SME

BANK CREDIT TO SAUDI SMES AT NEAR RECORD

The bank and financial services sector’s credit facilities towards small and medium enterprises (SMEs) in the first quarter of the year exceeded SAR 188 billion, according to the latest available data from the Saudi Central Bank (SAMA).

Funds extended by banks to micro, small and medium enterprises (MSMEs) in the first quarter reached SAR 175.46 billion, or 7.9% of banks’ total credit facilities during the quarter, SAMA data shows. This is near the 8% reached in 2020 – the highest proportion of credit facility provided by banks to SMEs.

Medium-sized companies accounted for 72% of bank financings, or SAR 127.5 billion, while small businesses made up SAR 39.6 billion, or 22.5%, and micro companies received SAR 8.4 billion, or 5.5% of all financings.

Meanwhile, credit facilities by financial services companies to SMEs stood just over SAR 13 billion in the first quarter, or 22% of their total loan book – its highest level in at least three years.

SURGE IN START-UPS

The kingdom’s start-ups are also garnering attention with record financings in the first half of the year.

Saudi saw a robust 65% growth in SME capital invested in the first half of the year, accounting for 14% of all funds raised in the MENA region during the period, according to Magnitt, which tracks regional financings and activity in the SME space.

This growth resulted in a half-yearly record amount of capital invested in Saudi, which surpassed the full-year capital raised in pre-pandemic 2019 at USD 62 million and is valued at 94% of capital raised in the entire 2020, Magnitt noted.

Despite a drop in the number of deals between H1 2020 and H1 2021, the Saudi VC ecosystem showed exemplary performance on several fronts, perhaps foreshadowing its rise to becoming the top VC ecosystem in the region, Magnitt said.

“From a broader perspective, the deal flow in KSA did witness a dip in H1 2021, however, if we focus on the data and benchmarks at hand, we still observe a very healthy qualitative and quantitative growth in KSA-based VC deals,” Magnitt noted.

“The 54 deals closed in H1 2021 was the second-highest number of deals closed by Saudi start-ups in half a year, that’s after H1 2020’s record of 58 transactions. Even more remarkably, Saudi Arabia was able to close the deal gap with the UAE from 44 transactions in 2020 to just an 11-deal difference in H1 2021.”

The surge in investment means Saudi Arabia secured the second-largest share of funding across MENA in the first half of the year.

“The Saudi Arabia VC ecosystem observed a healthy deal flow, where early-stage funding accounted for 82% of the 54 transactions closed in H1 2021, while later-stage deals rose by 7 percentage points year on year. Yet most importantly, it could be attributed to Saudi Arabia’s steady growth track, where CAGR of VC funding has been 56% between 2016 and 2020,” Magnitt noted.

STRONG INVESTOR BACKING

The momentum continues in the second half.

Sabbar, a Saudi-based tech start-up focusing on securing blue-collar flexible staffing in MENA, said in July it had raised USD 4 million for its pre-series A round led by STV, with additional investment from past backers Derayah VC and SEEDRA Ventures.

“As the pandemic made businesses more aware of its operational cost and adopt a flexible and cost-conscious culture, Sabbar has managed to have a big part in a healing economy post COVID-19 by launching a two-sided marketplace matching businesses with high quality flexible staff,” the company said. “The platform has been growing at a monthly rate of 40%, fulfilling shifts for over 150 customers such as IKEA, Toys ‘R’ Us, Domino’s Pizza, and Tamimi Markets, while ensuring high quality workers with an on-time arrival rate of 96.8%.”

Saudi agriculture technology start-up Red Farms also secured USD 16 million in its pre-Series A funding round from several investors from Saudi Arabia, UAE and the United States.

Meanwhile, Nejree, an online fashion and lifestyle start-up, said it had raised USD 15 million Series A round led by Impact46 fund.

“Each day at Nejree, embracing our vision, we strive to enhance and innovate by delivering the most convenient, reliable and unique experience, using big data, AI and innovative tech solutions”, Nejree founder and CEO Ibrahim Al Mogren said in a statement.

Finally, Speero, a Riyadh-based digital automotive series, said it had completed its USD 1.8 million Pre-Series A round, from Nuwa Capital, Eq2 Ventures and other domestic and international venture capital players such as JIMCO (Jameel Investment Management Company), Impact46, Access Bridge Ventures, and Mountain Partners.