Flat6Labs & Saudi Venture Capital Launch New $40M Early-Stage Fund
With VC investments reaching a record high in 2021, there has never been a better time for an early-stage fund.
As KSA continues its ascendency as one of the most prolific, active and investment-ready markets in the MENAP region, Flat6Labs has teamed up with Saudi Venture Capital (SVC) to launch a new $40 million fund that will target seed stage startups in the Kingdom.
The ‘Startups Seed Fund’ will target around 20 enterprises, with investment management company, BLOMINVEST set to manage the fund’s distribution and marketing. Beyond the capital, the fund has also laid out several objectives through a diversified systematic investment plan that ultimately aims to reduce the traditional risks faced by VCs on one side of the equation and on the other, to reduce administrative and legal costs faced by early-stage startups. In addition, Flat6Labs and SVC are looking to achieve much more intangible goals, including fostering a space for Saudi youth to develop their tech-enabled startups, with a view expanding their scope to the region.
Investments will range between $200K and $400K, though follow-up funding is certainly on the cards, particularly for startups that have the potential to scale outside of KSA quickly. The Flat6Labs Riyadh Seed Program is also a possible destination for startups, though it's not clear how many or under what criteria the fund’s investment targets will be chosen for a four-month programme that has been held twice annually over the last three years. With the next cycle set to launch at the beginning of the third quarter, the programme looks to support entrepreneurs in developing their business skills, providing them with a fitting environment to build their products, test market fit, improve their business models and even pitch to external investors.
Much like the rest of the region, VC investments experienced a remarkable boost in KSA in 2021, growing by 770% for a record high of $548 million, over double the VC investments in 2018. SVC has played a critical role, with 54% of all VC investments in KSA coming from local investors. The government-owned VC has invested a total of $320 million in Saudi startups alone. Across 147 deals, the firm has financed 83 Saudi startups in a number of sectors, including e-commerce, fintech, edtech and transportation. 2021 was generally a quite fruitful year for VC investments in MENA, with the UAE sitting atop of the pile with an incredible $2.6 billion raised.
In keeping with Saudi’s Vision 2030, the fund will look to back startups that can have wider impact, and is aiming to create 6,000 private sector jobs through its investments, while playing its part in the country’s structural transformation, as the Kingdom looks to increase the digital economy’s share of GDP.