Mind the Gap Update: Unlocking Technology Unicorns by Fueling KSA Native Growth-Stage Funds (STV)

Summary

• Over the last 5 years, approximately $5 billion in VC capital was deployed in KSA, leading to the emergence of 9 unicorns [p.2].p.2
• An insight report published by STV in 2023 highlighted a $20 billion growth funding gap in the MENA region [p.3].p.3
• Saudi Arabia accounts for 65% of the 14 unicorns that have emerged in MENA, 4 of which are listed on regional stock exchanges [p.5].p.5
• A healthy pipeline of 253 post-series A MENA ventures requires an estimated total of $16 billion in funding [p.9].p.9
• Companies backed by STV have raised $2,704 million in equity and debt since STV's initial ticket [p.10].p.10
• The government aims to catalyze private capital into funds sized between $0.5 and $1 billion per fund to back 20 to 30 Series B+ companies [p.12].p.12

Key insights

1. Venture capital deployed and unicorn creation in KSA remain significantly below benchmark levels relative to GDP [p.2].p.2
2. A lack of growth-stage funding acts as a key constraint on the expansion of the Saudi tech ecosystem [p.2].p.2
3. Half of the 14 unicorns in the MENA region emerged within the last 2 years [p.5].p.5
4. VC deployment in KSA can grow by 5x to 10x before reaching its full structural potential relative to GDP [p.6].p.6
5. Growth-stage VC rounds in KSA occur at a frequency of approximately 10 rounds per year [p.8].p.8
6. The graduation rate between post-Series A funding rounds in MENA is estimated at approximately 50% [p.9].p.9
7. Government first-loss capital structures are proposed to mitigate downside risk and unlock private investment into growth-stage funds [p.12].p.12