RIYADH: Startups in Saudi Arabia witnessed massive growth during the last decade and garnered $3.3 billion in venture capital funding, according to a report released by MAGNiTT.
The data platform, in its “10 Year Saudi Arabia Founder Report”, sponsored by the Saudi Venture Capital Company, provides an in-depth analysis of the background, experience and expertise of founders.
“MAGNiTT initially published a report on founders in the MENA VC ecosystem in 2018, which focused on uncovering the DNA of successful entrepreneurs in the region. Today, in partnership with Saudi Venture Capital Company, we present a comprehensive report on the founders of the top 200 funded startups in the Kingdom over the past ten years,” said Philip Bahoushi, CEO and founder of the platform.
“By shedding light on the experiences of founders in the Saudi ecosystem, we aim to dispel myths about founders, empower entrepreneurs looking to set up their ventures in the Kingdom, and engage government decision makers in shaping policies conducive to innovation. To provide guidance and invaluable intelligence to investors looking for opportunities in this area.”
Nabil Koshak, CEO of SVC, emphasized the remarkable growth and dynamism in the Saudi startup landscape.
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Of these, 44 per cent of startups were launched by teams with two founding members, garnering 53 per cent of the total funding.
Startups founded by a single person accounted for 30 percent of funded startups, but captured only 15 percent of funding in the last decade.
Thirty-six percent of the 400 founders analyzed had at least 10 years of work experience before starting their respective startups.
Sixty-nine percent of the founders had technical education backgrounds, highlighting science, technology, engineering and mathematics.
According to the Endeavor Insight study, thirty-nine percent of founders had a degree in business, which is in contrast to the global average of 19 percent.
“The Kingdom’s strategic initiatives driven by Saudi Vision 2030 have laid a solid foundation for innovation, entrepreneurship and investment. As a result, we have seen a surge in startup activity, with a growing number of ambitious founders taking advantage of opportunities and driving innovation across a variety of sectors,” he said.
“The report aims to provide policymakers, government officials, and investors with insights and data to inform strategic decisions and policies to advance the startup ecosystem for the next 10 years,” Koshak said.
a decade of funding
Compiling data from 200 Saudi-based startups that collectively raised a total of $3.3 billion from 2014 to 2023, the report revealed that 44 percent of these startups were launched by teams with two founding members, who raised more than half of the total funding. Had achieved 53 percent. ,
He further said that with significant support for innovation, the Kingdom is set to witness the emergence of more unicorns.
In contrast, startups founded by a single individual accounted for 30 percent of funded startups, but captured only 15 percent of funding in the last decade.
Notably, 36 percent of the 400 founders analyzed had at least 10 years of work experience before starting their respective startups.
The report also indicates a trend toward entrepreneurship among less experienced founders, with 66 percent being first-time startup founders and only 30 percent with previous regional startup experience.
It revealed a significant gender disparity in the VC landscape within Saudi Arabia, with 94 percent of the total 400 individuals being male founders, while female founders accounted for only 6 percent.
This gender gap is significantly wider than global norms, where the average proportion of female founders in an ecosystem was 15 percent, according to Startup Genome’s research conducted between 2016 and 2022.
Additionally, only 7 percent of solo founders were women, and there were no recorded startups with only two or more female founders.
However, as the number of founders per startup increased, so did gender diversity, albeit slightly. Among startups with three founders, 18 percent were of mixed gender, while among startups with four or more founders, the figure was 12 percent.
Additionally, 91 percent of startups founded only by men claimed 98 percent of the total funding. In contrast, only 3 percent of startups founded by women contributed 0.4 percent of the total funding.
education of the founders
The report delved more deeply into the education qualifications of the founders, revealing that 55 percent in the Kingdom had obtained at least a bachelor’s degree.
In terms of technological development, 59 percent of the founders had a technical education background, highlighting science, technology, engineering and mathematics.
According to the Endeavor Insight study, thirty-nine percent of founders had a degree in business, which is in contrast to the global average of 19 percent.
More than half of the 400 founders obtained their degrees internationally, while 22 percent had both international and local degrees.
King Saud University, King Fahd University of Petroleum and Minerals and King Abdulaziz University were among the most common institutions for startup founders.
Seven of the top 10 universities from Saudi founders who raised funds were public institutions.
Mirroring global trends, Stanford and Harvard were among the top international schools of Saudi founders.
professional experience
Despite fintech being the most funded sector, only 7 percent of founders had experience in finance, and 18 percent had experience in banking, compared to 48 percent who had a background in information technology.
Additionally, even fewer founders, only 12 percent, had experience in e-commerce, despite this industry accounting for the highest share of deals closed by the top 200 Saudi startups at 20 percent.
The report also revealed that 36 percent of founders in Saudi Arabia are skilled professionals who have more than 10 years of experience before starting their business.
Notably, Saudi Aramco was the most common previous employer among funded founders, with 7 percent of them having worked there before launching their startups.
Additionally, McKinsey and Microsoft were among the top 10 companies where the 400 founders included in this report previously worked.
The majority of these founders held significant leadership roles, with 31 percent serving as a founder, co-founder, or board member. Only 4 percent came from entry-level positions.
The report also notes: “Although Saudi Arabia has seen many serial entrepreneurs, 66 percent of founders in the last decade were first-time founders,” indicating a vibrant and growing entrepreneurial ecosystem.