Saudi Arabia's start-up sector to see $162m in new investments

Ministry of Investment grants six licences to start-ups and related entities

Saudi Minister of Investment Khalid Al Falih, centre left, with the start-up licence grantees during the Global Entrepreneurship Congress in Riyadh. Photo: Ministry of Investment

Saudi Arabia issued licences to six start-up entities that have collectively pledged to invest up to $162.2 million.

Four start-ups, including re-commerce platform Cartlow, second-hand marketplace Soum, delivery company Rabbitmart and dental service Smileneo received licences from Saudi Arabia’s Ministry of Investment.

Licences were also granted to imVentures, a Riyadh-based venture capital fund, and Silicon Valley-based early stage accelerator Plug and Play.

The announcement was made during the Global Entrepreneurship Congress in Riyadh on Monday.

The Ministry of Investment of Saudi Arabia, the event's organiser, also announced the signing of preliminary agreements with Monshaat — the kingdom's Small and Medium Enterprises General Authority — and the Saudi Authority for Data and Artificial Intelligence (Sdaia) to further extend support to start-ups.

“As the world continues to emerge from the Covid-19 pandemic, entrepreneurs are shaping our new normal. In Saudi Arabia, the start-up scene is thriving and there is enormous potential for venture capitalists,” said Minister of Investment Khalid Al Falih.

The Arab world's biggest economy is in the midst of a major diversification programme that aims to steer its economy away from oil dependence. One key pillar is technology, with Riyadh encouraging start-up entrepreneurship and attracting investments from both local and foreign funds.

The kingdom is among the most active start-up markets in the Middle East and North Africa, along with the UAE and Egypt.

Venture capital funding to Mena start-ups rose to $2.6 billion in 2021, which was 138 per cent higher compared to 2020, data platform Magnitt reported.

Each country closed a deal worth more than $100m.

Overall, the Mena region welcomed record-breaking venture capital numbers last year: registered transactions recovered from a slight dip in 2020 to reach a high of 590 deals, 35 exits were announced and the region recorded the highest number of investors to finance ventures based across Mena, Magnitt said.

There are 1,349 start-ups in the kingdom, Magnitt's website showed.

Earlier this month, Arib, a digital loan broker based in Jeddah, closed a $2.3m seed investment round that it will use for product and market expansion, while Dammam-based coffee speciality platform Kaffeen was acquired by UAE-based Cofe App for an undisclosed sum in a move to consolidate its presence across the region.

“An enhanced regulatory environment and our recently launched National Investment Strategy are unleashing opportunities not previously available in the kingdom and these new investments are a result of the economic transformation happening now under Vision 2030,” said Mr Al Falih, who is also the kingdom's former energy minister, referring to Saudi Arabia's diversification agenda.

The ministry's agreements with Monshaat and Sdaia follow last week's deal with the Riyadh-based Jada Fund of Funds — an entity established by the kingdom's Public Investment Fund — to create a platform that will connect Saudi entrepreneurs with investors abroad.