RIYADH: Entrepreneurship in Ƶ is no longer just a passing trend — it’s a driving force reshaping the Kingdom’s economy, aligned with the Vision 2030 agenda.
The Kingdom’s Center for International Communications reports that 42 percent of adults plan to launch their businesses within the next three years, marking the highest rate of entrepreneurial intent since 2016. This surge in entrepreneurial activity reflects the country’s growing commitment to economic diversification, with 25 percent of businesses in their early stages, operating for less than 42 months — a 33 percent increase from 2022.
The entrepreneurial boom is no accident. Ƶ is actively diversifying its economy away from oil and aims to increase the private sector’s contribution to gross domestic product from 40 percent to 65 percent by 2030. A key part of this transformation involves fostering an economy driven by entrepreneurship and innovation, with the contribution of small and medium enterprises set to rise from 20 percent to 35 percent by the decade’s end.
“A significant portion of this change has been driven by regulatory reforms, which have created an environment conducive to starting companies. Additionally, various investment initiatives have made the Kingdom a more attractive market for setting up operations,” said Khaled Talhouni, managing partner at Nuwa Capital.
Ƶ’s growing reputation as a friendly environment for early-stage businesses has been recognized by the Global Entrepreneurship Monitor, which recently ranked the Kingdom at the top for ease of starting a business and available opportunities.
Tushar Singhvi, deputy CEO and head of investments at Crescent Enterprises, said the government’s reform efforts, which have simplified business operations, attracted foreign investment, and nurtured a vibrant entrepreneurial ecosystem.
“The Ministry of Investments of Ƶ has introduced policies permitting 100 percent foreign ownership in most sectors, significantly reducing barriers for international entrepreneurs. This policy, alongside incentives such as tax exemptions, subsidies, and expedited licensing procedures, has made Ƶ a prime destination for global investment,” Singhvi said.
“The Kingdom’s strategic location, connecting markets across the GCC and beyond, offers access to over 60 million consumers. Infrastructure advancements, including NEOM and cutting-edge logistics networks, provide businesses with the tools to thrive in an increasingly competitive market,” he added.
Singhvi further said that by aligning policies with global best practices and embracing technology-driven solutions, Ƶ has positioned itself as a global leader in terms of ease of doing business.
Riyadh Al-Najjar, chairman of PwC Middle East and KSA country senior partner, said entrepreneurs and investors now benefit from a streamlined process in establishing and scaling businesses in Ƶ.
“Strategically located at the crossroads of major international markets, Ƶ has solidified its position as a global hub for commerce and innovation. This advantage is further amplified by a suite of government-backed incentives and specialized support programs to attract high-caliber talent and innovative ideas, supported by a thriving venture capital landscape,” Al-Najjar told Arab News.
He also said: “For the second year in a row, Ƶ has maintained its leadership in the MENA region, attracting SR1.5 billion ($399.3 million) in venture capital funding across 63 deals in just the first half of 2024. This achievement highlights the Kingdom’s success in cultivating a robust entrepreneurial ecosystem that continues to draw global investment and attention.”
Al-Najjar also praised the role of institutions like Monsha’at (General Authority for Small and Medium Enterprises), noting their proactive efforts in providing resources like funding, mentorship, and capacity-building programs that have enriched the entrepreneurial ecosystem.
“The Kingdom’s commitment to fostering an entrepreneurial ecosystem has also enhanced its global competitiveness, positioning it as a prime destination for investors and startups,” he added.
Key initiatives fueling growth
Ƶ’s thriving startup ecosystem is the result of several strategic initiatives, including regulatory reforms, increased venture capital, accelerators, and ecosystem enablers.
Talhouni of Nuwa Capital pointed to relaxed restrictions on foreign-owned startups, which have made it easier for international companies to establish operations in Ƶ. He also highlighted changes in capital market rules that benefit technology companies seeking public listings on the Saudi stock exchange.
“Notably, SAMA has played an instrumental role with its fintech sandbox, enabling startups to gain licenses easily and establishing a clear pathway for them to graduate to full-fledged licenses,” Talhouni added.
He also noted the importance of government-related entities like Saudi Venture Capital and the Jada Fund of Funds in developing the venture capital sector by investing in local and regional funds, which has spurred private investment in the region.
On the accelerator front, Ƶ supports its entrepreneurial ecosystem through programs like Misk, Taqadam, and The Garage. These initiatives offer valuable resources to entrepreneurs, from mentorship to funding, helping bridge the gap between early-stage startups and commercialization.
Singhvi highlighted that Monsha’at has been essential in supporting startups through financing programs like the Kafalah Program, which helps address financing gaps for SMEs. “Events such as the Biban Forum further connect entrepreneurs with investors and global stakeholders, fostering collaboration.
Regulatory advancements, including the introduction of the Saudi Companies Law in January 2023, have simplified business operations and encouraged foreign investment. Platforms like Meras streamline business registration, significantly reducing startup barriers,” Singhvi said.
Venture capital activity in the Kingdom has surged, with $412 million raised across 63 deals in the first half of 2024. Singhvi also said the success of the Saudi Unicorn Program, which aims to propel startups to unicorn status, reinforcing the Kingdom’s innovation-driven ambitions.
Education and talent development also remain central to Ƶ’s entrepreneurial strategy. Institutions like King Abdullah University of Science and Technology provide mentorship, incubation, and research opportunities, while accelerators such as Flat6Labs and Badir Technology Incubators help entrepreneurs scale their ventures effectively.
“These initiatives have positioned Ƶ as a global leader in fostering entrepreneurship and innovation,” Singhvi said.
Al-Najjar praised Monsha’at for empowering SMEs through innovative financial support mechanisms and expert advisory services. He highlighted the Unicorn Support Program from the Ministry of Communications and Information Technology and the Misk accelerator initiatives as key drivers of new opportunities for startups.
The Garage, a technology park in Riyadh, exemplifies the Kingdom’s commitment to innovation. Home to over 230 startups with a collective valuation exceeding $216 million, it provides a collaborative environment for entrepreneurs to thrive.
“These initiatives, combined with strategic support and infrastructure from academia and sector-specific entities, have nurtured a vibrant and dynamic entrepreneurial ecosystem,” Al-Najjar added. “Giga-projects such as AlUla create unparalleled opportunities for entrepreneurial ventures, especially in high-growth industries like technology, tourism, and renewable energy.”
Beyond just growth
The impact of Ƶ’s startup boom goes beyond mere economic expansion. Singhvi from Crescent Enterprises emphasized that startups are also contributing to the Kingdom’s sustainability goals, particularly in clean energy and smart infrastructure. Projects like NEOM, which has invested over $16 billion in the private sector in the last 18-24 months, are providing platforms for ventures that align with Vision 2030’s sustainability ambitions.
“Women-led startups have increased significantly, underscoring the alignment between Vision 2030’s objectives and the Kingdom’s proactive support for inclusivity alongside innovation and economic resilience,” Singhvi noted.
Al-Najjar described the Kingdom’s “entrepreneurial momentum” as a key catalyst for job creation and productivity enhancement. “By integrating national priorities with entrepreneurial initiatives, Ƶ is building a blueprint for a diversified future,” he said, adding: “The progress achieved is not only a milestone for the Kingdom but also a global benchmark for aligning economic goals with sustainable growth.”
