Saudi Arabia is expected to become a leading market for start-up exits in the Mena region, as its ecosystem continues to mature, with mergers and acquisitions, as well as initial public offerings, on the rise.
The UAE has historically topped the list, accounting for about 60 per cent of all exits in the region. But the kingdom is catching up, despite its venture market only being active in the past five years, giving venture capitalists more opportunities to get a return on their investments, analysts say.
In the first half of this year, Saudi Arabia's share of exits rose to 20 per cent, compared with 12 per cent in 2021, says Philip Bahoshy, chief executive of data platform Magnitt. Last year, the kingdom witnessed a total of nine exits, accounting for 21 per cent of the Mena region's M&A transactions and ranking second after the UAE. Start-ups usually take an average of seven years to exit, he adds.
"You are seeing more share of exits taking place in Saudi Arabia, but because Saudi’s venture has really only been active for about five years, many companies in Saudi have not hit the window for exits, relative to the rest of the Mena region," he says. "We are waiting and anticipating for exits to continue to rise in the next two to three years."
Some of the most notable exits in the kingdom include Tabby’s recent acquisition of Tweeq for an undisclosed amount, and Riyadh-based FinTech start-up Rasan, which raised $224 million from its initial public offering on the Tadawul exchange in June. Online food delivery start-up Jahez also listed on Saudi Arabia's secondary market, Nomu, in 2022, giving it a market valuation of $2.4 billion at the time.
While M&As are usually the most common exit route, Khaled Talhouni, managing partner at Nuwa Capital, expects the kingdom’s IPO space to become an increasingly viable path for start-up exits in the region.
“The key exit opportunity emanating from Saudi Arabia is the IPO route," he says. "Tadawul, and to some extent Nomu, are viable paths towards an IPO for regional tech companies. This has been made possible by the relatively recent uptick of activity on those exchanges.
"The recent public offerings of Rasan and Jahez illustrate this point and I wouldn’t be surprised if a number of new public offerings in Saudi Arabia, as well as in the UAE, are in process."
More than 13 Saudi start-ups are preparing to go public in the next two years, in large part because of the financial support they are receiving to grow their ventures, Saudi Venture Capital told media outlet Asharq News this year.
Saudi Arabia, the Arab world's largest economy, emerged as the region's most-funded country for start-ups last year. Start-ups in the kingdom raised $1.3 billion through venture capital funding, overtaking the UAE for the first time as the top destination for VC investment in the Mena region, Magnitt says. In the first half of this year, Saudi start-ups raised more than $400 million in capital, again the highest in the region, the data platform adds.
As part of Saudi Arabia’s economic diversification agenda under Vision 2030, start-ups are receiving significant support from local funds such as STV, a technology VC fund with $800 million in capital, and Sanabil, a portfolio company of the kingdom’s sovereign wealth fund, the Public Investment Fund.
Last year, STV announced a $150 million fund to accelerate the growth of technology companies in Saudi Arabia and across the region. Meanwhile, Sanabil has committed $2 billion in capital a year for private investments that support VC growth.
Eyad Albayouk, general manager of Flat6Labs in Saudi Arabia, believes the kingdom's large market, coupled with ample capital, is fuelling the growth of the venture space.
“I think it's an opportune time for a lot of people to consider liquidity events within the Saudi market. We have a few tailwinds that are helping make this happen, he says. "But the biggest tailwind, I think, is just the sheer market size, especially within the Mena context. And it definitely does have the depth in terms of financial capital to offer, whether strategic or even financial acquisition capital, for such events."
Besides liquidity, the kingdom’s updated regulations, the growing number of incubators and accelerators and the establishment of tax-free zones are all factors contributing to a maturing ecosystem, Mr Albayouk says.
“Five years ago, the exit via an IPO path was a pipe dream," he adds. "It wasn’t a consideration for those that weren’t large corporations. Today, definitely that’s very different with the ease of listings for both SMB-type businesses on the parallel market and also on the main market with larger or more mature businesses."
Mr Bahoshy says that, with start-ups in the kingdom receiving significant funding, looking for expansion opportunities inside and outside the region, and regulators focusing on tech companies that have the potential to announce IPOs, the market could become attractive for companies looking to exit. “Unlike many other jurisdictions, you have all three of those elements that are likely to benefit the exit environment for companies in Saudi,” he adds.
Earth under attack: Cosmic impacts throughout history
- 4.5 billion years ago: Mars-sized object smashes into the newly-formed Earth, creating debris that coalesces to form the Moon
- 66 million years ago: 10km-wide asteroid crashes into the Gulf of Mexico, wiping out over 70 per cent of living species – including the dinosaurs.
- 50,000 years ago: 50m-wide iron meteor crashes in Arizona with the violence of 10 megatonne hydrogen bomb, creating the famous 1.2km-wide Barringer Crater
- 1490: Meteor storm over Shansi Province, north-east China when large stones “fell like rain”, reportedly leading to thousands of deaths.
- 1908: 100-metre meteor from the Taurid Complex explodes near the Tunguska river in Siberia with the force of 1,000 Hiroshima-type bombs, devastating 2,000 square kilometres of forest.
- 1998: Comet Shoemaker-Levy 9 breaks apart and crashes into Jupiter in series of impacts that would have annihilated life on Earth.
-2013: 10,000-tonne meteor burns up over the southern Urals region of Russia, releasing a pressure blast and flash that left over 1600 people injured.
The specs
Engine: 2.0-litre 4-cyl turbo
Power: 201hp at 5,200rpm
Torque: 320Nm at 1,750-4,000rpm
Transmission: 6-speed auto
Fuel consumption: 8.7L/100km
Price: Dh133,900
On sale: now
The years Ramadan fell in May
Killing of Qassem Suleimani
BMW M5 specs
Engine: 4.4-litre twin-turbo V-8 petrol enging with additional electric motor
Power: 727hp
Torque: 1,000Nm
Transmission: 8-speed auto
Fuel consumption: 10.6L/100km
On sale: Now
Price: From Dh650,000
Essentials
The flights
Emirates, Etihad and Malaysia Airlines all fly direct from the UAE to Kuala Lumpur and on to Penang from about Dh2,300 return, including taxes.
Where to stay
In Kuala Lumpur, Element is a recently opened, futuristic hotel high up in a Norman Foster-designed skyscraper. Rooms cost from Dh400 per night, including taxes. Hotel Stripes, also in KL, is a great value design hotel, with an infinity rooftop pool. Rooms cost from Dh310, including taxes.
In Penang, Ren i Tang is a boutique b&b in what was once an ancient Chinese Medicine Hall in the centre of Little India. Rooms cost from Dh220, including taxes.
23 Love Lane in Penang is a luxury boutique heritage hotel in a converted mansion, with private tropical gardens. Rooms cost from Dh400, including taxes.
In Langkawi, Temple Tree is a unique architectural villa hotel consisting of antique houses from all across Malaysia. Rooms cost from Dh350, including taxes.
The five pillars of Islam
What is Reform?
Reform is a right-wing, populist party led by Nigel Farage, a former MEP who won a seat in the House of Commons last year at his eighth attempt and a prominent figure in the campaign for the UK to leave the European Union.
It was founded in 2018 and originally called the Brexit Party.
Many of its members previously belonged to UKIP or the mainstream Conservatives.
After Brexit took place, the party focused on the reformation of British democracy.
Former Tory deputy chairman Lee Anderson became its first MP after defecting in March 2024.
The party gained support from Elon Musk, and had hoped the tech billionaire would make a £100m donation. However, Mr Musk changed his mind and called for Mr Farage to step down as leader in a row involving the US tycoon's support for far-right figurehead Tommy Robinson who is in prison for contempt of court.
KILLING OF QASSEM SULEIMANI
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
Ant-Man and the Wasp
Director: Peyton Reed
Starring: Paul Rudd, Evangeline Lilly, Michael Douglas
Three stars
Killing of Qassem Suleimani
Mohammed bin Zayed Majlis
Prop idols
Girls full-contact rugby may be in its infancy in the Middle East, but there are already a number of role models for players to look up to.
Sophie Shams (Dubai Exiles mini, England sevens international)
An Emirati student who is blazing a trail in rugby. She first learnt the game at Dubai Exiles and captained her JESS Primary school team. After going to study geophysics at university in the UK, she scored a sensational try in a cup final at Twickenham. She has played for England sevens, and is now contracted to top Premiership club Saracens.
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Seren Gough-Walters (Sharjah Wanderers mini, Wales rugby league international)
Few players anywhere will have taken a more circuitous route to playing rugby on Sky Sports. Gough-Walters was born in Al Wasl Hospital in Dubai, raised in Sharjah, did not take up rugby seriously till she was 15, has a master’s in global governance and ethics, and once worked as an immigration officer at the British Embassy in Abu Dhabi. In the summer of 2021 she played for Wales against England in rugby league, in a match that was broadcast live on TV.
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Erin King (Dubai Hurricanes mini, Ireland sevens international)
Aged five, Australia-born King went to Dubai Hurricanes training at The Sevens with her brothers. She immediately struck up a deep affection for rugby. She returned to the city at the end of last year to play at the Dubai Rugby Sevens in the colours of Ireland in the Women’s World Series tournament on Pitch 1.
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