Evaluating market demand and right timing ‘crucial’ for Saudi startups to succeed: Expert

However, startups still continue to face some challenges, with funding and intellectual property rights remaining key issues for founders in the kingdom.

In this, Fadi AlWami, founder of The Consultation Center and a financial advisor specialised in SMEs, recommends that startups take advantage of Saudi Arabia’s support structure for small businesses. Startup accelerators, and seeking advice from experts on how to grow a business will help founders grow their businesses and find success.

The advice for startups used to be start small, or get clients before your first funding pitch. What is the proper way for KSA startups to begin their journey to provide their solutions to market need?

Both ways are important in choosing project idea, especially providing a solution to an existing problem. However, as some studies indicate that approximately 40 percent of projects fail due to wrong timing, which indicates that the potential customers have not yet accepted the idea, so it is very crucial to analyse the market acceptance for project’s idea to evaluate potential demand in the market.

With an abundance of opportunities in the kingdom, are there easier sectors to start a business in? How tough is it to get into the fintech scene?

The tech sector in Saudi Arabia is a promising sector, and there are many initiatives that have been launched to support tech startups, whether government authorities or even private sector working to facilitate and overcome many challenges for these ventures, and as a result apparently we have witnessed the success of a number of local tech startups or even international ones expanding in the Saudi market in recent years.

However, with regard to the fintech sector, the major challenge lies in the need to obtain the necessary licences to practice the activity from the authorities, whether the Saudi Central Bank (SAMA) or the Capital Market Authority (CMA).

Moreover, some activities related to fintech, due to that this sector is still new, may not have regulated yet, which requires submission request to Sandbox and work with limited capacity till they get regulated, and this process requires more time and skilled staff which is also we have shortage of such talents and they are expensive for startups in early stages.

There is a high demand for most of the activities of the fintech sector since they provide tech solutions for financial activities, whether related to payments or financing or other activity, which became very important during the pandemic, so there is almost zero risk to finding high demand and potential customers need these services and products, but the challenge may be due to the intense competition in this sector.

How can you protect startups ideas from copycats when pitching for funding?

It is noted that this matter is a great concern among many entrepreneurs, therefore in order to mitigate this risk they may sign a Confidentiality Agreement or a Nondisclosure Agreement (NDA) to protect their rights.

Moreover, they should not share much information related to the project unless it is needed in the event of joining programmes (i.e. incubation or accelerator) or obtaining certain licences. An important note to highlight is that the idea itself will not succeed without dedication, a solid business model and the passionate founders.

After the core of a company has been established, how do young people seek seed funding? What are the Saudi entities that provide funding for this stage?

There are many routes to startup funding which differ in the nature of the activity. As we are talking about tech projects, it is important to highlight the positive impact of the Accelerator programmes that have launched recently and have contributed to the success of many startups, as they provide mentoring and advisory services by experts in their fields and also help to develop the business models which are just as important to entrepreneurs as funding.

One of the active accelerators is Taqadam which is managed and funded by King Abdullah University of Science and Technology (KAUST), also the fintech accelerator managed by the FintechSaudi, and last but not least Monshaat’s accelerators which specialise in different activities. The advantage of these accelerators is to link the founders with investors, either angel investors or VCs, who have been very active recently in the Saudi market to investing in startups at different stages.