Digital Capital Raising - Saudi Arabia

The projected total transaction value in the Digital Capital Raising market market in Saudi Arabia is expected to reach US$114.30m by 2024.
MarketCrowdinvesting is set to dominate the market with a projected total transaction value of US$65.68m in 2024.
When comparing globally, it is evident that the United States leads with the highest cumulated transaction value of US$36bn in 2024.
Saudi Arabia is experiencing a surge in digital capital raising, with companies leveraging technology to attract investors in the capital market.

Definition:

The Digital Caiptal Raising segment relates to digital financial services for business customers, and private borrowers. Included are Crowdinvesting models, which focus particularly on start-ups exchanging investment for company shares (equity-based), and Crowdfunding solutions, which are used for non-monetary compensation, for example product launches, music, art & film financing (reward-based). The market also includes bank-independent loan allocation for SMEs (Crowdlending) and for personal loans (Marketplace Lending or so-called Peer-to-Peer lending) through private or institutional investors via online platforms. In view of processing complexity, this market is focused on small and medium-sized enterprises (SMEs), freelancers and private persons. Bank financing is not considered, neither are any financial aspects that reach beyond the scope of small and medium-sized enterprises or donation-based Crowdfunding models.

Structure:

Digital Capital Raising consists of Reward-Based Crowdfunding, Crowdinvesting, Crowdlending and Marketplace Lending.

Additional Information:

The market comprises of transaction values, campaigns, average funding per campaign.

Alternative financing for SMEs and freelancers
Equity-based Crowdfunding (or Crowdinvesting)
Reward-based Crowdfunding (or Crowdfunding)
Alternative lending for SMEs and freelancers (bank-independent loans)
Online marketplaces for personal loan applications and private investors
Peer-to-Peer loans with interest rates depending on internal credit scoring of the platform provider

Traditional bank loans
Traditional venture capital investments by institutional or private investors

The Digital Capital Raising market in Saudi Arabia is experiencing significant growth and development.

Customer preferences: Saudi Arabian customers are increasingly turning to digital capital raising platforms to fund their business ventures. This is driven by the convenience and accessibility offered by these platforms, as well as the ability to reach a larger pool of potential investors. Additionally, Saudi Arabian customers are becoming more comfortable with digital transactions and are seeking out platforms that offer secure and efficient processes for capital raising.

Trends in the market: One major trend in the Saudi Arabian Digital Capital Raising market is the rise of crowdfunding platforms. These platforms allow entrepreneurs and businesses to raise capital from a large number of individuals, often through small contributions. This trend is driven by the desire for diversification of investment opportunities and the potential for high returns. Crowdfunding platforms also provide a platform for Saudi Arabian investors to support local businesses and contribute to the growth of the economy. Another trend in the market is the increasing use of digital tokens and blockchain technology for capital raising. This allows businesses to issue digital tokens that represent ownership or rights in the company, which can be bought and sold on digital platforms. This trend is driven by the desire for more efficient and secure transactions, as well as the potential for increased liquidity in the market. Saudi Arabian businesses are exploring the use of blockchain technology to streamline their capital raising processes and attract a wider pool of investors.

Local special circumstances: Saudi Arabia has a strong entrepreneurial culture and a growing start-up ecosystem. The government has implemented various initiatives to support entrepreneurship and innovation, including the establishment of technology hubs and funding programs. This has created a favorable environment for digital capital raising, as entrepreneurs and businesses are actively seeking funding to fuel their growth. Additionally, the large youth population in Saudi Arabia is driving the demand for digital capital raising platforms, as young entrepreneurs are looking for alternative sources of funding to traditional banks.

Underlying macroeconomic factors: The Saudi Arabian economy is undergoing a period of diversification and transformation, with a focus on reducing dependence on oil and promoting non-oil sectors. This has led to increased investment in sectors such as technology, healthcare, and renewable energy, which in turn has created opportunities for digital capital raising. The government's Vision 2030 plan, which aims to diversify the economy and attract foreign investment, has also contributed to the growth of the digital capital raising market. The government is actively supporting initiatives that promote innovation and entrepreneurship, and this has created a favorable environment for digital capital raising platforms to flourish. Additionally, the high smartphone penetration rate in Saudi Arabia and the increasing internet connectivity have made it easier for individuals to access digital capital raising platforms, further fueling the growth of the market.

Data coverage:

The data encompasses B2C enterprises. Figures are based on transaction values / revenues / assets under management and user data of relevant services and products offered within the FinTech market.

Modeling approach / Market size:

Market sizes are determined through a combined top-down and bottom-up approach, building on a specific rationale for each market segment. As a basis for evaluating markets, we use annual financial reports of key players, industry reports, third-party reports, publicly available databases, and survey results from primary research (e.g., the Statista Global Consumer Survey). In addition, we use relevant key market indicators and data from country-specific associations, such as GDP, consumer spending, population, internet penetration, smartphone penetration, credit card penetration, and online banking penetration. This data helps us estimate the market size for each country individually.

Forecasts:

In our forecasts, we apply diverse forecasting techniques. The selection of forecasting techniques is based on the behavior of the relevant market. For example, the S-curve function and exponential trend smoothing are well suited for forecasting digital products and services due to the non-linear growth of technology adoption.

Additional notes:

The market is updated twice a year in case market dynamics change. The impact of the COVID-19 pandemic and the Russia-Ukraine war is considered at a country-specific level.

This report presents a comprehensive analysis and additional information on the Financial market, in a PDF format.

Crowdfunding is the collective effort of a large number of individuals who network and pool small amounts of capital to finance a new or existing business venture. Each campaign is set for a goal amount of money and a fixed timeframe, each day is counted down and the money raised will be tallied up for visitors to follow its success. The size of the global crowdfunding market is growing and the largest markets are North America and Asia.