The deal, which will see Tabby buy the digital-wallet operator for an undisclosed sum, was viewed as fresh evidence that Saudi Arabia’s start-up market is maturing and may start to give venture capitalists more strategies for exiting their investments, investors said at the 24 Fintech Conference in Riyadh last week.

“Successful start-up ecosystems are flywheels and start-up exits are a key cog,” said Alexandre Lazarow, global venture capitalist and founder of Fluent Ventures. “They help return capital to investors and catalyse new generations of angel investors.”

“One of the things that’s exciting about the Saudi market today is the early but increasing amount of technology IPOs (initial public offerings) and M&A (mergers and acquisitions), including in fintech,” Lazarow said, stressing the importance of a viable path to exiting investments in Saudi Arabia, as it navigates the early stages of developing its venture capital (VC) market.

Saudi Arabia has emerged as one of the hottest markets among emerging VC countries in recent years. It trailed only Singapore in the first half of 2024 (1H2024), with more than US$400 million (RM1.73 billion) in funds raised, and ranked the highest in the Middle East and North Africa (Mena). The country overtook the United Arab Emirates (UAE) last year as the top destination for VC investments in the Middle East, for the very first time.

Saudi company Rasan Information Technology Co, which operates online insurance platforms such as Tameeni and Treza, was among the first local fintech firms to go public in the kingdom. It raised US$224 million in June and has seen its share price climb more than 43% since its trading debut.

The UAE has historically been the most advanced venture market in the region, with investments dating back to 2013 and 2014, according to VC data firm Magnitt. The country has accounted for around 45% of all M&A deals closed in Mena since 2019. 

But Saudi Arabia is starting to catch up on M&A in particular; 19% of transactions done last year in the region were in the kingdom, Magnitt said.

“The window for exit activity in Saudi Arabia is likely to come into fruition in the next two- to three years,” said Magnitt chief executive officer Philip Bahoshy. “It takes between seven- to eight years for a company in Mena to achieve an exit.”

Saudi start-ups have received a significant boost from investments by local funds, including STV and Sanabil, a unit of Saudi Arabia’s sovereign wealth fund, known as the Public Investment Fund (PIF). Plowing money into tech firms and start-ups aims to serve the goal of building a VC industry and encouraging young entrepreneurs to set up businesses that can aid in the kingdom’s efforts to diversify the economy.

Tabby — a fintech firm that now offers buy-now-pay-later solutions — agreed to shift its headquarters to Saudi Arabia, from the UAE last year. It plans to go public on the Saudi stock exchange in late 2025 or 2026, the company told local media outlet Argaam last week.

Tabby, which has raised funds from regional and global players like Wellington Management, Mubadala Investment Capital, PayPal Ventures and Hassana Investment Co, said Tweeq will continue operating independently once its acquisition of the company is complete.

Uploaded by Liza Shireen Koshy