Riyadh-based venture capital firm STV has launched a new $100 million AI fund, backed by Google, to support AI-native startups across the Middle East and North Africa. Announced on Tuesday, the fund marks Google’s first investment in a VC firm in the region. It comes on the heels of STV’s launch of a separate $100 million non-dilutive capital vehicle, the STV Nice Fund I, created in partnership with Saudi investment firm SAB Investment.
Notably, this is the first dedicated fund in the region focused exclusively on AI startups by a leading VC firm. The new AI fund aims to help close the significant funding gap for AI innovation in MENA.
STV has mainly been a growth-stage investor, with a few seed-stage investments. However, with the launch of this $100 million AI fund, it seems they’re likely to focus on earlier-stage deals. The firm has not yet provided details on the specific investment stages or the size of the checks they’ll be writing.
The Saudi firm, which operates the largest VC fund in MENA with over $900 million in assets under management, highlighted that only 1.5% of the region’s venture capital funding went to AI startups in 2024, compared to 38% in the U.S. and 13% in India. This disparity represents a major untapped opportunity, with immediate AI-driven cost savings in the GCC estimated at over $23 billion.
Ahmad AlNaimi, General Partner at STV, said, “We believe that most of the AI value will accrue at the application layer. As such, our AI Fund will focus on investing in ventures that specialize in application-layer AI, localized AI models, and the necessary supporting infrastructure. By combining our regional expertise with Google’s global AI leadership, we will be able to scale regional startups that can compete on a global level.”
The fund will primarily target startups developing AI applications, localized AI models, and supporting infrastructure. This strategic focus aligns with the firm’s vision to establish the region as a future hub for global technology companies.
Najeeb Jarrar, Regional Marketing Director for Google in the Middle East & Africa, commented on the partnership, saying, “At Google, we have always been committed to providing access to the AI opportunity for everyone. This includes work like the MENA AI Opportunity Initiative, announced last year, alongside valuable programs such as our flagship Google for Startups programs. Our commitment to the STV AI Fund allows us to continue supporting entrepreneurs, who are building the future of AI in the region.”
STV’s notable investments include Tabby, Salla, Floward, Foodics, and Calo.
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