Saudi Arabia’s growing fintech sector experienced a surge in venture capital investments, with 16 deals made in the first eight months of 2021, for a total of USD 157.2 million across the sector. 2020 saw seven investments worth a total of USD 7.8 million according the Saudi Fintech Annual Report 2021.
The report also states that backing has been spread across a wide range of early-stage projects, with 46 percent at series A and B stages, 38 percent at the seed stage, and 15 percent at pre-seed levels. This represents early interest in new fintech companies by outside investors.
The report claims that over the first eight months of 2021, USD 12.9 million worth of deals were signed at seed and pre-seed stages. This represents a 108% increase over the same period in 2020.
Payment solutions popular
The payments sector has attracted over 90% of the venture capital investments. Examples of this include an investment of USD 6.5 million in Hala as it moved to become a digital bank and a USD 110 million investment in buy-now-pay-later business Tamara. Restaurant point-of-sale provider Foodics attracted $20 million of series B funding.
Smaller deals
According to the report, deals in Saudi Arabia averaged out at USD 2.7 million, which is lower than the global average of USD 7.3 million. With the launch of banking regulations which allow companies to share customer information once permission is given, it is expected that the fintech industry will experience additional growth.
Open banking
KSA’s central bank, SAMA, approved open banking in order to bolster the fintech sector and the decision was taken as part of the Saudi Vision 2030 and the Financial Sector Development Program, launched in 2017.
According to a recent ITP.net editorial by Mo Ali Yusuf, Regional Manager MENAP, Checkout.com, regional fintech growth is being fueled by innovation, progressive regulation and customer demand.
