As a startup, you would always be looking for great opportunities to grow your business and take it to the next level. One approach to this is geographical expansion and capturing market share in new regions. If you are exploring this path, then this article is for you.
In recent years, Saudi Arabia has been transforming and introducing new strategic priorities. Some of these priorities are increasing the non-oil revenues, bringing unemployment down, supporting SMEs and entrepreneurs, and diversifying the economy. These priorities and few others, represent the core drive for the government towards attracting international successful startups to Saudi.
So why should you, as a growing tech startup, consider expanding to KSA? I have summarized below my top 6 reasons to expand your business into Saudi Arabia.
1- Ease of Setup
As someone who has been through the process of setting up in Saudi 7 years ago, I am confident to say that the regulations and the process have improved substantially. What used to take almost a year to figure out and issue, is now taking a week or so. SAGIA (Now the Ministry of Investment) has worked really hard to build the right process for Entrepreneurs to come and run their startups in Saudi with minimal setup effort. The Entrepreneur License is just an example of SAGIA’s effort. Not only can you have 100% foreign ownership with easy requirements, but also the financial obligations are reduced. For example, entrepreneurs can now renew their license for just 2,000 SAR instead of the 60,000 SAR needed for the traditional service license.
2- Market Size and Dynamics
Saudi Arabia is considered the largest market in MENA, with a population of 33 million, out of which 50% are youth under 25. The Saudi GDP per Capita is 23.5K USD, and the purchase power of citizens and residents is considered high. In addition to that, Internet penetration in Saudi is as high as almost 90% of the population. Having these 3 key factors; large young audience, good purchase power, and high percentage of internet users should encourage any tech-based startup to seriously consider expanding to Saudi Arabia.
3- The Country’s Transformation
The whole country of Saudi Arabia has been going through an amazing journey of transformation. Being a long time resident of this beautiful country, I have seen the leaps of improvements and transformation that happened in the last 3-4 years. So why should you care? Well, first of all, this transformation targets business and economy as a priority. The first point I mentioned above is a result of this transformation. But that’s not the only thing, having this transformation opened up new sectors and new priorities for the government that were not present before. Nowadays there is a huge focus from the government on developing sectors like entertainment, information technology, and financial services, that are promising high returns for all investors. There are dedicated government entities to develop and support the artificial intelligence sector, the gaming sector, cyber-security, the fin-tech, etc. This is all of course in addition to the current focus from the government on health-tech, and education technologies. The time could not be any more perfect for tech-startups to flourish under these directions and the attention given to the digital and knowledge economy.
4- Access to Talent
Getting the right talents is always a challenge. However, with a large number of graduates every year, and the focus on tech and engineering jobs, this is less of an issue here in KSA. As mentioned, more than 50% of the population is under 25 years of age. You will be coming to a market full of energetic youth that are inspired to make a difference in their country. The government is also launching several initiatives to equip the youth with the right skill set for the job market such as coding. Moreover, Saudi has been sending hundreds of thousands of students to study at international universities which will improve the quality of the local talent and in turn provide a great pool of potential hires.
5- Government Support & Access to Fund
Once you officially setup in KSA, and after getting the SAGIA license, you would be treated almost like a local entity. Your local entity will be able to leverage the government support in many forms. One example is the great initiative from the government to support the hiring of local talents, where it would contribute to their salary. On another point, the investment scene in Saudi has never been better. There are around 30 institutions that provide funding to startups in one form or another, such as STV, Raed Ventures, Vision Ventures and others. Having these two factors together in a transforming country would present the perfect opportunity for the tech startups to expand here (business-wise and funding-wise).
Saudi has outperformed itself over the years when it comes to the development of the infrastructure. This could be seen in transportation systems, in tele-communication systems, in power and energy, and others. Things like fiber optic connectivity, internet for rural areas, and enabling 5G technology have been the key priorities for the Ministry of Communication and Information Technology in the last 3 years. This infrastructure contributes directly to an enhanced technology utilization, where you can deploy your solutions and products.
There are other reasons, but the above would be the main ones for you as an entrepreneur to consider such a move. At AstroLabs we are proud to be contributing positively to this, as we have helped more than 50 international startups soft-land in Saudi with our Saudi Arabia Company Registration service. This included the support with the setup process, providing them with fully equipped working facilities, and connecting them to our network of partners, clients, investors, etc. We are also proud that the total valuation of these international startups is above 3Bn USD and they are already creating jobs and impacting the local economy.