Web3 Poised to Become Saudi Arabia’s Next Major Economic Driver

Web3 in the Middle East, Saudi Arabia, is positioning itself as a leading hub for digital innovation, according to the latest “State of Web3 in Saudi Arabia” report by Adverse. 

The report highlights the country’s burgeoning role as a global magnet for entrepreneurs, investors, and talent, spurred by a youthful, tech-savvy population and robust governmental support.

A thriving digital ecosystem

With 63% of its population under 30 and a high internet penetration rate, Saudi Arabia presents fertile ground for digital ventures. The government has been instrumental in cultivating a friendly regulatory environment for Web3 initiatives. This supportive backdrop and substantial financial investments have facilitated rapid growth across various sectors.

In the first quarter of 2024 alone, startups in the MENA region secured $429 million through 163 deals, with Saudi enterprises accounting for 51% of these funds. Notably, the gaming sector in Saudi Arabia is on a steep upward trajectory, with its current value of $1.8 billion projected to triple by 2027. 

Additionally, the fintech and e-commerce sectors are experiencing robust growth, with fintech valued at $746 million and e-commerce revenues hitting $10 billion in 2023. The real estate technology sector (prop-tech) is also expanding, now valued at $763 million and playing a crucial role in achieving the nation’s Vision 2030 economic objectives.

Web3: Saudi Arabia vs. UAE

While the UAE has pioneered the regional Web3 scene, establishing comprehensive digital asset regulations through entities like Dubai’s Virtual Assets Regulatory Authority (VARA) and Abu Dhabi’s Global Market (ADGM), Saudi Arabia is quickly catching up. Last year, ADGM’s Hub71 introduced a $2 billion initiative to bolster Web3 startups, affirming the UAE’s commitment to the industry.

However, Saudi Arabia is making significant strides to assert its presence in the Web3 domain. In collaboration with Saudi’s National Technology Development Program (NPDP), the UK-based Outlier Ventures has recently initiated a Web3 accelerator program. Stephan Apel, CEO of Outlier Ventures, praised the advanced skills and international expertise of the Saudi workforce and the rapid evolution of the country’s Web3 ecosystem.

Further enriching the digital landscape, Saudi Arabia’s $95 billion Public Investment Fund (PIF) reportedly engages with top venture capital firm Andreessen Horowitz (A16z) to further Web3 initiatives. Meanwhile, partnerships like that between Animoca Brands and Riyadh’s King Abdulaziz City for Science and Technology (KACST) are set to enhance the gaming ecosystem. Golden Gate Ventures is also expanding its operations to the Gulf, viewing Saudi Arabia as a promising new frontier for digital innovation.

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