> Elm > Blog > Venture Investment in Startups in Saudi Arabia

Venture Investment in Startups in Saudi Arabia


Building on the community contributions made at “Elm” to activate the values of partnering with the entrepreneur community, and in line with the current crisis, the 23rd webinar out of a series of regular and virtual webinars welcomed H.E. Dr. Nabil Koshak, CEO of Saudi Venture Capital Company to shed some light on key advancements in venture investment in Saudi Arabia.

About Venture Investment

Venture investment started in the 1940s and has expanded locally during the past few years. Venture investors invest in a high risk-asset category that often includes tech startups. Many leading tech companies such as Google, Face book, Twitter, and Zoom were initially backed by venture investment funds.

Government Support to Empower Venture Investment Sector

The commencement of Vision 2030 planted roots to grow and empower the venture investment sector and support of tech startups and their entrepreneurs. Among the support received by the Saudi Venture Investment Company from the government was 2.8 billion SAR to motivate investors in this sector. Moreover, Jada was established to stimulate investment in private equity funds and venture capital, and thus, financed the growth of the SMEs sector. Such efforts were along with other initiatives launched by the Small & Medium Enterprises General Authority (Monsha’at) and Ministry of Investment to support this sector on a regular basis. In fact, the Kingdom has witnessed a rapid unprecedented growth in this sector which has led to the development of the investment environment and regulation of the legislative ecosystem. Moreover, this growth was reflected in the Kingdom being ranked 11th in venture capital abundance and the increasing number of startups. Despite COVID-19, the number of deals made in the first quarter of 2020 has exceeded that of the previous year. This sector witnesses annually an average growth estimated at 30% of total investments.

Startup Project Phases

In most situations, support during the preliminary phase is provided by the project owner, family members, friends, or venture investors. It is less likely for venture investors to invest in this phase given its high risks. The following phase is known as the post-prototype phase in which the project owner understands customers’ perceptions. In this phase, the venture investor plays a crucial role after the project and its feasibility is examined. The final stage of the project exists when investment activity is expanded and can be merged into another company or listed in the stock market to generate higher growth.