Endeavor launches report on state of Saudi startup ecosystem
- A report published by Endeavor Saudi Arabia highlights the rapid growth of the country's startup sector.
- Riyadh’s tech sector has grown rapidly with 50 per cent of companies in Riyadh’s tech ecosystem founded in only the past five years, but only 18 per cent of these have managed to scale.
- One of the biggest challenges facing startups in the country is securing technical talent. Of the founders surveyed in the report, 90 per cent hired overseas talent.
- The study, released on April 25, provides insights into the Saudi tech sector’s current state, evaluates its strengths and weaknesses, and enables decision-makers to better understand and support local tech entrepreneurship.
Endeavor Saudi Arabia in collaboration with Endeavor Insight launched its latest research project that studies, analyses, and maps the activity and connections in the entrepreneurial tech ecosystem in Riyadh for the past 20 years. The report is titled Mapping The Riyadh Tech Sector: A Network Analysis of the Entrepreneurship Community and was published during an event that hosted the Endeavor network in Riyadh and with the attendance of H.E. Eng. Haitham AlOhali, Vice Minister of Communications and Information Technology.
Successes in the tech sector are examples of Saudi Arabia’s growing diversity, inclusion, and innovation. The research showed that Riyadh’s tech sector has grown rapidly with 50% of companies in Riyadh’s tech ecosystem founded in only the past 5 years, but only 18% of those young companies have become scaled companies. These scaled companies provide the majority of jobs in tech in Riyadh with 90% of jobs created by only scaled companies. The growth of the ecosystem has accelerated in recent years from VCs, government initiatives, universities, and globally connected support organisations.
The report focuses on understanding scaled companies in the ecosystem, who are these companies, who leads them, how long did it take for them to scale, and what support they need in order to expand. Findings show that reaching 50 or more employees is a very important milestone for companies, after which they tend to keep growing. Companies that scale are more likely to have founders with specialised professional experience and who are well-connected with other founders.
The purpose of the study was to provide insights into the sector’s current state, evaluate its strengths and weaknesses, and enable decision-makers to better understand and support local tech entrepreneurship. Social network analysis was used to visualise the Riyadh tech sector. This methodology helps trace the flow of people, capital, and information among entrepreneurs, their co-founders, employees, mentors, investors, and other stakeholders. Network maps highlight existing entrepreneurial assets and challenges in a community grounded in the experience of entrepreneurs rather than secondary data and point to opportunities to increase access to capital, talent, or markets.
Lateefa Alwalaan, Managing Director of Endeavor Saudi Arabia, said: “We’ve witnessed firsthand at Endeavor the rapid growth of the tech ecosystem in Saudi and how valuable scaled companies are to the growth of any sector. It was important to us to document this growth and impact to better understand the ecosystem and to create a valuable tool to guide policymakers, VCs, and other stakeholders who support founders.”
One of the challenges facing the Saudi ecosystem was hiring tech talent, therefore, many of the founders interviewed have already moved some of their operations outside of the country, however, the main goal of improving the ecosystem is to create job opportunities for Saudi people. A vast majority of founders who participated in this study reported needing to hire tech talent from outside of Saudi Arabia. More than 90 per cent of them have tech teams in other countries, especially in the nearby MENA region.
Moreover, several interviewed founders of Saudi Arabian companies mentioned plans to relocate their legal headquarters to other countries within the Middle East region or make acquisitions to further address the limitations of the local market
The research is supported by Riyad Bank as a strategic partner, Saudi Aramco Entrepreneurship Center (Wa’ed) as a supporting partner, OCEANX as an ecosystem partner, and also backed by Endeavor Saudi board members. The report is accompanied by interactive network maps that trace the movement in the ecosystem, read the full report and browse the maps here.
Endeavor Saudi Arabia was launched in 2012 as a local affiliate of Endeavor, a non-profit that is the leading global community of, by, and for High-Impact Entrepreneurs. Endeavor creates a Multiplier Effect by inspiring high-growth founders to dream bigger, supporting and investing in them to scale faster, and providing a platform to pay it forward — thereby compounding their individual impact.