SME

MENA’S START-UP HUB SHIFTS FROM DUBAI TO RIYADH

Riyadh has emerged as the best place to set up a start-up in the Middle East North Africa region. A survey by UK-based consultancy Sortlist, gave the Saudi capital city 7.92 points out of 10, surpassing Dubai’s 7.78 points.

“Riyadh, Saudi Arabia, proves to be the best MENA city for start-ups. Average broadband speeds of 94.64 Mbps are higher than most, and literacy rates are standing at 95%. Riyadh also has one of the highest happiness ratings in MENA with 6.49/10 and an electricity cost of just 4.2 p/kWh, significantly cheaper than in the UK,” the consultancy noted.

Riyadh is fast becoming an entrepreneurial hub with a global reach, said Lateefa Alwaalan, managing director of Endeavor Saudi in a report published by Monsha’at, the Small & Medium Enterprise General Authority. “Entrepreneurs see Riyadh as the gateway to the largest consumer market in the GCC.”

More than 239,000 SMEs are located in Riyadh, making up around 31.8% of all SMEs in the country and employing over 1.8 million people.

“This makes Riyadh one of the most dynamic cities in the region for small businesses. In March 2022 Riyadh hosted the Global Entrepreneurship Congress (GEC), a global event that brings together leading voices in entrepreneurship, including innovators, regulators and financers,” Monsha’at said.

  

SUPPORTING A GENERATION OF ENTREPRENEURS

Interests from start-ups and small to medium enterprises (SMEs) to set up in Saudi have been picking up momentum. There were more than 752,000 SMEs operating in the kingdom in the first quarter of 2021, a 15% increase over the fourth quarter of 2021, according to Monsha’at’s first quarter report.

Funding for Saudi SMEs via Monsha’at facilitated services saw the Kafalah programme guarantee SAR 64.6 billion in secured loans to entrepreneurs, while the Tamweel platform enabled SAR 12.3 billion in loans, the Saudi Venture Capital Company invested SAR 1.4 billion, and the Indirect Lending Initiative provides low-cost loans of SAR 2.5 billion to companies, the authority said in its quarterly report.

“SMEs need streamlined bureaucracy, lower fees, and the ability to compete in the market,” said Eng. Saleh Ibrahim Alrasheed, governor of Monsha’at. “We are ensuring that SMEs get the support they need, and that growth is transformed into sustainable business models.” Monsha’at’s mandate is to boost private sector productivity and help increase SMEs’ contribution to GDP from 20% to 35% by 2030. The authority deploys a number of initiatives to address challenges faced by SMEs in the market. It also provides small businesses with critical administrative, technical, and financial support, in addition to marketing and human resources.

 

START-UP CULTURE

Venture capital funding in Saudi start-ups surged 93% year on year to reach USD 818 million in the first three quarters of 2022, compared to the same period last year, according to research firm Magnitt.

“FinTech captured the lion’s share with funding value rising by an annual 266% spread over 22 deals in the first nine months of 2022,” Magnitt noted. “Q3 saw only one exit, bringing the total number of exits in Saudi Arabia to six, a single exit higher than FY 2021.”

Egypt, UAE, and Saudi Arabia maintained the top three positions at the level of the number of deals and value of funding capturing more than 75% of the region’s shares.

 

LINKEDIN’S TOP 10

Professional networking solution provider LinkedIn has revealed the annual ranking of the top 10 start-ups based in Saudi Arabia, which have demonstrated growth in 2022.

Tamara topped the list. The Riyadh-based start-up is a payments innovator, focused on providing a seamless experience for merchants and customers through fair and transparent financial solutions, while second-placed Sary is a B2B marketplace connecting small businesses across the wider MENA region with wholesalers and lenders to procure supply efficiently.

Nana, which was ranked third, is a grocery shopping and delivery platform that offers grocery and other home essentials delivery. Fourth-placed Zid is an e-commerce-in-a-box solution provider that any retailer can use to start ecommerce, while fifth-ranked Tweeq offers a feature-rich spending account for modern individuals and SMEs with a user-first approach.

Gathern, Lendo, Qawafel, Resal, and Shgardi, in that order, made up the rest of the list.

“KSA’s Top Startups List 2022 reflects the current state of the start-ups and VC space in the country while also offering insights into the prevailing market trends influencing the community,” said Salma Altantawy, senior news editor at LinkedIn.