While global venture capital (VC) funding shrank to a six-year low of $248.4 billion in 2023, the Gulf Cooperation Council (GCC) defied the trend, witnessing a 30% year-on-year growth. Despite accounting for just 1% of global VC funding, the region’s rapid expansion has drawn considerable investor interest.
For the first time, Saudi Arabia surpassed the UAE in total VC funding, representing over 50% of all deals in the GCC. Major late-stage investments, including unicorn-creating mega-rounds for fintech giants Tabby and Tamara, propelled Saudi Arabia to the forefront of the region’s VC ecosystem, especially in fintech and e-commerce.
Venture Ecosystem Growth
According to Pulsar, a global leader in venture capital and startup acceleration, the GCC’s top five deals made up 74% of total venture investment. Some of the most notable deals include:
- $156 million invested in Floward, a Kuwait-based marketplace, marking the largest deal in the country in five years.
- Unicorn status rounds for Tamara and Tabby, boosting total funding to $1.36 billion, solidifying Saudi leadership in the fintech and e-commerce sectors.
- A notable rise in green tech investments, driven by Saudi Arabia’s $64 billion investment in renewable energy and electric mobility, as part of major projects like NEOM and Qiddiya.
Key Factors Driving GCC’s VC Growth
Pulsar’s research highlights the key drivers behind the GCC’s venture growth:
- Capital and Business Opportunities: The region is becoming both a source of capital and a significant market, especially in the B2B sector, attracting international investors.
- Increased Global Integration: Business hubs in Dubai, Abu Dhabi, Qatar, and other GCC nations are fostering strong international market ties by attracting talent across various sectors.
- Government-backed Initiatives: Programs like Saudi Arabia’s Vision 2030 and the UAE’s Vision 2031 are encouraging investments in sectors like financial services, green energy, and advanced technologies. Sovereign wealth funds, such as Saudi Arabia’s Public Investment Fund (PIF), play a crucial role in backing tech startups across the region.
Sectoral Growth Drivers
Key sectors fueling the GCC’s venture boom include:
- Fintech: Innovations in blockchain and digital payments lead this sector.
- Healthtech: Investments have grown 22x from 2016 to 2022.
- E-commerce and Buy Now, Pay Later (BNPL) platforms like Tamara are attracting major capital.
- Green Technologies: Renewable energy and electric mobility investments are surging, supported by Saudi Arabia’s long-term commitment to deep tech projects like NEOM.
Future Opportunities and Investment Outlook
As the GCC transitions from oil-dependent economies to knowledge-based hubs, Pulsar’s report points to future growth areas:
- Artificial Intelligence (AI): The rise of AI applications in smart cities, healthcare, and robotics offers new investment avenues.
- Green Technologies: Saudi Arabia is a significant contributor, with $3 billion invested in global climate tech projects like the Al Shuaiba solar project.
- Advanced Mobility: The push towards electric vehicles (EVs) and mobility technologies is gaining momentum, with Saudi Arabia and the UAE leading large-scale green transport initiatives.
Pavel Korolev, Founder and CEO of Pulsar, noted: “Despite the global downturn, the GCC’s resilience and growth offer significant opportunities for businesses. We are committed to helping companies enter this promising market and achieve sustainable growth.”
