 67 percent of total deals in 2024, up from 43 percent in the previous year. In contrast, buyout transactions, which dominated in 2023, experienced a sharp 76 percent decline, with their share of total PE deals dropping from 57 percent to 33 percent. This shift reflects a growing investor preference for expansion-stage companies with strong scaling potential, rather than control-focused buyouts. Investment value trends further underscore this transition. While buyouts still represented the largest share of PE capital at 82 percent in 2024, they saw a significant 39 percent year-on-year decline, totaling $2.3 billion. Conversely, growth-stage investments, though representing a smaller 18 percent of total PE investment value, experienced a notable surge from just 1 percent in 2023. This suggests a shift toward minority and expansion-stage investments in the deal mix. Philip Bahoshy, CEO of MAGNiTT, forecasts that Saudi Arabia's PE market will stabilize over the next five years, evolving from the extreme volatility of 2020-24 into a more mature and steady investment landscape. 'In a forward look, several factors will impact the PE landscape, like increased institutional participation, as sovereign wealth funds like PIF will continue to anchor PE investments alongside a growing number of regional and international LPs (limited partners),' he said. Sectoral breakdown Saudi Arabia's PE market in 2024 was significantly driven by sector-specific trends, with the telecom and communications industry capturing the largest share of total investment value. The sector attracted $2.3 billion in PE investments, accounting for 81.8 percent of total PE funding. This surge was largely fueled by a major buyout transaction involving Telecom Towers Co., underscoring continued investor confidence in the Kingdom's telecommunications infrastructure. Beyond telecom, the sustainability sector emerged as the second-largest recipient of PE investments, securing $225 million, or 8 percent of total PE funding. Healthcare followed with $190 million, representing 6.7 percent of the total, benefiting from both PE growth transactions and buyouts, with $188 million specifically allocated to PE growth investments. Transport and logistics secured $83 million, or 2.9 percent, while financial services saw the least investment activity among the top five sectors, attracting $17 million, or 0.6 percent. Despite telecom leading in total investment value, the industry transaction volume told a different story. The food and beverage sector was the most active in terms of deal count, registering three transactions, all of which were buyouts. Healthcare also recorded three transactions, split between two PE growth deals and one buyout. Financial services and transport and logistics each saw two transactions, representing 13.3 percent of total PE activity. Education, though smaller in terms of funding, accounted for one transaction, making up 6.7 percent of total PE deals. The overall distribution of PE transactions in 2024 reflected a strategic shift toward sectors aligned with Saudi Arabia's Vision 2030 goals. While buyout investments dominated in terms of capital allocation — capturing 82 percent of total PE funding — PE growth transactions accounted for nearly half, or 47 percent, of overall deal activity across key industries. This trend suggests a growing investor appetite for mid-market and expansion-stage companies, particularly in sectors such as sustainability, healthcare, and financial services. Philip Bahoshy emphasized that sectoral diversification will play a pivotal role in shaping the future of Saudi Arabia's PE market. 'Telecom, healthcare, and financial services remain dominant, while emerging industries like sustainability and logistics will likely attract increased capital,' he said. The continued participation of sovereign funds, regulatory enhancements, and foreign investment are expected to further solidify these trends, paving the way for a more stable and mature PE landscape in the coming years, he added. 'Furthermore, regulatory maturity and market depth, whereby reforms and Vision 2030 initiatives drive transparency and foreign investment, will enable the ecosystem to allow smoother exits and secondary markets,' he said. Deal sizes Transaction sizes also reflected this changing landscape. Deals in the $10 million–$200 million range remained the primary driver of Saudi Arabia's PE market, although their share fell from 72 percent in 2023 to 58 percent in 2024. Meanwhile, the proportion of transactions over $200 million rebounded to 29 percent in 2024, from 14 percent in 2023. Investment landscape 'Saudi Arabia's investment ecosystem is transforming strategically, driven by Vision 2030, regulatory enhancements, and increasing institutional participation,' Bahoshy said. He noted that private capital, spanning PE, venture capital, and venture debt, is playing a complementary role in shaping the investment landscape. While PE focuses on scaling mature businesses, VC remains a critical driver of early-stage innovation, particularly in fintech and e-commerce. Saudi VC funding peaked at $1.3 billion in 2023 before moderating to $750 million in 2024, while venture debt is emerging as an alternative financing tool for startups. As Saudi Arabia's investment ecosystem matures, the interplay between PE, VC, and alternative investment vehicles will be key in sustaining long-term economic diversification and capital efficiency. 'As PE matures and M&A activity rises, VC-backed startups will have better liquidity options, strengthening the investment cycle,' Bahoshy said. The country's recalibrated approach to PE signals a shift toward a more measured and strategic capital deployment strategy, positioning the market for long-term stability and growth. 'Saudi Arabia's investment landscape is evolving into a multi-layered ecosystem where PE drives scale, VC fosters innovation, and alternative investment vehicles provide liquidity and diversification,' Bahoshy said. 'The interplay between these verticals will be essential in sustaining long-term economic diversification, capital efficiency, and investor confidence,' he added.
