One of the organizations helping to achieve this target is the Saudi Aramco Entrepreneurship Center (Wa’ed), which is a subsidiary of the world’s largest oil company.
Established in 2011, Wa’ed has so far helped around 90 companies with loans and venture capital investments. It aims to double that number by 2023, with around 20 deals forecast during 2021.
Last year, amid the pandemic, Wa’ed tripled the amount of money loaned to startups in the Kingdom as part of its bid to support the SME sector. But Wassim Basrawi, Wa’ed’s managing director, said he wanted to do even better.
“We were given the privilege to support entrepreneurship in the Kingdom, and when you most need entrepreneurship is in times of necessity when jobs and opportunities are scarce,” he told Arab News. “Our stakeholders and decision-makers increased the targets. They said whatever we did in 2020 is not enough.”
Wa’ed regularly invests in companies which identify a gap in the local market. Some of its recent investments have included funding for a digital mapping startup, a sports and fitness app, a language software platform for teachers of students with disabilities, a farming technology company, an AI-powered traffic management system, and a drone operator. Basrawi said his preference was for business ideas that had the potential to scale up. “The bigger the gap, the greater the impact,” he added.
He said they had seen a high success rate among the companies they had invested in, currently around 83 percent, and that Wa’ed aimed to maintain this rate going forward.
The wider ecosystem has seen positive advances. According to this year’s Global Entrepreneurship Monitor report, total entrepreneurial activity in Saudi Arabia increased in 2020 by 24 percent compared to 2019.
It also showed that more than 90 percent of adults saw entrepreneurship as a favorable career choice, while a third of Saudis surveyed said they were keen on launching a business within the next three years.
● Total entrepreneurial activity in Saudi Arabia increased in 2020 by 24 percent compared to 2019.
● Wa’ed last month launched its first roadshow event to find and fund the next generation of Saudi entrepreneurs with up to SR100 million.
● Saudi Arabia recorded a 35 percent year-on-year increase in the number of investment deals in the technology startup sector in 2020.
“The entrepreneurship environment in Saudi Arabia is growing so fast to the point that you (have) got to hold on to your seat, it is growing exponentially,” Basrawi said. “I think what we are going to see next year is different from what we saw last year, it is so fast that it does not compare to the last 10 years, not even close.”
Wa’ed last month launched its first roadshow event to find and fund the next generation of Saudi entrepreneurs with up to SR100 million ($27 million), including loans and venture capital investments, to support game-changing ideas through a series of events in six Saudi cities from September to December.
“We are the only entity in the world that has a complete spectrum of services from the very beginning to the end, including the phases between before, during, and after investment support,” Basrawi said, adding that “by having the end-to-end service, you increase the likelihood of success.”
One of the challenges often cited by SMEs for their lack of success is funding. As part of Vision 2030, the government wants to increase the amount of funding that financial institutions allocate to SMEs to 20 percent by 2030, up from just 5 percent. Basrawi believed the advances in financial technology in the Kingdom had already begun to address this, with new sources and forms of funding.
“One of our incubated companies, not even ready for venture capital, got SR3 million equity investment through a crowd-funding source in the Kingdom. Technologies are making a huge difference for us in the Kingdom, to better our lives, (and) our income for our families.”
Saudi Arabia recorded a 35 percent year-on-year increase in the number of investment deals in the technology startup sector in 2020, while the value of deals soared 55 percent year-on-year to $152 million, according to a study in January by data research platform Magnitt.
Wa’ed is the Arabic word for promising, and Basrawi hoped the upcoming roadshow would entice young Saudis to embrace entrepreneurship.
“Entrepreneurs are going to make a difference.”