Winning in Saudi, for Saudi

Shorooq Partners is always exploring opportunities for early-stage investments, and one country we have been strongly focusing on for the past five years is the Kingdom of Saudi Arabia. As the largest economy in the Middle East, Saudi Arabia has a GDP of more than $700 billion, growing 7.6% this year according to the IMF, as one of the fastest growing economies out of the G20 nations. Boasting a youthful population, Saudi has a population of over 34.5 million, 70% of which is below the age of 35 years old. Led by the youth, the Kingdom has embarked on a remarkable journey under the Saudi Vision 2030 launched by HRH Crown Prince Mohammed bin Salman back in 2016 – with technology as a core enabler and form of growth.

Ever since Saudi's Vision 2030 was announced in 2016, venture capital funding in Saudi has continued to rise to an all-time high, with consecutive QoQ growths. As of Q1’2022, the total funding raised by Saudi-based startups grew 212% to more than $265mm. According to the Saudi Arabia Venture Investment Report prepared by the Saudi Venture Capital Company (SVC), Q1’2022 marks a 3,557% growth rate since Q3’2020, indicating a remarkable growth of the sector and an evolution of the ecosystem.

We remain extremely optimistic about Saudi’s future growth likely driven by tech-savvy young population becoming more acceptive of digital solutions, as well as government initiatives that aim to restructure and boost the Saudi economy from every angle. Our Saudi operation has concentrated on software, fintech, platforms, and Web 3.0 sectors for the last few years, with applications in healthcare, real estate, manufacturing, data and AI to name a few. We believe this is an amazing time for local companies, especially for fintech startups, to accelerate adoption of the digital economy and change & improve how people live and operate in the Kingdom.

Riding the tide of unprecedented reform initiatives unlocking opportunities for investment and growth in Saudi, Yousef Albabtain joined Shorooq Partners in January 2020 as part of the firm’s strategy to expand its presence across the region. As the Principal and Saudi Country Manager at Shorooq Partners based in Riyadh, Yousef has been focusing on identifying and backing promising startups in the Saudi market, leading many of our key investments in such amazing companies as Lean, Lendo, Mozn, Penny, Nuqta NFT and Retailo, to name just a few.

As a consultant first, an entrepreneur next and an investor now, Yousef has spent a number of years honing his analytical, operational and management skills before he took an active interest in exploring his passion for technology and profession in investments. Upon meeting Shorooq Partners’ Founding Partner Shane Shin in late 2019 through a mutual friend and an investor, Yousef finally decided to merge his passion and profession together and purse the journey of becoming a company builder and value investor.

“I have always had a personal passion for tech solutions and investing in general. When the opportunity to join a fast-growing investment platform like Shorooq Partners with a clear outlook and a vision for Saudi’s future was presented to me, I had to put my foot down and join the momentum. Having grown up mostly in the US, joining Shorooq Partners two years ago to build the VC platform and the startup landscape together in my home country was the best career decision I have made. It is a rewarding experience to meet and partner with founders, and supporting their journeys as they build enduring companies, from the Kingdom to the world. It has been great delving with local founders and entrepreneurs, as well as witnessing Shorooq Partners grow from a nascent platform to an established one that supports numerous category-leading regional startups today,” said Yousef.

A positive environment for Saudi startups

According to Yousef, local regulators have stepped up the level of support and enablement for startups to flourish in the Kingdom, becoming more receptive to partnerships with startups as well as with larger companies, and paved the way for innovative thinkers and passionate founders to pursue their visions.

After all, at the heart of every evolving ecosystem are innovators and entrepreneurs that strive to solve a problem and drive a change. Likewise, we reiterate our sense of responsibility as being founders’ partners, not just investors, and therefore consider finding the best talents and founders that share our vision and thesis our main priority in every region we operate.

Saudi is a rich country economically and culturally, and the country is becoming more developed in terms of digital and mobile infrastructure day by day, but we have experienced some Saudi founders tend to be too cautious and moderate when approaching investors. Even though we have built strong circles and networks of collaborative individuals to generate healthy referrals and deal flows in the region, meeting innovative, ambitious founders who share our vision can still be quite a challenge.

We would love to see more Saudi founders change this soft dynamic into a proactive relationship with investors and embrace that early-stage VCs like Shorooq Partners are here to take startups to the next level and grow along with founders, beyond a simple one-way relationship of investing and expecting returns. We understand that the seed and early stages are about creating something great from a simple problem-solving idea, against all odds. Let us be present to support, challenge, and help develop your thoughts into concrete plans.

What we strive to be

Shorooq Partners has always strived to offer differentiated value-adds to our portfolio companies under our main ethos of being founders’ partners, and we try to achieve this first and foremost by building the right systems and framework from the very beginning with the founders who appreciate and utilize our founder-centric ideals.

We are a collaborative and supportive team of diverse backgrounds and networks, and we are very proud of having backed amazing Saudi-based startups such as: Lendo (the first licensed SME lending platform in the Kingdom), Mozn (Saudi AI and data giant), Nuqta NFT (the first Saudi NFT platform), Lean Technologies (the first Saudi B2B company to receive investment from Sequoia), Penny (B2B procurement marketplace in Saudi and beyond), and Retailo (one of the fastest growing FMCG digital supply-chain solutions).

One of our unique value-adds to the founders is bringing strategic international capital that is differentiated from the regional investors. We think ahead and ask ourselves, where is this startup headed in terms of growth prospects? And where in terms of fundraising opportunities to unlock further capital in the later stages of development? Recently, we have been able to connect one of our Saudi-based portfolio company with an Asia-based blockchain developer to expand its business abroad, and this feat was made possible after extensive collaboration with our international networks. We will continue to explore expansion scenarios for our portfolio companies as their partners in business.

The great news is that local companies in Saudi Arabia have a high chance of successfully expanding into other countries in the Middle East and beyond because they are starting at the largest economy in the region amidst an unprecedented journey and support driven by the government’s Vision 2030. Under this movement, we are looking for innovative ideas that will stand the test of time. We yearn for opportunities to identify untapped sourcing opportunities in the Kingdom. If you have an idea you would like to share, reach out and join the tide with us. We are eager to start the dialogue.

Website: www.shorooq.com

Email: hello@shorooq.com