A Bubble In The Making: Too Much Capital, Too Few Deals.

A Bubble In The Making: Too Much Capital, Too Few Deals. Why Looking Global Is The Only Way To Survive It As A Local VC

It feels like everyone in Saudi today wants to be a founder or a VC. Capital is everywhere, funds are sprouting up, and sovereign wealth is fueling the boom. But let’s be honest: too much money is now chasing too few good deals. That’s the definition of a bubble in the making.

Saudi’s venture story started quietly in the late 2000s, but the real acceleration came around 2018 when SVC and JADA began backing local funds. Suddenly, the floodgates opened. Family offices turned into VCs. Banks and corporations launched their own CVCs. The number of firms jumped from a handful to over a hundred in just a few years.

Here’s the catch: venture capital is not easy money. Fund I is brutal. Fund II is even harder if you haven’t had any exits. Only by Fund III, with one or two real home runs, do you start earning the trust to raise consistently. Many of today’s new funds won’t make it past the second cycle. That’s normal. Every emerging market goes through a mini-bubble before it matures.

But the capital is still here. LPs want exposure to VC — usually 5–10% of their portfolio — and they need somewhere to put it. If local markets can’t absorb it with differentiated outcomes, that capital will start flowing into global funds, or force local VCs to invest globally themselves.

And that’s the real survival play. If every Saudi VC invests in the same founders, in the same industries, at the same time, the returns will all look the same. That’s not venture — it’s indexing. The only way to generate differentiated returns is to take calculated risks outside the local bubble. Deploy globally. Tap into deeptech. Back AI. Chase opportunities that don’t look like the rest of the herd.

We’re already seeing early moves in this direction. Wyld VC has global ambitions baked into its DNA. Presight and Shorooq just launched a $100M global AI fund with Saudi backing. Sukna Ventures is experimenting too. And Edure Capital started deploying globally years ago, now boasting some serious names in its portfolio.

Meanwhile, sovereign funds have reduced their share of fund commitments — from 50% to 30%, and likely lower going forward. That means private LPs will demand more discipline: higher DPI, real returns, and a clear global strategy.

So yes, a bubble is inflating. But bubbles aren’t fatal — they’re the growing pains of an ecosystem finding its footing. The question is: who will break from the herd, look global, and emerge on the other side with a truly differentiated story to tell?