How the Saudi startup ecosystem was built
In this series, we ask global startup ecosystem builders for their perspectives on their geographies unique challenges and opportunities, and the best practices they’ve developed to help foster a vibrant innovation ecosystem. Five questions for the Saudi Arabia Ministry of Communications and Information Technology.
What makes the Saudi Arabian ecosystem unique?
Saudi Arabia is strategically located, making it a hub for businesses to access the vast Middle East and North Africa (MENA) market with nearly 450 million consumers. In Saudi Arabia itself, there are over 1,600 startups, supported by +140 programs and a network of venture capital firms. Additionally, The diversity of founders from various backgrounds fosters innovation.
Adding to that, Saudi Arabia has seen a significant increase in fundraising, ranking first in venture capital activities in the MENA region for the first half of 2023, capturing 42% of all investment in the region. This highlights Saudi Arabia’s growing importance in the MENA tech ecosystem.
The Saudi Arabian startup ecosystem has experienced rapid growth in recent years. What have been some of the ingredients for success?
The government represented by MCIT plays a crucial role in fostering the entrepreneurship ecosystem through various initiatives and programs, including but not limited to:
National Technology Development Program (NTDP): A national program that contributes to developing the technology ecosystem in the Kingdom and increasing its effectiveness by driving sustainable growth using different interventions and support mechanisms complementing efforts made by others stakeholders. The program also plays an essential role in enhancing all enablers that influence the technology market growth, aiming to make the Kingdom an attractive regional center for innovation and investment in the sector. Some of its offerings include Technology Development Financing, Next Era, Boost, Tech Crew, And Relocate.
Saudi Unicorns: A national program that supports and enables high-growth technology companies to reach the unicorn stage by providing an integrated set of services and offerings such as: Global Expansion, Talent Development, Recruitment ,Link with Investors and Private Sector, Provide Guidance and Mentorship and Access to governments.
Center of Digital Entrepreneurship (CODE): A tech center that seeks to capitalize on the growing pace of the Saudi digital economy, through expediting and leading the development of digital knowledge, empowering local talents and enabling digital entrepreneurship in all its startup phases through hosting networking events, incubators and accelerators and developing digital capabilities.
What metrics do you keep an eye on most when measuring the development of the ecosystem?
When evaluating the success of a tech and investment ecosystem, one of the most crucial metrics is the number of startups that secure funding. This metric holds significant importance because it reflects the ecosystem’s ability to attract investment, support entrepreneurial ventures, and fuel innovation. In Saudi Arabia, this metric is particularly relevant, given the active participation of prominent funds like Jada and SVC, which are dedicated to financially supporting startups and SMEs through venture capital and private equity investments.
Additionally, A thriving ecosystem is characterized by a robust pipeline of startups receiving financial backing at various stages, from pre-seed to pre-IPO. Notable venture capital firms and investors in KSA, such as STV, Impact46, Waed, and Raed Ventures, play a cruical role in contributing to the Kingdom’s vibrant startup landscape by funding and nurturing these innovative enterprises.
What are some of the startups that should be on people’s radar?
Within the vibrant startup scene in Saudi Arabia, several noteworthy companies have emerged as pioneers in innovation. Notably, these startups are part of the Saudi Unicorns Program. Here are some standout startups:
Lean Tech: Dedicated to simplifying fintech innovation, Lean Tech offers a Universal API that unlocks essential financial infrastructure across the MENA region. This API facilitates the development of the next generation of pioneering financial solutions.
Mrsool: The app stands out for its disruptive approach to on-demand home delivery. This innovative platform has gained rapid popularity in the Saudi market, offering users access to a network of couriers for reliable and timely product deliveries.
Quant: With a comprehensive range of services, Quant excels in areas such as Data Analytics, Business Intelligence, Artificial Intelligence, Machine Learning, Data Quality Management, Analytics Training, Predictive Analytics, and AI & BI SaaS products.
Mozn: The company proudly holds the regional leadership position in designing and implementing customized AI solutions. It also plays a significant role in advancing Arabic Natural Language Processing (NLP) data products on a global scale.
These startups exemplify the vibrant culture of innovation and entrepreneurship flourishing in Saudi Arabia, actively shaping the nation’s dynamic and future-oriented business environment
What has been some of the biggest challenges for the growing ecosystem?
A critical hurdle on the global stage for startups lies in dealing with regulatory frameworks that must evolve to embrace innovation. To foster a nurturing ecosystem in the aim of supporting innovation, numerous government entities in KSA are introducing a range of initiatives. A standout noteworthy initiative is the establishment of regulatory sandboxes and fintech hubs that allow startups and tech companies to test innovative products and services in a controlled environment. These sandboxes provide a platform for companies to demonstrate compliance with regulatory requirements while fostering innovation.