Key stakeholders from Saudi Arabia share their insights on the local startup ecosystem
MAGNiTT's recently launched 2019 Saudi Arabia Venture Capital Snapshot highlighted the growth of Saudi Arabia's startup ecosystem, with 2019 marking a record number of startup investments and total funding. Following the launch of the report, we wanted our audience to hear from some of the most reputed ecosystem stakeholders about their insights on Saudi Arabia and their predictions for the future.
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One of the key trends in recent years is government support, which takes place across the region to spur innovation and entrepreneurship. However, Saudi Arabia is one of the frontrunners in this area, with many initiatives such as Funds of Funds, matching programs, accelerators, licensing schemes, and more. We spoke to Mohammed Almalki, VP of Funding at Monsha'at, Omar Almajdouie, Vice Chairman at the SAVCPEA, Adel Al-Ateeq, the CEO of the newly launched $1.07B Jada Fund of Funds, and Nora Alsarhan, Investment Director at SVC. Below are their takes on the key developments in 2019 and predictions for 2020.
VP of Funding, Monsha’at
We are proud of the remarkable increase in value and volume of early-stage investments in Saudi Arabia via the Saudi Venture Capital Company (SVC) and its partners. SVC, which was initiated by Monsha’at to address the needs of entrepreneurs and SMEs by increasing access to financing across all stages, makes it easier to conduct business and ensure long term success by deploying a total of ~SAR 2.8B across different investment vehicles. In 2020, we are eager to establish a bank for SMEs, with the aim of providing financial resources and solutions, including lending, capital funding, and advisory services in line with the best practices. We anticipate a more effective entrepreneurial environment through business incubators, accelerators and innovation centers which will result in higher quality startups and will lead to better deal flow and consequently a more dynamic venture capital environment with greater activities carried out by VCs.
Vice Chairman, SAVCPEA
The Saudi Arabian Venture Capital and Private Equity Association (SAVCPEA) plans to unite professionals, drive industry awareness, facilitate partnerships in the sector, and encourage closer collaboration between innovative businesses, VC firms, and PE companies. Our objective is to accelerate VC & PE investments in Saudi Arabia in 2020 and beyond with the aim of establishing a robust and globally competitive ecosystem for greater collaboration, innovation and growth.
Managing Director, Jada
Jada was established to tackle one of the main issues that Saudi SMEs face: access to the right active institutional capital. Jada seeks to partner with PE and VC funds that are focused on the Saudi market and are committed to international best practices in governance and fund management. Saudi VC has been one of the fastest risers in the region – we hope to accelerate this even further in order to place Saudi Arabia in its natural first place.
Investment Director, SVC
The fact that SVC have access to funds enables us to push forward quality investments in the market, because of the stringent criteria that we apply in deciding which investment to match. Furthermore, SVC is well-placed to be the spearhead of quality investment by covering the capital gap in the market and by providing a strategy to mitigate failures through diversification of the risk for investors.
Of course, there are many initiatives in the private sector too. 500 Startups, the most active investor by number of deals in both MENA and Saudi Arabia, set up an accelerator program with Misk Innovation. Moreover, Misk Innovation partnered with Vision Ventures and Seedstars to launch another accelerator, aimed at growth-stage startups. We spoke to some high-profile investors, including Abdullah Altamami, Managing Director at iNet, Ahmed AlJabreen, Venture Partner at 500 Startups, and Kais Al Essa, Founding Partner & CEO at Vision Ventures, to hear their views on Saudi Arabia's quickly developing ecosystem.
Managing Director, iNet Fund
In 2020, there will be considerably more money available for entrepreneurs, and we will start to see a clear shift in power from investors to entrepreneurs. Investors will need to differentiate themselves, and work on adding tangible value to their portfolio companies beyond their capital to attract the best deals. This is a healthy trend that will grow the ecosystem and push it forward.
Venture Partner, 500 Startups
As Saudi moves forward to achieve the Vision 2030, we will see a few trends. First, more investors will continue entering the market, utilizing government support. Second, we will see corporates evaluating their innovation strategy, which has been sorely missing in the ecosystem from a startup engagement perspective. Third, experienced employees will leave their jobs to start companies within their field of expertise, disrupting some industries such as FinTech.
Kais Al Essa
Founding Partner & CEO, Vision Ventures
The Saudi ecosystem has been evolving with big steps with initiatives by Misk Innovation, along with the great support from Monsha’at, SVC and PIF Fund of Funds: all big drivers towards a better ecosystem. On top of that, we see initiatives from the private sector, such as the new accelerators that added value to startups and bridge clear gaps, the on-going awareness to entrepreneurs and investors, and the collaboration between investors and decision makers.
Facilitators & Enablers
Lastly, we highlighted some views from key facilitators of the startup ecosystem in Saudi Arabia, including Endeavor Saudi's new Managing Director, Lateefa AlWaalan. Read her views, and our CEO's opinions, below.
Managing Director, Endeavor Saudi
As more entrepreneurs go through the experience of fundraising and managing relationships with investors, the more we see "lessons learned" circulate among entrepreneurs on how to navigate and manage this space. Endeavor focused on facilitating peer-to-peer level learning among Saudi and regional entrepreneurs, as well as global ones. As for trends, we are seeing more regional collaboration between MENA entrepreneurship ecosystems.
Founder & CEO, MAGNiTT
On the back of strong government support, Saudi Arabia has experienced growth in many aspects of its startup ecosystem. 2019 was a record year by both number of deals and total funding, with 2020 expected to grow even more on the back of public and private interest in the sector, including matching programs, the new Fund of Funds, accelerators, licenses, and more.
We would like to thank all the contributors for their views and opinions.
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