Google backs Saudi VC firm’s new AI fund for MENA startups

Google has announced support for STV’s new AI Fund, which focuses on backing early-stage AI startups in the Middle East and North Africa (MENA).

The fund targets localized AI applications and infrastructure to boost the regional AI ecosystem.

AI adoption is growing worldwide, but MENA still lags in AI investment.

In 2024, only 1.5% of venture capital in MENA went to AI, compared to 38% in the US and 13% in India, highlighting a big funding gap.

Ahmad AlNaimi, STV general partner, said the fund will prioritize application-layer AI and localized models.

He sees the partnership with Google as a way to help regional startups expand globally.

The collaboration between STV and Google aims to speed up AI innovation and position the MENA region as a competitive hub for AI-driven tech companies.

🔗 Source: STV

🧠 Food for thought

1️⃣ Closing the massive AI investment gap in MENA

The 1.5% AI funding allocation in MENA reveals a critical investment disparity when compared to the US (38%) and India (13%), despite the region’s significant economic potential 1.

This gap is particularly notable considering PwC projections that AI could contribute up to $320 billion to the Middle East economy by 2030, with Saudi Arabia potentially gaining $135.2 billion (12.4% of GDP) and the UAE seeing 14% of its GDP impacted 2.

Dubai has already demonstrated strong AI attraction capability, securing over $21 billion in foreign investment for AI and robotics from 2015-2018, ranking first globally in attracting FDI for these technologies 3.

The Google-STV partnership addresses a strategic opportunity, as generative AI adoption in the region is expected to jump from 5% to 56% within a year, indicating rapidly growing demand for AI solutions 4.

The immediate AI-driven cost savings in the GCC are estimated at $23 billion, with the GCC AI market projected to reach $24 billion by 2030. This suggests the timing is right for targeted investment in regional AI startups 5.