Saudi Arabia backs tech startup sector with $888m

SPA

• Revealed at Leap tech conference
• Support for AI, fintech, gaming
• Funding for SMEs in kingdom rises

Saudi Arabia has announced investments worth $888 million to support the local tech startup and venture capital sector.

The funds will support industries such as digital payments, e-gaming and artificial intelligence (AI).

The announcement was made on the second day of the Leap international technology conference taking place this week in Riyadh.

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Saudi Arabia has emerged as a growing market for startups. While startup funding declined globally last year, the kingdom recorded a 159 percent increase in investment compared with 2022, according to venture capital firm Wamda.    

The kingdom’s central bank Sama also reported that funding for small companies surged, by a 17.8 percent year-on-year increase in loans to micro, small and medium-sized enterprises.

Bahrain-based Investcorp announced the establishment of a $500 million fund in Saudi Arabia, which includes a $35 million investment from the company. 

This fund will primarily target growing Saudi companies in their expansion phases. 

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Another Bahraini investment company, Oasis Capital, launched Fund II, amounting to $100 million, aimed at supporting early-stage international tech founders.

Collaborative efforts from the National Development Fund, Social Development Bank, Ignite and the Saudi ESports Federation have led to the creation of two significant funds – an $80 million accelerator VC fund managed by Merck Capital, and a $40 million fund managed by Impact46. 

Both funds will focus on propelling the growth of the local gaming industry and attracting further investments in this sector.

Ibrahim Neyaz, CEO of Saudi Arabia’s National Technology Development Program (NTDP), revealed the launch of five innovative products to enhance the kingdom’s technology, VC and startup domains. 

The first initiative, “Fuel”, equipped with a $266 million budget, aims to support VC funds investing in emerging technologies such as generative AI, space tech, smart cities and biotech.

NTDP’s “Artificial Intelligence Mission”, backed with funding of $266 million, offers a platform facilitating research and development in AI.

Over the next five years, the programme aims to train 800 to 1,000 individuals in AI and machine learning, fostering the creation of 70 to 100 new AI-focused ventures.

Neyaz also launched NTDP’s “Source Tech” initiative, designed to incentivise IT and outsourcing companies to expand services in the kingdom. It will be equipped with a $15 million budget.

“Source Tech” also aims to boost women’s participation in the technology sector, creating more than 2,000 jobs.

NTDP also announced another initiative, “Transform+”, aimed at bridging the technology gap for startups and accelerating cloud adoption. It holds a $33 million budget.

Saudi company Takamol Holding announced a $53 million venture capital arm, Takamol Ventures, to support early-stage technology companies in the Middle East and African markets. 

Startup accelerator Plug and Play and X by Unifonic introduced its debut investment funds to foster tech startups in various sectors across the region.