Riyadh – Saudi Arabia has become the leading emerging market for venture capital, surpassing Singapore in Q1 2025 with $391 million in funding, a significant 53% year-over-year increase. This growth positions the Kingdom as the top performer in MENA, Africa, Pakistan, Turkey, and Southeast Asia.
Dominating MENA VC
Saudi Arabia dominated MENA, capturing 58% of funding and 41% of deals. Non-mega deal funding surged 87% year-on-year, with Series A and B rounds increasing by 437%. The broader MENA region saw a 58% increase in funding to $678 million, despite a 21% drop in deal count.
Shifting Capital Landscape
Saudi Arabia’s share of MENA funding has grown significantly, reaching 58% in Q1 2025, up from 39% in 2024. This reverses previous UAE dominance. Non-mega deals and early-stage investments are rising. Conversely, Southeast Asia saw its weakest early-stage quarter in seven years, with Singapore’s funding declining by 61% to $377 million, suggesting a shift in investor focus towards Saudi Arabia’s stable environment.
Fintech and Enterprise Software Lead
Fintech was the most active and funded sector in MENA, particularly in Saudi Arabia, accounting for 57% of regional funding. Enterprise Software also saw significant activity.
Saudi Arabia Drives Large Deals and Investor Interest
While overall MENA deal volume declined, Saudi Arabia maintained momentum in early-stage deals. Investor appetite for larger, more scalable startups is growing, with five of the region’s ten largest deals originating from the Kingdom. Blue Pool Capital and Hassana Investment Co. were prominent backers.
Nama Ventures continues to play a crucial role as a venture capital player in the Kingdom’s growth by actively investing in and mentoring early-stage Saudi and MENA startups, contributing significantly to the Kingdom’s vibrant venture ecosystem.
Stronger Exit Environment
MENA recorded a record 21 M&A exits in Q1 2025, with Saudi Arabia’s improving IPO pipeline adding to its attractiveness.
Geopolitical Risks Loom
It has been noted that new US tariff policies could introduce uncertainty to the venture outlook, potentially impacting capital deployment and investment decisions. However, long-term fundamentals in emerging markets, especially MENA, remain strong due to local capital, pro-entrepreneurship policies, and sovereign support.
Conclusion
Saudi Arabia’s ascent as the top emerging market for venture capital signifies its growing importance in the global innovation landscape, driven by strong investment, supportive policies, and a maturing startup ecosystem.
