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Saudi Arabia will emerge as a regional fintech powerhouse over the next five to ten years, said Outward VC Co-Head and General Partner Devon Kohli in an interview with Al Arabiya (watch: runtime: 3:55), citing regulatory reforms, smart government incentives, and solid tech infrastructure. “The whole sector has moved at a very fast pace in the last few years. Saudi Arabia is now at the cutting edge of that. You’re seeing investments, regulatory change … and an incentivization system from the government,” he said.
Building a new system > legacy system: “You’re not adding into legacy platforms, you’re building brand new platforms. So it is much easier to disrupt and change when you’re building from scratch than when you’re having to integrate and uphill existing systems,” he said.
IN CONTEXT- London-based Outward is one of 30 high-profile UK venture capital firms and fintech outfits that are here to to drum up investment and business opportunities.Executives from Wise and Anthemis are also in Riyadh on a three-day visit to meet up with representatives Saudi Arabian Monetary Authority and Public Investment Fund int he hope of luring capital to British startups. The visit, organized by the Saudi-British Joint Business Council, wraps up tomorrow.
A two-way street: “What we’re aiming to achieve out of the trip are combined synergies in our profile companies moving into there or some of their companies looking to move to the UK and an exchange of capital as well…,” Kohli said.
Saudi investment could be a lifeline for some British fintech startups. Investment in the UK sector plunged 65% y-o-y in 2023 to USD 5.1 bn, according to a report by Innovate Finance. The drop, which is also seen on a global scale, comes on the back of spiking interest rates, higher inflation, and lower valuations in the markets.
It’s a totally different story in Saudi, where investment is still flowing. BNPL startup Tamara clenched in December a USD 1 bn valuation in its latest equity funding round, becoming the Kingdom’s first homegrown fintech unicorn. Riyadh-based fintech unicorn Tabby also landed unicorn status recently after its series D round valued it at over USD 1.5 bn. Foodics, which plays up its fintech credentials, is hoping to hit a USD 1 bn valuation this year.
The local fintech sector had a good run last year, growing by 40% y-o-y to 207 companies by the end of November, SAMA chief Ayman Al-Sayari said last month.
More to come? SAMA and the Capital Market Authority (CMA) launched in December a new fintech program dubbed Makken they hope will accelerate the growth in the industry across the Kingdom. The program aims to speed the growth of some 150 emerging fintech companies over the next three years. Few details of the program have been made public.
