Saudi Arabia home to 957 startups, says MAGNiTT CEO

As the government of Saudi Arabia is evolving at an accelerated pace in becoming a regional hub for startups and venture capital (VC), MAGNiTT’s 2019 MENA Venture Investment Summary report showed that the Kingdom recorded the fastest growing landscape in terms of number of investments and total funding in 2019 across the Middle East and North Africa region.

Despite ranking third after Egypt and the UAE, Saudi Arabia accounted for 12% of the total number of venture deals which hit 564, with 4% increase of share year-on-year (YoY), the report said.

It also noted that 9% of the total funding worth $704 million was granted to Saudi-based startups, with 3% rise YoY.

“MAGNiTT lists 957 startups headquartered in Saudi Arabia,” chief executive officer Philip Bahoshy told Argaam in an exclusive interview.

He added the Kingdom has made big strides in supporting local entrepreneurship ecosystem, calling for ensuring intellectual capital transfer and talent transfer to further develop it.

“At several top-tier universities, talent is available for startups to grow their teams and expand, which is central to any developing ecosystem,” he further explained.

On the main growth drivers of Saudi Vision 2030 in shaping a positive climate for investments in startups, entrepreneurships and capital ventures, Bahoshy said the government has doubled down on developing its startup and venture capital ecosystem, which is core to position itself as a leading player on the global stage, in line with Vision 2030.

He added that the new rules and regulations introduced by the government to help foster local startups and allow foreign companies to scale into the Kingdom, will also support the ecosystem’s growth, while having a positive effect of further encouraging Foreign Direct Investment (FDI).

“A government and its legislations should be a facilitator of business, which Saudi Arabia understands as well. It is the role of the government to foster entrepreneurship by creating an environment where it is cost-effective for startups to start, cost-effective to potentially fail and still incentivize them to start again,” Bahoshy asserted.

On the Funds of Fund initiative “Jada”, MAGNiTT CEO noted that Saudi Arabia is directly aiding venture capital firms by creating the largest regional fund, adding this will pave the way for developing the venture asset class across the Kingdom and the MENA region.

The Public Investment Fund (PIF) launched, in December 2019, a SAR 4 billion company Fund of Fund “Jada” to support and empower small and medium enterprises (SMEs).

Read more: PIF launches Fund of Funds to support SMEs

Nevertheless, Bahoshy highlighted the importance of ensuring smart capital as well.

“Core to the Jada mandate is investor education to help foster local investors, as well as encourage international investors to set up in Saudi Arabia,” he stressed, calling for

Back to the report, as many as 212 institutions have invested in MENA-based startups, with 75% from the region and the remaining 25% are international.

It also highlighted that the investments covered mainly the following industries; fintech, e-commerce, delivery and transport, Information Technology (IT) solutions, as well as food and beverage.

Write to Christine El Cheikh at christine.elcheikh@argaam.com