Saudi Arabia saw a significant jump in venture capital investments in the financial technology sector, hitting 16 deals in the first eight months of 2021 totaling $157.2 million. This compares with 2020, when seven venture capital deals were signed worth $7.8 million as pandemic restrictions curtailed activity. Pre-seed funding is the earliest stage of investment, often from founders, family, and close supporters. This is followed by more formal seed and series stages, where equity in the business is traded. This spread of investment demonstrates that backing is available to support fintech companies at key stages of their development. The payments sector remains the most attractive fintech area in the Kingdom, so far accounting for around 93% of total venture capital investments. Highlights include series A investments in mobile payments platform Hala $6.5 million and buy-now-pay-later business Tamara $110 million. While restaurant point-of-sale provider Foodics attracted $20 million of series B funding. Despite growing levels of fintech investment in the Kingdom, the median deal size in Saudi Arabia is $2.7 million compared to a global median deal size of $7.3 million.
Launch of Open Banking in Saudi Arabia in 2022, which allows firms to share consumer current account data once permission has been given, is also expected to speed up the pace of fintech development. The move by the Kingdom’s central bank, SAMA, to Open Banking is set to support the further development of the sector, in line with Saudi Vision 2030 and the Financial Sector Development Program, launched in 2017. The plan includes developing the digital economy and allowing financial intermediaries to support private sector growth by opening the financial services industry to new players. It also encourages the building of an advanced capital market in the Kingdom.