The Venture Capital Industry: What It Is, How It Works, and an Outlook on the Region (Riyadh Valley Company)

Summary

• Venture capital funds maintained over 30% of total private investment deals over the past five years, with global venture funding growing nearly 3x in 5 years to $620.8 billion in 2021, representing an 111% YoY growth.p.2
• Fintech captured approximately $132 billion of global venture funding in 2021, which accounts for nearly 20% of the total market.p.2
• Early-stage venture deals dominated global transaction volume, representing 62% of all completed deals in 2021.p.4
• The UAE led MENA venture capital funding in 2021 with $1,165 million, followed by Saudi Arabia with $548 million and Egypt with $502 million.p.6
• Venture funding in Saudi Arabia reached a record high of $548 million across 139 deals in 2021, growing nearly 3x compared to 2020.p.6
• In Saudi Arabia, e-commerce received $170 million in 2021 (31% of total funding, up 492% YoY), while fintech recorded the highest deal count with 27 deals.p.7

Key insights

1. Venture capital quarterly internal rate of return (IRR) reached its highest level in Q1-2021 at 18.9%.p.3
2. Asia and the United States together capture approximately 70% of global venture capital deal volume.p.3
3. The average global venture capital deal size increased to $25 million in 2021.p.4
4. Early-stage startups accounted for 85% of total completed venture deal activity in Saudi Arabia in 2021.p.6
5. Aramco launched Prosperity7 in February 2022, a $1 billion venture capital fund.p.8
6. The UK-managed Oryx Fund, launched in 2020 by Hambro Perks and backed by Riyadh Valley Company, was the first foreign VC fund to focus primarily on Saudi Arabia and the MENA region.p.9