Sanabil Investments, a financial company wholly owned by Saudi Arabia's Public Investment Fund, and US venture fund 500 Global have welcomed a new batch of start-ups for their Middle East and North Africa seed accelerator programme, with the kingdom the most represented for the first time.
The fourth cohort of the initiative, called Sanabil 500, will offer 15 selected start-ups an opportunity to receive mentorship on business development and fund-raising, which they can use in developing solutions to address real-life issues, Sanabil and 500 Global said in a joint statement on Monday.
Saudi Arabia is being represented by six start-ups, followed by the UAE and Egypt with four each, cementing their positions as the top-three markets for start-up activity in Mena.
Oman has one start-up in the fourth edition of the programme, which will feature the financial, food and beverage, agriculture, health, insurance and media industries.
The move is indicative of the potential of the region's start-up ecosystem, particularly Saudi Arabia's, despite global economic challenges, said Amal Dokhan, general partner at 500 Global Mena.
“The growing interest is a testament to the unwavering commitment among start-ups to innovate and develop effective solutions to everyday issues.
“The increased participation from the top-three geographies is a positive indication to the deepening entrepreneurial drive in Saudi Arabia and the Mena region.”
The start-up sector has grown exponentially over the past few years as entrepreneurs use innovation to address consumer needs. They are also increasingly seeking funding from global investors to accelerate their development.
The sector's growth has risen in tandem with the increase in digitalisation in key sectors such as retail, services, e-commerce and government.
Venture capital funding for start-ups in Mena rose 20 per cent annually to more than $2.3 billion in the first three quarters of 2022, putting it on track to potentially surpass the total investment attracted in 2021, an October study by data start-up platform Magnitt found.
Egypt, the UAE and Saudi Arabia retained the top-three positions in both funding value and number of deals, capturing more than 75 per cent of overall Mena investment, Magnitt said.
The kingdom, in particular, is hastening its digital transformation push, with a focus on start-ups, as it banks on technology to power its future economy.
Venture capital funding in the Arab world's largest economy surged more than threefold to $584 million in the first half of this year, surpassing the total for the whole of last year, Magnitt said in a recent report.
The UAE, meanwhile, has introduced several initiatives to boost the start-up sector. This has resulted in supporting funding, which rose about 5 per cent in the third quarter to $148 million, from $141 million a year ago, according to Magnitt.
Egypt, on the other hand, has been described “a strong market of talent”, Courtney Powell, 500 Global’s chief operating officer and managing partner, told The National last week as it opened its office in Cairo.
About 600 start-ups filed applications for the 12-week Sanabil 500 programme, with more than a quarter hailing from Saudi Arabia.
The initiative, which was launched in September 2021, has helped 39 start-ups graduate, a “testament to the unwavering commitment among start-ups to innovate and develop effective solutions to everyday issues”, Ms Dokhan said.
Sanabil Investments, based in Riyadh, has $8 billion in paid-up share capital and is committed to about $2 billion in capital per annum in private investments that include venture, growth capital and small buyouts.
San Francisco-based 500 Global, meanwhile, has about $2.7 billion in assets under management. It has supported more than 5,000 start-up founders representing more than 2,700 companies in 81 countries.