Is Saudi Arabia Your Next Best Bet?
The Kingdom of Saudi Arabia is stepping into the spotlight as a technological hub at the back of “Vision 2030” and conferences like LEAP. IS KSA where you need to be in 2023?
The Middle East has long been recognized as a region with immense potential for technological innovation and entrepreneurship. While the United Arab Emirates has taken the lead in this domain, Saudi Arabia is emerging as a formidable contender for the title of the next technological hub of the region. Not just that, the Kingdom has been making the news in the football world too. Beating Argentina in the World Cup, nabbing Cristiano Ronaldo to play for Al Nasr, and recently the buzz of Messi visiting KSA and joining a Saudi club, has been drawing international attention. Tourism in the country last year peaked as it reported more than 93M domestic and international visits.
With a growing non-oil economy and a strategic vision for the future, Saudi Arabia is paving the way for a vibrant startup ecosystem. It crossed the $1Bn mark for the first time in 2022 while maintaining the same level of deals as the year before. The VC ecosystem of the Kingdom has grown at a CAGR of 74% between 2018 and 2022. Not to mention, last year the GDP exceeded $1Trn, achieving its highest growth rate in over a decade.
At the heart of Saudi Arabia's transformation lies Vision 2030, a comprehensive blueprint to diversify the economy and reduce its dependence on oil. As a result of focused efforts, the non-oil sector has witnessed a remarkable 3.9% growth in the first quarter of 2023. This unprecedented expansion is paying heed to the Kingdom's aspirations to become a technological powerhouse. In line with that, the Saudi Arabian government has been introducing a range of initiatives to foster entrepreneurship and innovation. Funding programs, regulatory reforms, and infrastructure development have created an enabling environment for startups to thrive. Of the three MEGA deals ($100M+) closed this year, two came from KSA-based startups, Floward and Nana. The efforts made by the Kingdom are attracting both local and international investors. The VC space has been largely dominated by regional investors but the number of international investors entering the region has been increasing steadily on a year-on-year basis.
Saudia Arabia’s efforts to nurture entrepreneurship spirit have also led startups to relocate their headquarters to Saudi Arabia. TruKKer, a logistics technology company moved its operations from Dubai to Riyadh to take advantage of the favorable business environment. Additionally, KSA-based startups are expanding across the region, leveraging their innovative solutions to capture new markets. RetailO, a Saudi Arabian e-commerce platform, has successfully scaled its operations to neighboring countries like Pakistan in a bid for Saudi startups to create regional impact.
Furthermore, Saudi Arabia boasts a robust network of investors’ support for its burgeoning startup ecosystem. Prominent KSA-based investors are actively backing entrepreneurs and fueling innovation. Venture capital firms such as SVC, Waed Ventures, and OQAL Angel Investors are known protagonists in the region, injecting capital and expertise to help them grow and scale.
Financial Times recently reported on how Silicon Valley investors are coming to the Middle East particularly KSA to build relationships and seek funds at a time of market cooldown. This is further fueled by the government’s support for innovation and technology-driven ventures. The KSA's efforts to attract foreign investments, coupled with its strategic location as a gateway to the broader Middle East and Africa markets, makes it an increasingly attractive destination for venture capitalists seeking high-growth opportunities, especially at a time of economic downturn and investors striving to secure funding.
It seems apparent that Saudi Arabia is embracing the journey to become the next technological hub of the Middle East. It has been working gradually toward refining its rigid regulatory structure and ensuring ease of doing business. With Vision 2030 as its guiding force, the Kingdom is making substantial progress in diversifying its economy and moving away from its dependency on oil.
The piece has been created using datasets from our Analytics feature. Learn more about Our Data Methodology
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