A new wave of accelerator programmes is boosting Saudi entrepreneurs
- 07 May 2018
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May El Habachi
There is no better time to be an entrepreneur in Saudi Arabia. The number of support organisations, including incubators, accelerators, funds and co-working spaces, has tripled over the last few years, and entrepreneurs in the country now have a great opportunity to successfully launch and grow their startups.
To date, SMEs have contributed about 20 per cent of Saudi Arabia’s GDP, compared to 70 per cent in advanced economies, but the country’s Vision 2030 is focusing heavily on supporting SME entrepreneurship as part of the government’s plans to create more job opportunities.
“It is important to encourage entrepreneurship and diversify our economy,” said Mohanned Alnabulsi, Managing Director of Flat6Labs Jeddah. “To do this, we need to take care of our startups; they are our pipeline. Startups can become SMEs, which in turn can create more jobs and boost the economy.”
BIG OPPORTUNITIES FOR STARTUPS
To support startups, Flat6Labs Jeddah has a robust accelerator programme for entrepreneurs that includes providing office space, consultancy and mentorship, networking and legal support. The programme is meant to take entrepreneurs from concept to reality.
So far, they have proven successful. Since launching in 2013, Flat6Labs Jeddah has graduated more than 40 startups, most of which have gone on to successfully run their own businesses. But applicants must be prepared for a rigorous selection process to enrol in the programme. This includes an interview, a five-day boot camp and a presentation in front of a selection committee.
“We receive hundreds of applicants each cycle,” said Alnabulsi. “What matters most is not the business idea but the person. We want to learn how they think. We invest in the person because they are what’s going to determine the success of the startup.”
Another accelerator that is slowly making waves in the country is the recently launched 9/10ths, an initiative by the Saudi Human Resources Development Fund (HRDF) in partnership with King Abdullah University of Science and Technology (KAUST) to support startups in Saudi Arabia.
What differentiates 9/10ths from other programmes is that it is a not-for-profit scheme and does not acquire any equity in exchange for the seed money provided. Any losses are covered by HRDF and KAUST.
While 9/10ths provides features similar to other accelerators in the country, such as coworking spaces, mentoring, seed funding, hands-on training and access to investments, it also has a unique three-stage programme that consists of incubation, pre-acceleration and acceleration.
“Our three-stage process enables us to support our startups from idea to market stage,” said Nora Al Swailem, Accelerator Manager at 9/10ths. “Startups must graduate from each phase to enter the next programme and receive more funding. At the end of the accelerator phase, we organise a showcase event where successful startups exhibit their product to an audience of venture capitalists and angel investors.”
Despite the support startups receive, many still face challenges. Funding, or more specifically, lack of funding, is one of the biggest obstacles.
“One of the most critical stages in the life of a startup is between the seed and the venture capital investment,” said Mohamed Nawito, Incubation Programme Manager at Wadi Makkah, a platform for launching startup companies in Mecca. “There is a very strong demand from startups for funding, but some investors are reluctant to invest in startups because they are still not fully on board with tech investments yet.”
As a result, accelerators designed their programme to support and guide startups from the idea to the market stage. However, in some cases, this is not enough; upon graduation, some startups do not have enough funds to continue growing their business. To address this challenge, Flat6Labs Jeddah extended its support for startups long after programme graduation.
“Startups still have access to co-working spaces, mentorship, guidance and networking opportunities to connect with investors after graduation,” said Alnabulsi. “We don’t want them to get tired and give up.”
(Reporting by May El Habachi; Seban Scaria seban.scaria@thomsonreuters.
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