Saudi Arabia’s Entrepreneurial Ecosystem Showing Big Changes

CAIRO: Saudi entrepreneurs have demonstrated excellence and courage in driving economic growth through innovation and entrepreneurship.

The Middle East has seen unprecedented growth in SME establishments along with a shift towards entrepreneurship, with Saudi Arabia setting an example for a flourishing startup ecosystem.

Entrepreneurship in the Kingdom and the region has changed significantly over the years, with founders demonstrating superior skills in financing, accelerating and scaling ventures.

In an exclusive interview with Arab News, Saudi Arabia’s Directorate General of Small and Medium Enterprises (also known as Monsha’at), Entrepreneurship Vice President Saud Al-Savan, said that Saudi Arabia’s entrepreneurial ecosystem has developed its own logic. said it came.

“Over the past six years, we have seen unprecedented growth in our own entrepreneurial ecosystem, both organizationally and institutionally. We see family spirit as the right career move,” he added.

The Saudi government is supporting private sector agencies targeting start-ups to further promote investment and engagement in the ecosystem.

Alsabhan added that Saudi entrepreneurs now have access to financing mechanisms, upskilling programs, accelerators and incubators.

A report by Monsha’at found that Saudi startups raised $980 million in the first three quarters of 2022, a 108% increase compared to 2021, and the rise in knowledge and programs It has been shown to have a significant impact on capital investment.

“For example, our Monsha’at Academy has already upskilled over 20,000 trainees to empower small businesses. , has helped more than 48,000 beneficiaries,” Alsabhan explained.

He added that startups supporting SMEs like Nawafth, an online consulting services app, have also been spotted in Saudi Arabia. Tomoh 2.0 to scale small businesses. Fikra is a platform for companies to develop better public services.

“Add to this the strong and ambitious funding mechanisms offered by other institutional actors, and there has never been a better time to do a small, enterprising business in Saudi Arabia. It’s not an exaggeration to say that we didn’t,” said Alsabhan.

Tarek Sakr, founder of 4Sale, Kuwait’s largest online marketplace, told Arab News EXCLUSIVELY that while Saudi Arabia has led the growth of entrepreneurship in the region, venture capital is set to decline in 2023. said he expects

“Countries like Saudi Arabia are spearheading the growth of entrepreneurship in the region. These countries are markets where entrepreneurial knowledge is put into practice, from ideation to successful completion. .”

He added: “Saudi Arabia has developed an impressive support scheme for entrepreneurs, systematically encourages new business projects, and has a government and sovereign wealth fund that seeks to ease the journey on all fronts. It stands out because of the fund.”

Sakr said entrepreneurs in 2022 will show resilience following global economic crises such as inflation and the war between Russia and Ukraine, resulting in startups focusing more on generating revenue rather than public relations. I explained that it has become

“In recent years, founders in the Middle East have experienced few hurdles when raising capital, following a seemingly clear path they have set to secure the funding investors want. , with an increasing focus on presenting startups in the right light, marketing became as important, if not more important, than building a business.

Venture capital is heavily driven by acquisitions and mergers, so Sakr explained that the region’s startup ecosystem is perceived as a very attractive investment opportunity, but “the tide has turned.”

“My projection is that funding in 2023 will not continue to grow at the rate we have seen in recent years. he explained.

He added that future investments in startups will be “smart money” with more conditions and due diligence.

Sakr went on to say that startups need access to traditional loans rather than relying on investors for funding to further revitalize the ecosystem and avoid decline.

“Today, for most early-stage technology startups, raising venture capital is much more feasible than taking a loan from a bank due to stringent due diligence requirements,” he added.

Alsabhan believes internationalizing the entrepreneurial ecosystem is one way to strengthen the startup space.

He explained that even though the Saudi people are highly educated and young, most products and innovations are made outside the kingdom.

“We are part of an intelligent and entrepreneurial trend by inviting more investors, entrepreneurs, innovators and creative individuals to invest their time, resources and ideas in Saudi Arabia at Monsha’at and across the government. We want to turn around,” added Alsabhan. .

In addition, global venture capitalists have their sights set on the startup space in the region, particularly in Saudi Arabia, but as the ecosystem begins to expand, it will be more difficult for entrepreneurs to raise money and start their businesses. We encourage you to be cautious.

Igor Ryabenkiy, CEO and Managing Partner of AltaIR Capital, an early-stage global venture capital firm, offered some tips for entrepreneurs to fend off a bubble burst.

Ryabenkiy advises ambitious startups to look beyond the local market and go global from the start.

“When a startup founder decides to build a global company, it is important to communicate that idea to users, investors and the market and develop a strong go-to-market strategy. I also propose to hire an international expert with experience,” he told Arab News EXCLUSIVELY.

Ryabenkiy further explained that when it comes to fundraising, start-ups need to be selective in their investors, looking for industry knowledge and not just monetary value.