Saudi Arabia announces billions more in funding to support start-ups

More than a dozen funds and services worth $2.8bn launched as the kingdom moves to improve its appeal to the tech sector

Founders and executives of the 34 start-ups included in the Saudi Unicorns Programme are presented at the Leap technology exhibition in Riyadh. Alvin R Cabral / The National

Saudi entities have announced billions more in funding and a programme that aim to scale start-ups as it seeks to create a competitive technology ecosystem.

Nine funds worth a combined $2.4 billion will support the growth of start-ups in the Arab world's biggest economy, Emon Shakoor, founder and chief executive of Blossom Accelerator, said at the Leap technology exhibition in Riyadh on Tuesday.

Banque Saudi Fransi and Riyad Bank, two of the kingdom's biggest lenders, have pledged $1 billion each to support the information and communications technology sector.

Riyadh-based investment firm Merak Capital is also providing $53 million for ICT.

Saudi Arabia's Impact46 is contributing $133 million to fund Mena start-ups in the early to initial public offering stages, while Bim Ventures will provide $100 million for financially sustainable start-ups from creation to growth.

Shorooq Partners, the Abu Dhabi-based investment company, has pledged $100 million for a venture debt fund, $15 million of which will be dedicated to Saudi Arabia's first gaming accelerator fund.

Saudi Investment Bank pledged $40 million to fund financial technology while Planetary Capital pledged $30 million for downstream space software technology and Rakeezah Ventures $25 million for an accelerator-backed venture capital programme.

In addition, Blossom Accelerator unveiled the Saudi Unicorns Programme, which will help regional start-ups achieve billion-dollar market values.

“We are going to take the most high-tech and best-performing start-ups [to] $1 billion valuation,” said Ms Shakoor, who introduced the 34 start-ups included in the initiative.

Saudi Arabia has introduced several projects to promote the use of technology as it prepares for the future economy.

The kingdom is also diversifying its economy away from oil as part of its Vision 2030 strategy, with technology one of the key pillars of the plan.

Venture capital funding for start-ups in Saudi Arabia grew by 72 per cent annually to $987 million, from 144 deals in 2022, data platform Magnitt reported last month.

Riyadh is encouraging entrepreneurship and seeking investment domestically and from overseas to develop the technology sector.

The growth in Saudi Arabia's technology scene is “very important” in setting the tone for Vision 2030, Yahya Anouti, partner and environmental, social and governance leader at Strategy& Middle East, told The National at Leap on Tuesday.

“The [investment and funding] numbers explain the emphasis on the ecosystem, but you also have to look at the reforms that are happening to enable this ecosystem,” he said, referring to the dedicated entities and programmes Riyadh has put in place to grow the technology sector.

Also on Tuesday, Saudi technology venture capital fund STV announced that it had received an additional $150 million in funding as it aims to contribute to making the kingdom a global leader in technology.

The fund is meant to support start-ups expand globally and help them to achieve unicorn status, Abdulrahman Tarabzouni, founder and chief executive of STV, said at Leap.

“We think the Middle East, fuelled by Saudi Arabia, is set to move from linear growth to exponential growth,” the former Google executive said.

STV, which was founded in 2018, is the biggest independent venture capital fund, starting out with a $500 million investment from Saudi Telecom Company, the kingdom's biggest mobile operator.

So far, it has raised $1.5 billion in capital, attracted $600 million in foreign direct investment, contributed to the creation of about 10,000 jobs and helped to create two “unicorns”, said Mr Tarabzouni.

“We’re just getting started and we hope to play our role in making Saudi Arabia the tech platform of the Middle East.”

Meanwhile, the National Technology Development Programme (NTDP), which contributes to developing the technology ecosystem in Saudi Arabia, announced six new services with $430 million to fund start-ups.

Its $150 million Venture Debt service provides venture financing while the $81 million Relocate service offers incentives to start-ups to convince them to relocate to the kingdom.

Tech Crew, with $78 million in funding, supports the recruitment of technology employees by offering salary subsidies while Boost, with $46 million, aims to encourage citizens and residents to pursue entrepreneurship.

The $42 million Connect service will help to reduce the gap between large companies and local small and medium enterprises, while also helping SMEs to secure contracts from the public and private sectors.

The $26 million Bridge service will assist local start-ups in expanding globally.

“We want to share the future of the digital economy to make Saudi Arabia a global launch pad for start-ups and a technology hub,” NTDP chief executive Ibrahim Neyaz said at Leap.

Tuesday's funding news follows the more than $9 billion in investment announced in Saudi Arabia's technology sector on the opening day of Leap, including plans to set up cloud and data centres from global companies Microsoft, Oracle, Huawei and Zoom.