Saudi fintech is firing on all cylinders as the country sets out to compete on the global stage with the likes of Silicon Valley and Singapore. With digital transformation taking hold across Saudi Arabia’s financial system and beyond, fintech is currently one of the fastest growing industries in the Saudi economy.
Crucially, local companies are leading the way. In 2018 Saudi Arabia was home to just 10 local fintech companies with 70 employees. Today, there are over 200 fintech companies, which employ more than 5,000 Saudi nationals. The Kingdom also boasts two home-grown unicorns – innovative start-ups with a valuation exceeding $1 billion – in the form of Tamara and stc pay.
By 2030, the Saudi Central Bank (SAMA) hopes to raise the number of local fintech companies to 525, creating 18,000 jobs for Saudi nationals and contributing SAR 13.3 billion ($3.5 billion) to Saudi Arabia’s GDP.
These developments set the stage for the Kingdom’s 24 Fintech conference, a global fintech summit which was held in Riyadh between 3-5 September. Those attending the conference included fintech entrepreneurs and thought leaders working in finance, policy, technology, investment and academia around the world. Hosted by the Saudi Central Bank, the Capital Markets Authority (CMA) and the Financial Sector Development Program (FSDP), and co-organised by Fintech Saudi and Tahaluf, the conference set out not only to present Saudi fintech to the world, but to bring the world of fintech to Saudi.
Annabelle Mander, Senior Vice President at Tahaluf, explained the logic behind holding a global fintech conference in Riyadh: “Fintech and finance are two vital parts of the Kingdom of Saudi Arabia’s growth strategy…What we’re doing with Tahaluf is bringing in the international expertise that is necessary to cultivate this ecosystem and drive development. That means bringing in expertise from places such as the UK, USA, Hong Kong and Singapore.”
“Fintech and finance are two vital parts of the Kingdom of Saudi Arabia’s growth strategy…
When asked about how 24 Fintech would contribute to the transformation of the Saudi economy, Mander explained that the event was “designed to make sure that business gets done and that companies are able to make connections and investments.”
The conference certainly delivered on its promise. On the second day of 24 Fintech, 1957 Ventures – a new closed-end investment fund founded by Riyad Bank, Saudi Arabia’s third largest commercial bank – announced that it was launching a new VC mega-fund worth SAR 800 million ($213 million). The purpose of the mega-fund is to support Saudi start-ups and power a revolution in fintech.
Emad Kashgari, CEO of 1957 Ventures, told Inside Saudi about some of the challenges faced by fintech start-ups in Saudi Arabia, and explained what his fund is doing to improve their chances of success. “The main problem I think is access to talent, to quality talent. We need seasoned entrepreneurs to spearhead those ventures and launch them in the market and help them grow.”
Nonetheless, Kashgari also expressed his belief that, over the next decade, “Saudi will be the hub for financial technologies in the MENA region.” Indeed, when it comes to fintech, Kashgari said that the Kingdom already has the highest number of business transactions and the greatest market size of any country in the Middle East and North Africa. He stated that his fund’s ambition is to create fintech unicorns in order to boost GDP, stimulate innovation in the economy, and create quality jobs for Saudis.
These words were echoed by Mazen Pharaon, the Vice Chairman of 1957 Ventures, who explained that the new VC mega-fund will focus on investing in a portfolio of Saudi start-ups with the aim of “creating innovators and disruptors in the fintech space”. He and Kashgari identified a number of areas currently driving growth in Saudi fintech, including buy-now-pay-later finance, microlending, and micro-retail, all of which have recently experienced significant growth in valuations and foreign investment.
One Saudi start-up that has shown the possibilities open to the Kingdom’s entrepreneurs is Ejari, a company at the intersection of fintech and proptech which provides a rent now and pay later service for residential properties. The company won the 24 Fintech Award at the conference last week, beating 300 other Saudi start-ups to claim the prize.
Speaking to Inside Saudi, the Co-Founder and CEO of Ejari, Yazeed Al-Shamsi, explained that his firm launched last year after raising $1 million courtesy of the Oryx Fund, a regional VC fund owned by British venture capital firm Salica Investments. Now, his company has acquired over $30 million in demand for its service and operates in 16 cities across the Kingdom.
Al-Shamsi praised the substantial support provided by the Saudi government for local start-ups through its National Technology Development Program (NTDP). “We received a tremendous amount of government support across the board from day one”, he says, citing generous financial subsidies for office and salary costs.
He said: “I don’t think globally in the world there’s any kind of support anywhere that’s anything close to the amount of support that the government is providing (in Saudi). When we started we had no money, they gave us a $50,000 dollar grant. That $50,000 dollars just snowballed into the million dollars that we raised last year, and the $14 million that we’re going to announce very soon.”
Turning to the challenges faced by start-ups in the Kingdom, Al-Shamsi believes there is more scope for international investors to play a role in providing late-stage funding. “There’s a huge funding gap when it comes to late-stage start-ups, so you see a lot of VC funds focus on the pre-seed, seed and Series A stages, but once you go to Series B and beyond there’s a drop in the available capital because the amounts just get much bigger. The rounds to go 50, 100, 200 million dollars in size and not a lot of funds locally, or even regionally, have the capacity to fund those start-ups.”
In their quest to scale-up their companies, Saudi entrepreneurs welcomed the opportunity to connect with big global players and investors at 24 Fintech. Al-Shamsi said that the conference was “hands down the best event that we’ve attended in the past few years locally”. He added that the summit allowed him and his colleagues to meet “a lot of relevant people for what we’re trying to do, whether it’s banks, payments companies, potential investors, international investors, local regulators.”
Saudi Arabia has recently witnessed a surge in venture capital investment for fintech as the Kingdom consolidates its position as the leading location for VC investments in the Middle East and North Africa. According to a report by Magnitt, a leading provider of data analytics for venture capital in the Middle East, total funding for fintech in the Kingdom stood at $62 million in the first half of 2024. This represented a 360% increase in funding compared to the first half of 2023.
The same report found that fintech attracted the second largest amount of venture capital of any start-up industry in Saudi Arabia during the first half of 2024. The country’s e-commerce and digital retail industry came in first place and drew investments worth $215 million in H1 2024.