RIYADH: Saudi Arabia’s focus on encouraging entrepreneurship has paid off as startups in the Kingdom raised $446 million in the first half of 2023, the highest in the Middle East and North Africa region. According to MAGNiTT’s “H1 2023 Saudi Arabia Venture Capital Report”, Saudi startups accounted for 42 percent of the total capital deployed in the MENA region. According to the Dubai-based data analytics platform, the Kingdom ranked second in deal counts, facilitating 54 transactions against the UAE’s 60. E-commerce was the most funded sector in the Kingdom thanks to online flower marketplace Floward and grocery shopping platform Nana raising $156 million and $133 million in their series C rounds, respectively. Both deals accounted for 65 percent of the country’s total funding. Moreover, Nana, Floward and Saudi e-commerce Sary also featured among the top five funding rounds in the MENA region. E-commerce also emerged as the topmost sector for funding, closing 11 deals for $368 million. The report further indicated that “pre-seed” to “pre-series A” deals captured the lion’s share with 86 percent of the Kingdom’s total amassed funds. The e-commerce sector witnessed a 245 percent growth year on year in terms of capital deployed while other industries struggled. Financial technologies, the sector of choice in Saudi Arabia in the first half of last year, experienced a massive decline of 90 percent in funding this year to $10 million. “Capital deployed in deals of less than $100 million posted a 65 percent year on year retreat in H1 2023 and stood at $157 million, the lowest since H2 2020,” the report stated. Moreover, the total funding deployed in the Kingdom decreased by 27 percent this year compared to the same period last year. Investors backing Saudi-based startups also declined year on year, with only 54 investors participating in deals in the first half of 2023, a drop of 41 percent. The study further said that the total funding in the MENA region stood at $1.9 billion, a drop of 64 percent compared to the first half of 2022. The deal count in the region fell 40 percent to 530 during the corresponding period. “Amid a liquidity crunch and a slowdown in economic growth globally, the pace at which venture capitalists deployed funding across the globe continued to decline,” the report stated.