Three Trends To Watch In Saudi Arabia's Startup Ecosystem

Many international VCs that have started to keep an eye on the Saudi market are also assessing it as a potential market for their international portfolio companies.

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By Erika Masako Welch

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We asked key stakeholders in the KSA -including venture capitalists (VCs), startup founders, accelerators, incubators and angel investors- the question: "What future trends can we expect out of Saudi Arabia's startup ecosystem?"

Here is what they told us:

1. More Saudi startups are reaching the later growth stages, looking for Series B funding Many VCs are looking to fund growth stage funds to support their existing portfolio of startups, and meet this growing demand in the Kingdom. At present, some fast-paced Saudi startups in later growth stages are going to international VCs for support, garnering support from the likes of Softbank and Sequoia.

2. Direct-to-consumer (D2C) startup categories like fintech and e-commerce will remain dominant, but Saudi will see an emergence of B2B startups These B2B solutions will emerge in sub-sectors such as supply chain technologies, fleet optimization, agtech, and even further into deeptech, driven by artificial intelligence-powered software solutions.

3. Increasing number of "experienced" founders starting companies The current enthusiasm and activity in the Saudi startup market has shifted mindsets so drastically that many experienced professionals are leaving 10-20 year careers to found their first startups. This also means that the solutions they are offering are highly specialized, bringing more sophisticated solutions to the market.

4. More globally-minded startups are entering the market The first startups that came out of the Kingdom were very Saudi-focused. Today, however, founders are thinking bigger and bolder from day one. The market expects to see many more startups that have a MENA region focus from the beginning, with bold global ambitions in their future.

5. International startups are making their presence felt in KSA As the Kingdom continues to open its borders, with accelerator programs run by 500 Global and King Abdullah University of Science and Technology (KAUST) sending invitations to international founders, and local VCs like Wa'ed Ventures investing in international startups with the aim of supporting their market-entry into the Kingdom, it is predicted that Saudi Arabia will see a gradual increase of foreign startups establish themselves in the market. Many international VCs that have started to keep an eye on the Saudi market are also assessing it as a potential market for their international portfolio companies.

Learn more about the successful and the emerging startups in the KSA ecosystem by checking out the report, The Evolution of Saudi Arabia's Startup Ecosystem 2010-2022.

This article was originally published on Lucidity Insights, a partner of Entrepreneur Middle East in developing special reports on the Middle East and Africa's tech and entrepreneurial ecosystems.

Erika Masako Welch

Chief Content Officer, Lucidity Insights

Erika Masako Welch is the Chief Content Officer of Lucidity Insights.

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