Saudi venture capital company Falak Investment Hub is seeking to grow its start-up funding base in line with the kingdom's ambitions to position itself as a hub for emerging technology companies, its chief executive has said.
The Riyadh-based company has helped businesses to raise more than 400 million Saudi riyals ($107 million), largely through a network of angel investors, Adwa Al Dakheel told The National in an interview.
This is on top of the 20 million riyals that Falak has invested to help accelerate the development of start-ups, which it also plans to boost by seeking the right partnerships, she said.
Falak, which has introduced more than 100 start-ups into the Saudi ecosystem since it started in 2018, is implementing a core strategy of increasing the know-how of angel investors so they can add more value when they invest in a company, Ms Al Dakheel said.
"To get investors, you need investible companies. And to be an investible company, you need smart investors. So the No 1 challenge is finding the equilibrium between both of these variables," she said.
"It's not just about putting liquidity – it's more about providing connections, being an advisor and providing further more than what money can provide."
Saudi Arabia is aggressively promoting and developing its technology ecosystem, which is a key pillar of its Vision 2030 economic programme to diversify away from its reliance on oil.
The kingdom was one of the emerging markets that recorded year-on-year growth in start-up venture capital during 2022. Its ecosystem netted $987 million in funding across 144 deals, surpassing 2021’s figures by 72 per cent, according to start-up data platform Magnitt.
The Arab world's biggest economy also logged in the most mega rounds – those that are valued at $100 million and above – in one year in the Middle East and North Africa region, the report said.
While Falak has remained largely sector agnostic, the hub has set its sights on climate technology, tapping its potential and furthering Saudi Arabia's programmes to advance the sector amid conscious global efforts to promote sustainability, according to Ms Al Dakheel.
The kingdom has made several moves to push forward with its climate agenda. It has committed to contribute $2.5 billion to a green initiative in the Middle East over the next 10 years, launched two high-profile green forums and will host this year's Mena Climate Week in October.
"Climate technology has several verticals underneath it and, basically, it is one of the leading industries that creates unicorns and enables start-ups," Ms Al Dakheel said.
Unicorns are start-ups with a valuation of more than $1 billion. More than 45 unicorns are expected to emerge from Mena by 2030, led by Saudi Arabia, venture capital fund STV has said.
At February's Leap technology conference in Riyadh, Jeddah-based Blossom Accelerator launched the Saudi Unicorns Programme, part of several funding initiatives worth billions of dollars launched by Saudi entities at the event.
Ms Al Dakheel also cited the projects at Neom, the kingdom's $500 billion futuristic mega-city that plans to implement climate-friendly initiatives, which include sustainable transport and clean energy.
Global technology majors are also taking notice of opportunities in the kingdom. Earlier this month, Google announced a start-up accelerator for climate change companies in the Mena region.
Apple, Amazon and Facebook parent Meta have also opened up academies in Saudi Arabia, focusing on app development, human capital and the metaverse, respectively. These moves are aimed at supporting the kingdom's technology push.
"We're seeing inflows of international companies coming into Saudi Arabia", Ms Al Dakheel said, adding that "the government knows the importance of enabling start-ups".
Two other sectors that Falak will be focusing on are logistics, to boost the kingdom's last-mile deliveries and supply chains, and software as a service, to help build solutions for enterprises.
In the future, the hub will eye the financial, property, construction and smart building sectors, as "they fall in line with our climate technology mandates", Ms Al Dakheel said.
"Going forward, we realised the core maturity of markets and that meant we needed to start focusing on certain industries that are future industries of our region and of the world as well."
Saudi Arabia's young demographic that is increasingly leaning towards entrepreneurship is also a boon for the start-up ecosystem, inspired by the Riyadh's business-friendly regulations, Ms Al Dakheel said.
Female entrepreneur numbers are also rising, with Falak having received hundreds of applications from women, she said.
"We truly believe in the future of what the kingdom has to offer, and that what we are seeing now are just the very early days of what is yet to come."