Saudi startup funding market changing rapidly, says Badir CEO
The pace of growth in Saudi Arabia's tech startups is set to increase, given the surge in investments and opportunities in seed rounds and angel funding, Nawaf Al Sahhaf, chief executive of the Badir Program, told Argaam in an exclusive interview.
"When Badir started in 2008, there was no angel investment network, there was no network for incubators and accelerators in the Kingdom, no seed funds existed and none of the regulations in place today existed back then," he said.
Badir Program – an initiative of King Abdulaziz City for Science and Technology (KACST) – is a great example of addressing the challenges faced by Saudi startups, Al Sahhaf noted.
Below are excerpts from the interview with Al Sahhaf.
Q) Technology start-ups incubated by the Badir Program raised SAR 12 million in Q2 2018, up from SAR 11 million in Q1 2018. What are your expectations for the full year?
A) There is little doubt that the tech startups incubated by the Badir Program gained huge momentum in the last two years and will end the year on a very favorable note as we will see a surge in investments and opportunities in seed round and angel funding for most startups. Series A and Series B is also bullish for the ever-growing and expanding Saudi start-up industry.
Five years ago, the vast majority of startups relied on family, friends and business angels to provide the required capital to launch their startups; however, these are no longer the only options available to entrepreneurs. Nowadays, entrepreneurs have greater options and we believe that 2018 will bring even more government funds into the mix, and inject the kind of investments that will kick-start a new wave of growth.
Badir Program statistics shows that the total funding has been increased to nearly SAR 151 million ($40.253 million) since the establishment of the Badir program in 2008 until the end of June 2018.
Overall, the startup funding market in the Kingdom is changing rapidly and expected to grow remarkably well in this year, with various investors and steadily growing experience.
Q) Are you working on any initiatives to get more international venture capital (VC) firms to invest in Saudi startups?
A) The region is still at the beginning of its investment journey. Saudi Arabia has seen a boom in tech startup and investor activity over the last few years. Also, several new funds were announced by the government and VCs that are committed to Saudi young and dynamic technology companies in the market. In fact, the investment landscape in Saudi Arabia has further developed, and the market has seen intense activities from established and new players alike.
The entrepreneurship ecosystem in Saudi Arabia has fittingly grown to improve the opportunities available for entrepreneurs and investors, with the number of organizations aimed to support entrepreneurs. Also, the ever-growing startup ecosystem in the country has created an environment for innovation, contributing greatly to the economy. We have seen many high-value deals in startups helping them grow even stronger. As a result, investors are showing confidence in the ecosystem by throwing their support behind startups.
Interconnectedness, technology's role in reducing the overreliance on oil, smartphone penetration, and a diverse and young population means the Kingdom is an attractive hub for international VCs.
Q) What is your strategy to achieve the target of 600 startups and 3,600 jobs by 2020?
A) Today, Badir is focusing on expanding its innovation and entrepreneurial hubs across the Kingdom in order to achieve its KPIs of creating 600 startups and 3,600 jobs by 2020.
We are currently present in seven cities throughout the Kingdom. Such incubators, in turn, seek to support male and female entrepreneurs and [create a supportive environment] for start-up projects.
To achieve this target, we are now adopting a funnel technique that will allow us to accept a larger number of startups and funnel them down various stages as they progress from the idea, to prototype, to launch and later to growing and scaling.
This will be done by opening public co-working spaces in line with the incubators where entrepreneurs who are yet to meet the requirements for incubation or acceleration can rent low-cost office spaces and work during their idea stage within Badir’s community of entrepreneurs.
Those who make progress with their ideas will qualify to the accelerator stage. On successful completion, the entrepreneur qualifies to the incubator, where he will receive more support until graduation.
Q) Will the Badir Program expand its horizon to beyond attracting technology entrepreneurs?
A) The Badir program focuses only on supporting technology-based business opportunities and the development of technology entrepreneurship.
The program is open to all technology entrepreneurs from Saudi Arabia that have an early-stage technology-based project or a prototype or even an initial concept for a product that meets the specific conditions and requirements for incubation.