In a significant milestone for Saudi Arabia’s entrepreneurial landscape, the number of small and medium enterprises (SMEs) has reached an impressive 1.3 million by Q1 2025, according to recent data released by Monsha’at, the Small and Medium Enterprises General Authority. This figure marks a year-on-year increase of over 10%, reflecting the success of Saudi Arabia’s Vision 2030 initiatives and ongoing efforts to diversify the economy beyond oil.
Riyadh Leads the Entrepreneurial Wave
Riyadh continues to serve as the epicenter of SME activity, accounting for 33.6% of the Kingdom’s total enterprises. Makkah follows with 21.5%, and the Eastern Province (Al-Sharqiyah) contributes 13.1%. These regions have become thriving hubs for startups and investors, supported by state-of-the-art infrastructure, government funding, and regulatory reforms that encourage innovation and private sector growth.
Empowering Women and Micro Businesses
One of the most remarkable trends in 2025 is the continued rise of women-owned enterprises, which now make up over 45% of SMEs — doubling from their 2017 levels. Moreover, micro and small enterprises dominate the market, representing approximately 81% of all SMEs. These businesses benefit from a broad range of initiatives, including financial grants, mentorship programs, and digital readiness training, underscoring the inclusive and forward-thinking approach of Saudi policymakers.
The Role of Digital Transformation
Under the Digital Transformation Program, SMEs now represent 99.5% of all private sector companies in the Kingdom. The government continues to leverage cutting-edge technology and global best practices to enhance regulatory frameworks and improve access to finance. These efforts are key to increasing SMEs’ contribution to the national GDP and fostering a sustainable business ecosystem.
A Magnet for Venture Capital in MENA
Saudi Arabia has secured its place as the second-largest venture capital (VC) market in the MENA region, right behind the UAE. According to MAGNiTT, startups and SMEs in the Kingdom attracted a record-breaking $1.38 billion in venture capital funding in 2024, a figure expected to grow further in 2025. The sectors drawing the most attention include fintech, e-commerce, food and beverage, and construction.
Notably, the Kafala Program, run by Monsha’at in partnership with local banks, continues to facilitate SME growth by offering loan guarantees — enabling smaller businesses to secure much-needed financing. As of 2025, the program has supported over $20 billion in financing since its inception, playing a vital role in economic development.
A Regional Perspective: UAE and Egypt Join the Movement
Beyond Saudi Arabia, the SME ecosystem across the Gulf is flourishing. The UAE and Egypt have collectively raised over $500 million in VC funding in Q1 of 2025, driven by a surge in foreign investments and supportive government policies. The UAE, in particular, has seen a 65% growth in startup funding, with 61% of investments coming from international backers.
Conclusion
Saudi Arabia’s commitment to empowering SMEs through comprehensive reforms, digital transformation, and inclusive growth strategies is yielding tangible results in 2025. As the Kingdom continues to attract global investors and nurture local talent, its SME sector is not just thriving — it’s setting a benchmark for the region. Vision 2030 is well on track to position Saudi Arabia as a global hub for entrepreneurship and innovation.
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