Saudi startup investment shifts focus to AI, enterprise software, and SMEs

Saudi startup investment shifts focus to AI, enterprise software, and SMEs
Saudi Arabia’s startup ecosystem could shift to artificial intelligence in the future. Above, the Global AI 2020 Summit in Riyadh on Oct. 21, 2020. (AFP file photo)
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Updated 01 January 2025
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Saudi startup investment shifts focus to AI, enterprise software, and SMEs

Saudi startup investment shifts focus to AI, enterprise software, and SMEs

RIYADH: Saudi Arabia’s startup ecosystem is gaining momentum, propelled by government-backed initiatives and an influx of investor interest. While the fintech sector remains a primary focus, emerging opportunities in artificial intelligence, enterprise systems, and small-to-medium enterprise investments are drawing attention.

As part of its Vision 2030 initiative to reduce its dependence on oil, Saudi Arabia is positioning itself as a regional hub for innovation, creating fertile ground for startups and attracting significant venture capital flows.

Why fintech?

Tushar Singhvi, deputy CEO of Crescent Enterprises and head of its investment platform, CE-Ventures, discussed the enduring potential of the fintech sector in an interview with Arab News. He pointed to the Kingdom's robust national strategy, which aims to establish 525 fintech companies by 2030, as a key driver behind sustained growth.

“Saudi Arabia’s fintech sector is set for sustained growth, driven by a clear national strategy to have 525 fintech companies by 2030,” Singhvi said.

In 2023, Saudi Arabia captured 58 percent of all fintech venture capital in the Middle East and North Africa. Singhvi also highlighted pivotal moves like the acquisition of Tweeq by Tabby and the launch of Samsung Pay, both of which support Saudi Arabia’s goal of becoming a cashless society.

“These efforts position Saudi Arabia as a leader in fintech innovation, making the sector highly attractive to investors,” Singhvi stated.

He added that this fintech momentum is aligned with the broader push for economic diversification. Vision 2030, Saudi Arabia’s ambitious roadmap for its post-oil economy, is channeling investments into long-term growth sectors like fintech, logistics, and healthcare.

“Investors are focusing on sectors with long-term growth potential, like financial services, healthcare, and renewable energy,” Singhvi said, emphasizing a rising interest in ESG-aligned investments that prioritize sustainability and social impact.

The fintech sector’s growth is further accelerated by the relative underdevelopment of traditional financial services in the region, according to Khaled Talhouni, managing partner at Nuwa Capital. He noted that the services available to both consumers and businesses from traditional financial institutions remain limited compared to the maturity of the overall economy.

“The availability and depth of services to both consumers and firms from traditional financial institutions like banks remains woefully under-developed relative to the maturity of the overall economy,” Talhouni explained.

This gap presents significant opportunities for fintech startups. However, Talhouni anticipates market consolidation, with smaller companies potentially being acquired by larger players. “I do suspect some consolidation in the space with smaller players folding into larger ones,” he said.

The rise of AI

AI is another area where Saudi Arabia is positioning itself for major growth. Singhvi pointed to the partnership between the Saudi Data and Artificial Intelligence Authority and NVIDIA to build one of the largest high-performance computing data centers in MENA.

“Saudi Arabia is rapidly aligning with global AI trends, aiming to be a top 15 AI leader by 2030,” Singhvi explained. Along with such investments, there is a concerted effort to build a skilled workforce, ensuring that the Kingdom can adopt AI and enterprise technologies to fuel its digital transformation.

Talhouni, however, sees the real opportunity for startups in integrating AI into day-to-day business operations rather than in large-scale AI infrastructure.

“Rather than investing in AI infrastructure/LLMs (large language models) etc., startups will incorporate AI into their normal course of business naturally across the region,” he said. “AI will become embedded in the offerings of all startups,” but he does not expect many companies in the region to invest deeply in large-scale AI or deeptech, except for specific use cases.

Talhouni emphasized that AI will likely serve as an enabling technology, integrated into existing business models, rather than being the primary focus for most startups.

Shifting focus

Singhvi anticipates a shift in investor attention toward enterprise systems as Saudi companies scale up and strive for global competitiveness. He highlighted that enterprise software will play a pivotal role in the Kingdom’s broader digital transformation efforts.

“We are seeing more and more SaaS (Software as a Service) companies emerge from the region and the Kingdom,” Talhouni observed. However, scaling such businesses can be challenging, given the relatively small number of large companies in the region. “SaaS/Enterprise requires a large number of firms and a relatively large economy to flourish,” he said. Despite these hurdles, Talhouni noted that niche opportunities exist for creating regional champions in the sector.

Why not oil and gas?

While the oil and gas sector has traditionally been the cornerstone of Saudi Arabia’s economy, it poses significant challenges for startups. Singhvi explained that the sector’s complex regulations and high capital requirements create barriers to entry for smaller companies. Established industry giants dominate research and development, making it tough for new players to break into the space.

“The oil and gas sector’s complex regulations and high capital requirements create significant barriers for startups,” Singhvi said.

However, Singhvi noted the growing opportunities for energy-tech startups, particularly those focused on digital transformation and sustainability, through partnerships with oil and gas companies.

“There has been a rise in strategic collaborations between oil and gas companies and energy-tech startups, which is accelerating the shift toward digital innovation,” he said.

Talhouni offered a broader perspective, suggesting that much of the innovation in the oil and gas sector requires specialized research and development infrastructure, which the region still lacks.

“Most innovation in the oil and gas sector is in engineering, material science, and deeptech,” he explained, adding that these fields require strong research-driven universities and a grant system, which are not yet widespread in the region.

“Unlike consumer internet startups that require, as an example of the opposite side of the spectrum, much easier entry with existing cloud infrastructure and limited technical/research-driven processes required,” he added.

This, he believes, makes it harder for new startups to break into the oil and gas industry, compared to the more accessible fintech sector, where cloud infrastructure allows companies to scale with fewer resources.

The growing SME sector

According to Ibrahim AbdelRahim, managing partner at Moonbase Capital, Saudi Arabia’s SME sector has experienced impressive growth, largely driven by government support and Vision 2030 initiatives.

“As of the fourth quarter of 2023, the number of SMEs in the country reached 1.31 million, reflecting a 3 percent quarter-on-quarter increase,” AbdelRahim noted, referencing a report by the General Authority for Small and Medium Enterprises.

This marks a staggering 179 percent increase in SME numbers over the last eight years. While most of these SMEs are micro-sized, they are well-positioned for further growth.

AbdelRahim also highlighted the rising interest in search funds, a new asset class in the region that aligns well with Saudi Arabia’s economic landscape.

“Many investors are eager to diversify their portfolios with search funds due to their potential for steady returns that surpass those of real estate investments or forex trading,” he said.

Moonbase Capital, one of the pioneers in search funds in the region, has seen growing interest from high-net-worth individuals and family offices in Saudi Arabia.

From an entrepreneurial perspective, AbdelRahim believes search fund-backed ventures will thrive in the coming decade, thanks to the rapid growth and transformation of the SME sector.


Closing Bell: Saudi main index closes in green at 12,388   

Closing Bell: Saudi main index closes in green at 12,388   
Updated 20 February 2025
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Closing Bell: Saudi main index closes in green at 12,388   

Closing Bell: Saudi main index closes in green at 12,388   

RIYADH: Saudi Arabia’s Tadawul All Share Index edged up on Thursday, gaining 70.56 points, or 0.57 percent, to close at 12,388.15. 

The total trading turnover of the benchmark index was SR5.95 billion ($1.58 billion), as 95 of the listed stocks advanced, while 137 retreated.    

The MSCI Tadawul Index increased by 13.19 points, or 0.86 percent, to close at 1,551.49. 

The Kingdom’s parallel market Nomu rose, gaining 44.37 points, or 0.14 percent, to close at 31,474.69. This came as 40 of the listed stocks advanced, while 47 retreated. 

The best-performing stock was Anaam International Holding Group, with its share price surging by 6.33 percent to SR23.84. 

Other top performers included Etihad Etisalat Co., which saw its share price rise by 5.35 percent to SR63, and Tourism Enterprise Co., which saw a 4.65 percent increase to SR0.90. 

The biggest decline of the day was seen in Al Sagr Cooperative Insurance Co., with its share price dropping 9.83 percent to SR15.96. 

Saudi Steel Pipe Co. saw its share price drop 6.77 percent to close at SR67.50, while Astra Industrial Group fell 4.81 percent to SR182, reflecting broader market pressures.

Following this, Saudi Steel Pipe Co. reported its annual results for 2024, with net profits rising 15.21 percent year-on-year to SR250 million. 

In a Tadawul filing, the company said the profit increase was driven by a rise in gross profit to SR399 million in 2024 from SR283 million the previous year, largely due to higher sales volumes. 

Astra Industrial Group reported interim financial results for the period ending Dec. 31, with net profits rising 23.99 percent year on year to SR589.34 million. 

The company attributed the growth to higher gross profit across all sectors, increased sales value, and a rise in other income. 

Meanwhile, shares of Yamama Cement Co. fell 1.89 percent on the main market today, closing at SR36.25. 

In a separate announcement, Nayifat Finance Co. posted its annual results for 2024, with net profits surging 47.93 percent to SR131.23 million. 

The company credited the profit increase to higher operational earnings, driven by a decline in the net charge for expected credit loss allowance due to improved write-off recoveries. 

In today’s trading, Nayifat Finance Co.’s shares edged up 0.83 percent on the main market to close at SR14.74. 


Qurayyah power plant to expand by 3.01 GW thanks to $3.6bn investment

Qurayyah power plant to expand by 3.01 GW thanks to $3.6bn investment
Updated 20 February 2025
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Qurayyah power plant to expand by 3.01 GW thanks to $3.6bn investment

Qurayyah power plant to expand by 3.01 GW thanks to $3.6bn investment

JEDDAH: Saudi Arabia is boosting its energy security with an SR13.4 billion ($3.57 billion) investment to expand the Qurayyah power plant, adding 3.01 gigawatts to meet growing demand and support economic growth.

Saudi Electricity Co. and ACWA Power have signed a power purchase agreement with Saudi Power Procurement Co., the Kingdom’s sole licensed electricity buyer, to expand Qurayyah Independent Power Plant. This facility is the largest combined-cycle gas-fired independent energy station in the world.

The initiative supports the Kingdom’s Vision 2030 by improving electricity generation efficiency, reducing costs, and diversifying energy sources to replace liquid fuels in the power sector. It aims to enhance reliability and sustainability through advanced combined-cycle gas turbine technology while reducing carbon emissions and promoting environmental conservation.

The project, overseen by the Ministry of Energy, aims to increase Saudi Arabia’s electricity capacity and efficiency by adding combined-cycle power plant units designed for future carbon capture. According to the principal buyer, the deal was signed with a consortium led by ACWA Power, SEC, and Hajji Abdullah Alireza & Co. Ltd., with SEC and ACWA Power each holding a 40 percent stake.

As one of the Kingdom’s largest power generation projects, it includes the financing, construction, ownership, and operation of a combined-cycle gas power plant, along with the development and transfer of a 380-kilovolt electrical substation, according to the Saudi Press Agency.

SEC is the largest electricity producer, transmitter, and distributor in the Middle East and North Africa, serving over 11 million customers.

ACWA Power — the world’s largest private desalination company — announced that on Feb. 19 it received a notice from the Al-Shuaiba 2 Solar PV Independent Power Plant project company, confirming that it has been granted the commercial operation certificate by the SPPC for the first, second and third groups, with a total capacity of 2,060 MW.

In a statement on Tadawul, the firm added that the initiative is now fully operational, noting that it owns a net stake of 35.01 percent share in the project company.

The body expects the financial impact to be reflected in the current year’s second quarter.


Saudi investment ministry inks deal with Sana to boost entrepreneurial ecosystem in Al-Ahsa

Saudi investment ministry inks deal with Sana to boost entrepreneurial ecosystem in Al-Ahsa
Updated 20 February 2025
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Saudi investment ministry inks deal with Sana to boost entrepreneurial ecosystem in Al-Ahsa

Saudi investment ministry inks deal with Sana to boost entrepreneurial ecosystem in Al-Ahsa

RIYADH: A new cooperation agreement between the Ministry of Investment and Prince Ahmed bin Fahd bin Salman Center will see Saudi Arabia enhance its entrepreneurial ecosystem in the Al-Ahsa region.

The deal signed with the center, also known as Sana, focuses on attracting pioneering companies and innovators while fostering a business-friendly environment.

The Kingdom is increasingly being recognized for its growing enteprise-friendly landscape, securing third position in the 2023-2024 Global Entrepreneurship Monitor report.

The latest initiative, inked at the Al-Ahsa Forum 2025 in Al-Ahsa, also seeks to foster greater engagement with creative thinkers and business leaders through investment meetings and events, and will support the issuance of entrepreneurial licenses and provide access to essential services.

Moreover, the Sana agreement seeks to explore investment opportunities, encourage strategic partnerships, and promote investment alliances that enhance the competitiveness of the entrepreneurship sector in Saudi Arabia.

The new deal comes against a backdrop of venture capital pouring into the Kingdom, with the country retaining its position as the leading destination for such funds in the MENA region in 2024, raising $750 million, according to a report from regional venture platform MAGNiTT.

This marked the second consecutive year the Kingdom has led regional VC rankings. Saudi Arabia accounted for 40 percent of the total amount deployed in MENA, closing 178 deals, the most of any nation in the region.

Speaking to Arab News at at the LEAP 2025 Tech Conference held in February, Mohammed Al-Zubi —founder of Saudi venture capital firm Nama Ventures — explained that the nation is rapidly becoming a key player in the regional technology ecosystem and is emerging as the “center of gravity” for Middle East startups.

Al-Zubi believes Saudi Arabia’s support for the startup ecosystem is unmatched globally. Having spent time in Silicon Valley, London, and the Middle East, he argued that the Kingdom’s government-led initiatives are unparalleled.

According to the international policy advisory and research organization Startup Genome, Riyadh ranked among the top five startup ecosystems in the Middle East and North Africa in June, in collaboration with the Global Entrepreneurship Network.


King Salman approves Saudi riyal symbol

King Salman approves Saudi riyal symbol
Updated 20 February 2025
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King Salman approves Saudi riyal symbol

King Salman approves Saudi riyal symbol

RIYADH: King Salman on Thursday approved the official symbol for the Saudi riyal, marking the beginning of a new chapter in the Kingdom’s financial journey, as reported by the Saudi Press Agency.

Saudi Central Bank Gov. Ayman Al-Sayari expressed his gratitude to the nation’s leadership for launching the symbol, which he believes “reinforces Saudi Arabia’s financial identity both locally and globally.”

Al-Sayari further noted that this initiative underscores the growing international influence of the Saudi riyal, while also fostering a sense of national pride and cultural unity. He added that the newly designed symbol represents the Kingdom’s rich cultural heritage.

The symbol, which blends Arabic calligraphy with the name of the national currency, “riyal,” will be utilized in financial and commercial transactions both within the Kingdom and internationally.

The central bank governor also commended the collaborative efforts of all parties involved in the project, including the Ministry of Culture, the Ministry of Information, and the Saudi Standards, Metrology, and Quality Organization.

Introducing a symbol for the riyal reinforces the Kingdom’s financial and economic identity, further positioning the Saudi riyal as a credible and globally recognized currency within the international financial system.

It also simplifies the representation of the riyal in financial transactions and commercial dealings.

According to SAMA, the symbol will be rolled out immediately, with its integration into financial and commercial transactions, as well as various applications, occurring gradually in coordination with relevant entities.


Saudi Wafi Energy Pakistan reports $11.8 million profit for 2024

Saudi Wafi Energy Pakistan reports $11.8 million profit for 2024
Updated 20 February 2025
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Saudi Wafi Energy Pakistan reports $11.8 million profit for 2024

Saudi Wafi Energy Pakistan reports $11.8 million profit for 2024
  • The company became the majority shareholder of Shell Pakistan Limited in November 2024
  • It has formed a partnership in Thar Coal Project following a win in Saindak mining project

ISLAMABAD: Saudi company Wafi Energy Pakistan Limited has announced its financial results for 2024, reporting a profit of Rs3.3 billion ($11.8 million), according to a statement from the group on Thursday.
Wafi Energy, an affiliate of the Asyad Group, became the majority shareholder of Shell Pakistan Limited (SPL) in November last year and now holds approximately 87.78% of the total issued share capital of SPL. However, the Shell brand will remain in Pakistan through retail and brand licensing agreements, with SPL as the exclusive brand licensee.
The financials of the company for the year ending December 2024 were announced by its board of directors.
“The company reported a profit after tax of Rs3.3 billion for 2024 compared to a profit of Rs5.8 billion [$20.7 million] in 2023,” the company said. “It is important to note that the 2023 results included a one-time income of PKR10.7 billion [$38.3 million] related to the waiver of Shell Group liabilities.”
The company highlighted that it increased its market share with Helix and Advance Lubricants and formed a partnership in the Thar Coal Project following a win in the Saindak Gold and Copper mining project.
“The mobility business also made significant strides, expanding its network by introducing 16 new sites and rebuilding nine existing ones,” the statement added. “The convenience retail business demonstrated strong growth, with a 28% year-on-year increase.”
SPL is one of the oldest multinationals in Pakistan, with a network of over 600 sites, countrywide storage facilities and a broad portfolio of global lubricant brands.
Shell has supported Pakistan’s development by providing energy for major projects like Mangla Dam and Kotri Barrage, powering Pakistan International Airlines’ first flights, expanding road infrastructure and fostering innovation among local entrepreneurs.