Saudi Venture Capital (SVC) is investing more in fintech. Recently, the government-backed investment company made a $5 mn investment in a fintech fund managed by VentureSouq (VSQ). The investment will primarily focus on supporting early-stage fintech startups.
SVC Chief Executive Officer and Board Member Dr. Nabeel Koshak and VSQ General Manager Maan Eshgi signed the subscription agreement. Also present at the signing ceremony were other key SVC officials, including Chief Investment Officer Nora Alsarhan and Chief Legal Officer Haifa Bahaian. VSQ’s Fintech General Partner Musaab Hakami also graced the event.
Giving fintech a boost
According to Dr. Koshak, “the investment in the fintech fund by VSQ is part of SVC’s Investment in Funds Program to support the development of the VC ecosystem in Saudi Arabia across all sectors and stages. This investment also helps to foster the growth of the fintech sector.”
At its core, SVC’s goal is to catalyze and nurture funding opportunities for startups as well as small- and midsized-enterprises (SMEs) that are in their pre-seed or pre-initial public offering (IPO) stages. It has already allocated $2 bn worth of investments and co-investments. As of writing, it has contributed to 43 funds, which, in turn, have funded over 700 companies.
Furthermore, as part of its efforts to support SMEs, SVC also inked a memorandum of agreement with Tadawul, the Saudi stock market, to offer assistance to SMEs who want to list an IPO.
SVC was established in 2018. It operates as a subsidiary of the SME Bank, which is one of the development banks affiliated with the National Development Fund.
Booming fintech sector
Earlier in March, SVC launched Investment in Fintech VC Funds as part of its Investment in Funds Program. The fund has an allocation of $80 mn aimed at specifically helping Saudi’s fintech sector flourish.
In 2022, the sector captured about 25 percent of all venture capital funding in Saudi. This is equivalent to about $239 mn.
Dr. Koshak attributed the fintech sector’s boom to “the launch of many governmental initiatives that stimulate the industry, such as the Saudi Fintech initiative launched by the Saudi Central Bank in partnership with the Capital Market Authority, as well as the launch of the Kingdom’s fintech strategy as a new pillar within the Saudi Vision 2030 Financial Sector Development Program (FSDP).”
FSDP aims to support the Kingdom’s emergence as among the leaders in the global fintech scene.
In the broader SME landscape, Saudi Arabia received 42 percent of all funding directed towards SMEs in the MENA region during the first half (H1) of 2023. The data was released by Saudi’s SME General Authority (Monsha’at). Saudi startups raised a total of $446 million in H1 of this year. This has contributed to a highly robust SME and startup scene in Saudi.
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