Arab News, Tuesday, Dec 21, 2021 | Jumada Al-Uola 16, 1443
Saudi startups trail Egyptians in VC deals despite 400% increase in Q3 funding
Saudi Arabia:Saudi
Arabia was among the top countries in the Middle East and North Africa for new
venture capital deals in the third quarter of 2021 with startups in the Kingdom
raising SR769 million ($205 million) from 91 deals.
It is a 439 percent hike as compared with the
figures of a year ago during which business activities were affected by the
coronavirus disease pandemic, according to the KSA venture investment report
from startup data platform MAGNiTT.
In the MENA region, Egypt topped the list with 96
contracts while the UAE also recorded 91 deals during the same period.
Growth
Commenting on the report, Saud Al-Sabhan, vice
governor for communications at the General Authority for Small and Medium
Enterprises, Monshaat, told Arab News: “The total VC investment reached $376
million in the first three quarters of 2021, already more than double of what
was reported in the entire 2020.”
The authority was founded in 2016 to boost the
contribution of small and medium enterprises to the gross domestic product to 35
percent by 2030 as against the current 20 percent. The authority established the
Saudi Venture Capital Co. in 2018 to support venture capital investment by
backing funds and co-investing with angel investors in high-growth startups and
small firms.
Al-Sabhan said the authority uses a wide range of
funding initiatives to boost backing to small firms, which are further broken
down by a company’s size and type.
Facilitator
He said Monshaat is not a lender itself but
facilitates funds from the public and private sectors.
“Entrepreneurs and SMEs alike can access our core
funding opportunities by visiting the authority’s website. We offer a funding
platform to connect SMEs with commercial and public lenders,” the official told
Arab News.
He said: “Increasing entrepreneurship is a trend
we are witnessing globally, but it must be enabled at the level of government
policies to ensure the protection of the Saudi economy and revenues from
fluctuations that will especially affect non-oil revenues through fiscal policy
decisions.
“Monshaat itself, as a government-funded entity,
is dedicated to the growth and empowerment of emerging enterprises through many
studied initiatives and policies that it offers.”
The body also encourages links between
universities and businesses.
Al-Sabhan said: “What links academia and
entrepreneurship, in general, is that universities around the world often
provide a unique and trustworthy atmosphere for entrepreneurs who are still in
the early stages.
“These entrepreneurs often require continuous
support and guidance, in addition to an environment where they can test their
prototypes and go through a smooth phase of multiple iterations (of a project).
“Given our role of enabling entrepreneurs and SMEs
around the Kingdom, we are continuously working to bridge the gap between them
and universities. We currently lead several initiatives in this regard, such as
our collaboration with King Abdullah University for Science and Technology.”
KAUST, a private research university based in
Thuwal on the Red Sea coast, was established in 2009 to conduct
“curiosity-driven and goal-oriented research to address global challenges
related to food, water, energy, and the environment.”
Al-Sabhan said KAUST and Monshaat have been able
to provide a different set of services, such as workshops and mentoring sessions
for entrepreneurs and funders.
KAUST will also partner with the authority for the
second year in a row on the 2021 Ebtakir Awards. This annual award held by
Monshaat in Riyadh highlights the most innovative startups in the Kingdom. Prize
money is split between three finalists — with SR150,000 going to the winner,
SR100,000 for second place, and SR50,000 awarded to the third best startup of
the year.
Foreign investment
The body also has a role in attracting foreign
investment to the Kingdom.
Al-Sabhan said: “We have qualified local talent
and vast opportunities for high growth and are beginning to see demand for our
foreign entrepreneur licenses. Foreign-owned or registered firms are vital in
diversifying and internationalizing the economy, and Monshaat can assist in
registration, office spaces, and business advisory.”
“The investment climate has greatly improved in
Saudi Arabia over the past several years for foreign businesses. Enhancing
transparency, allowing 100 percent foreign ownership of an investment, reducing
licensing process and cutting the red tape.”
In October, the Kingdom said it had licensed 44
international companies to set up regional headquarters in Riyadh, including
Unilever, Baker Hughes, and Siemens.