RIYADH: Artificial intelligence is reshaping venture capital worldwide — not just as a thematic investment opportunity but as a core enabler of operational transformation. 

Saudi Arabia exemplifies this evolution, as AI adoption in the Kingdom is not only accelerating but is also closely aligned with the Vision 2030 strategy for economic diversification.

“Saudi VCs are actually ahead of many regions in AI adoption for deal sourcing and due diligence,” said Charles Kickham, managing director of Cayenne Consulting, told Arab News.

“They’re using platforms like Affinity and Dealroom that incorporate AI for market intelligence and portfolio tracking,” he added.

This shift reflects a broader global trend. According to data from Gitnux, 42 percent of venture capital firms worldwide now use AI for deal sourcing, and 68 percent believe the technology will significantly improve decision-making accuracy. 

Kickham attributes Saudi Arabia’s competitive edge to the institutional scale and advanced digital infrastructure of its sovereign investment entities. 

“The sovereign wealth funds there have massive data advantages that smaller Western VCs don’t have,” he said, adding: “That kind of access gives them an edge in identifying patterns and tracking early-stage ventures with high scalability potential.”

Vision 2030 drives premium valuations

In the Kingdom, this is more than an operational upgrade — it is a policy-aligned transformation. “The cultural factor that’s unique is the emphasis on AI that aligns with Vision 2030’s diversification goals,” Kickham explained. 

The Cayenne Consulting managing director added that Saudi investors are specifically hunting for AI startups that can reduce oil dependency, and this targeted strategy is influencing local deal dynamics and startup valuations.

“I’ve seen this drive premium valuations for fintech and logistics AI companies by 20 to 30 percent compared to similar deals elsewhere,” he added.

A report from MAGNiTT in June emphasized the growth of AI in the Kingdom, with the platform added that the technology was the main driver of investment activity both in the private and public markets in the US and other mature markets in 2024.

It added that based on its proprietary data, MAGNiTT expects AI funding to double in 2025 due to increased investor attention to innovative startups.

Global VC firms turn to automation

Globally, AI’s integration into the venture process is advancing across regions and firm sizes. In India, for instance, venture capital firms are rapidly deploying AI-based systems to streamline investment workflows and sharpen competitive advantage. 

“AI has redefined the front end of our venture workflow, from deal sourcing to diligence, giving us unprecedented scale, speed, and precision,” said Rahul Agarwalla, managing partner of SenseAI, in an interview with Entrepreneur in June.

“At SenseAI, our proprietary engine surfaces technical founders months before they raise, using a live signal graph of research papers, product launches, and social media activity,” he added. 

Gitnux reports that 75 percent of top-tier VC firms now rely on proprietary deal-scanning tools and analytics platforms. 

Additionally, 50 percent of firms use natural language processing-based sentiment analysis during due diligence to assess market dynamics and founder behavior in real time.

AI-powered dashboards have also delivered measurable gains in portfolio management, with 70 percent of firms reporting improvements in operational efficiency.

The adoption of AI tools is not limited to large-scale firms. Even mid-sized and emerging market players are leveraging accessible platforms to enhance decision-making. 

“We’re seeing strong interest from mid-market firms in Asia and the Middle East that don’t have internal data science teams but want the same capabilities,” said Clyde Anderson, CEO of GrowthFactor.ai. 

“They’re looking for AI tools that are usable without deep technical knowledge,” Anderson told Arab News.

Both Kickham and others cautioned that while AI offers significant leverage, human insight remains critical, particularly when evaluating founder qualities and long-term potential.

“The main challenge is talent retention,” Kickham said of the Saudi market. “Saudi funds can identify great AI deals but struggle to provide the technical mentorship that Silicon Valley VCs offer.” 

To address this, Saudi investors are increasingly collaborating with international funds. “They’re compensating by co-investing with international funds more frequently than other regional markets,” he added. 

“It’s a pragmatic approach — leveraging external technical strength while continuing to build internal capability.”

Talal Al-Jabri, founder of the recently launched Wyld VC, has pinpointed the impact of talent in boosting AI.

During the launch of the company’s first AI-native fund in May, Al-Jabri said: “The region’s greatest gap is AI talent.”

Al-Jabri went on to say that the GCC is leading the charge in catalyzing an AI revolution — through massive infrastructure investments, advanced research and model deployment, and transparent, innovation-forward regulation.

Human judgment still key in venture

Agarwalla emphasized that AI cannot replace the human element central to venture capital decision-making. 

“Models can’t assess founder resilience, ethical integrity, or long-term vision — only repeated human interaction can,” he said. 

“AI gives us leverage; human judgment gives us conviction.” In his view, the firms that find the right balance between automation and experience will shape the next generation of venture outcomes. 

“Venture capital is paid to underwrite non-linear futures and that’s a deeply human endeavor rooted in taste, contrarian insight, imagination, and pattern-breaks that AI cannot model or predict,” Agarwalla added.

While challenges remain, including talent shortages, infrastructure constraints, and limitations in local language models, the trajectory for AI in venture capital is clear.

“The expectation now is real-time, data-backed decisions,” Anderson noted. “AI isn’t replacing investors — it’s becoming table stakes for modern investment processes.”

In markets like Saudi Arabia, where policy, capital, and technology are converging, the impact is particularly profound. 

“They’re not just following global trends— they’re aligning capital and technology to national policy, which sets them apart,” Kickham said. 

As AI becomes embedded in the global VC toolkit, such alignment may offer a lasting strategic advantage in a highly competitive, data-driven future.