In the dynamic realm of business, Saudi Arabia’s startup ecosystem stands as a beacon of progress. Fuelled by the Vision 2030 initiative, the Kingdom is fervently diversifying its economy, with a strategic emphasis on nurturing a vibrant startup culture. This transformative journey is reshaping Saudi Arabia’s economic landscape and presents extensive opportunities for entrepreneurs and investors worldwide.
In a significant milestone, Saudi Arabia’s startup ecosystem secured the top spot in regional venture funding activities in 2023, amassing a record-breaking $1.38 billion in capital. This achievement positioned the Kingdom as a frontrunner in venture capital funding across the Middle East and North Africa, surpassing the $1 billion mark for the first time, as per MAGNiTT’s Saudi Arabia FY2023 report.
During the year, the funding for Saudi Arabia’s startup ecosystem experienced a 33% increase from the $987 million raised in 2022, indicating a robust growth trajectory. Furthermore, the Kingdom’s share of total venture capital funding in the MENA region also substantially rose, from 30% in 2022 to 52% in 2023. Notably, the Kingdom attracted $879 million in mega-rounds—individual funding deals surpassing $100 million—reflecting strong investor interest in the region’s startup scene.
“We are living in a great time and era where the Middle East, especially the Gulf, the GCC, is becoming more of a magnet,” said Dr Abdulrahman Al Olayan, CEO & Managing Partner, Beta Lab, in an exclusive interview with Finance Middle East. “If you look at Saudi Arabia, the UAE, Qatar, Oman and others, everyone is trying to do their best to develop the ecosystem to become more attractive.”
“And this will make the region a better place.”
Dr Al Olayan reckons that the region’s collective efforts to bolster its startup ecosystem will attract the best talent from different parts of the world and backgrounds.
One such programme launched recently to lure startups to the Kingdom is the 2024 DeepTech Startups Program. The initiative, launched by Beta Lab in collaboration with the Ministry of Investment, FII and KBW Ventures, aims to attract top talent in biotech, food tech and artificial intelligence by offering investment, mentorship and market access opportunities. The programme seeks cutting-edge technologies globally and provides management consulting and specialised training. Structured in four stages, it includes registration, selection, development, and final evaluation with grants of up to $1 million.
Beta Lab is a venture capital and co-creation studio dedicated to fostering deep technology startups. It provides a range of services in product development, business development, capital and more to help entrepreneurs turn their innovative ideas into successful businesses. In addition, the studio’s team of experienced professionals work closely with each startup to help them navigate the unique challenges of the startup lifecycle.
otable mentors include HRH Prince Khaled bin Alwaleed bin Talal, founder and CEO of KBW Ventures; HE Eng. Khaled Al Falih, Minister of Investment of Saudi Arabia; Salwa Akhannouch, founder and CEO of Aksal Group; Dr Peter Diamandis, CEO of the Zero Gravity Corporation and Dr Mehmood Khan, CEO of Revolution. The program aims to enhance the deeptech landscape in Saudi Arabia, foster global entrepreneurial success through strategic partnerships, and focus on the future of technology.
2024 DeepTech Startups Program
Talking about the launch, Dr Al Olayan said that the Saudi startup ecosystem has evolved in a very positive direction in the last few years across ecommerce, logistics, fintech, and other industries. However, opportunities are very limited for deeptech startups—those coming from AGI, biotech, foodtech, and other related industries—not just within Saudi Arabia but globally.
“This is the right time for us to make the right efforts, a structural effort to bring attention of the industry and startups to engage, and educate them about the ecosystem, raising funds, engaging with stakeholders and other like-minded people,” explained Dr Al Olayan.
He said with Beta Lab and the 2024 DeepTech Startups Program, the Kingdom could tap into more mature global startups, talents and ideas, and see if they want to associate with Saudi Arabia.
“I think this is long term impact when we are able to bring the best ideas, talent, and not only global, but also incentivise the local talent to engage, raise fund which will contribute greatly to the ecosystem, especially when we are talking about deeptech.”
Saudi exit
When asked about exit opportunities in Saudi Arabia, Dr Al Olayan said that if a company is doing quite well in a unique industry with advanced technology, the programme would want it to have an exit in the Kingdom. Either it would get acquired, go for an IPO, or merge with a bigger institution.
Biotech push
Earlier this year, HRH Prince Mohammed bin Salman bin Abdulaziz Al Saud, Crown Prince and Prime Minister of the Kingdom of Saudi Arabia, launched the National Biotechnology Strategy, a comprehensive roadmap designed to enhance the Kingdom’s position as a leader in the sector.
With the ambition of becoming the biotechnology leader in the MENA region by 2030, and a major international biotechnology hub by 2040, the National Biotechnology Strategy will build on the Kingdom’s existing strengths, which include access to robust capital, a large market, government commitment and a unique gene pool to advance its capabilities across four strategic plays, vaccines, bio-manufacturing and localisation, genomics and plant optimisation.
The National Biotechnology Strategy also strengthens food security and sustainable agricultural productivity through plant optimisation. By leveraging biotechnology, the strategy aims to reduce reliance on food imports and enhance domestic production, ensuring a more sustainable and self-sufficient food supply.
The statement issued during the launch reads, “The evolution of a mature and functional biotechnology ecosystem in Saudi Arabia will be enabled by a set of initiatives that systematically address barriers across talent, regulation, funding and infrastructure.”
With a robust pipeline of programs and initiatives, the strategy is set to catalyse the growth of Saudi Arabia’s biotechnology sector and unify efforts in the ecosystem, creating high-quality jobs by 2030 and exciting opportunities for investors and biotechnology talent. This strategy marks a significant milestone for Saudi Arabia in becoming a major player in the regional and global biotechnology sector. It aims to contribute 3% of non-oil real GDP by 2040, helping deliver economic diversification. By successfully implementing this strategy, the Kingdom will establish a leading biotechnology hub that drives innovation, job creation and economic growth.
Eligibility criteria
When asked about the eligibility criteria for the programme, Dr Al Olayan said that the potential candidates should “be working in well-respected lab across the globe.” “We want to bring to their attention that there is an opportunity for them [startups] to bring their ideas from the lab to the market in a very structured and dynamic way,” he explained. “[We provide] not only the grants but also the investment, the access to market, local talent and help with other regulations.”
“We also weigh their ideas, problem-solving ability and technology readiness,” Dr Al Olayan added. “If it [startup] is an early stage of research, most likely, we will not engage with them. But if it’s close to being ready to commercialise and be pushed from the lab to the market, this is most likely the time we engage and have meaningful conversations.”
Dr Al Olyan told Finance Middle East that in 15 days since its launch, the 2024 DeepTech Startups Program received more than 130 applications worldwide. Examples include MIT Research Lab, Hong Kong University for Science and Technology, Northwestern Technological Institute and University of California, San Diego (UCSD). “This is just to tell you that the Saudi ecosystem is getting the right attention and response,” he emphasised.
Gaining momentum
When asked about the rationale behind the surge in the Kingdom’s startup ecosystem dynamics, Dr Al Olayan said that the ecosystem has provided reason to believe Saudi Arabia is serious about investing, building the ecosystem, and welcoming companies. “That doesn’t mean we don’t have pitfalls or shortcomings, but we are serious about challenges,” he noted. “We have challenges, but we are serious about dealing with them and acknowledging them.”
“I think now, talents, startups, and founders from around the world are starting to realise that if they want to come in and benefit from the Saudi system, the time is now. If they wait a few years from now, maybe it will be too late.”
Navigating challenges
There are a number of challenges, but the Kingdom is working towards addressing them. Dr Al Olayan reaffirmed that, firstly, as a nascent deeptech ecosystem in Saudi Arabia, the programme wants to create pathways for IP commercialisations and focus on attracting the top global talent and engaging the local talent.
Secondly, he noted that the regulators are working towards acknowledging IPs and how to protect them and push them out of the lab to the market. Dr Al Olayan told Finance Middle East that the programme is asking the applicants to register IPs in the US and push it from there, but also have a presence in Saudi.
“With Vision 2030, the Kingdom is opening its market and welcoming innovators. However, regulators on the ground need some education, especially when it comes to deeptech, and how they should deal with them and address the challenges,” he said.
Dr Al Olayan is optimistic that the programme will see positive outcomes in the next few years. “But as you know, these things take time, not only for the right talents and investors but also for regulators to understand and comprehend and adapt positively,” he noted. “They want to regulate things positively and help attract more talents or investors than the other way around.”
Finally, Dr Al Olayan noted funding as one of the key challenges that startups face. “But in the last few years, a lot of funding opportunities in Saudi and within the region [opened up], especially when it comes to ICT—meaning fintech, ecommerce—deeptech, on the other hand, is still lagging behind when it comes to funding.” He noted that more initiatives are coming into this space and the 2024 DeepTech Startups Program is a testament to such efforts.
The surge in Saudi Arabia’s startup ecosystem, particularly evident through initiatives like the 2024 DeepTech Startups Program, underscores the nation’s commitment to fostering innovation and economic diversification. Whether in deeptech, fintech or agritech, startups have ample opportunities to leverage the momentum of the region’s dynamic landscape. With strategic partnerships, regulatory support, and a burgeoning investor interest, Saudi Arabia is poised to emerge as a prominent player in the global startup arena. As the ecosystem continues to evolve, the time is ripe for entrepreneurs to seize the moment and contribute to the Kingdom’s journey towards a more vibrant and diversified economy.
https://www.financemiddleeast.com/how-is-saudi-arabia-leading-the-deeptech-startup-revolution/
