Cairo-based venture capital company Flat6Labs announced the first close of the Startup Seed Fund in Saudi Arabia, which is aimed at supporting entrepreneurs in the kingdom.
The 75 million riyal ($20 million) fund was created to invest in early stage start-ups operating in the technology and innovation sectors in Saudi Arabia.
It involved participation from Saudi Venture Capital Company, a subsidiary of the Riyadh-based Small and Medium Enterprises Bank, which is affiliated with the National Development Fund, and the Jada Fund of Funds that is wholly owned by the kingdom’s sovereign wealth fund, the Public Investment Fund, Flat6Labs said.
The Startup Seed Fund enables start-ups to receive follow-on funding of up to 2.4 million riyals and helps them to obtain access to support and training programmes.
“The fund will adopt a highly diversified, systematic investment plan that aims to reduce the risks faced by venture capital and reduce the administrative and legal costs incurred by early-stage start-ups,” Flat6Labs said.
It aims to develop the capabilities of more than 180 entrepreneurs, create more than 6,000 jobs in the private sector in the kingdom and enable Saudi companies to expand in the region through Flat6Labs' regional offices.
“This will contribute to completing the structural transformation that the kingdom aspires to by increasing the share of the digital economy in GDP [gross domestic product] and enhancing the contribution of the non-oil private sector,” it added.
Saudi Arabia is seeking to grow its start-ups and small and medium enterprise sector as part of its push to diversify the economy from oil, create jobs and attract high-skilled talent into the kingdom.
Technology is a key pillar of Vision 2030, the country's national strategy, and Riyadh is encouraging entrepreneurship and seeking investment from both local and foreign entities to develop the sector.
Start-ups in Saudi Arabia recorded a 72 per cent annual increase in venture capital funding to $987 million across 144 deals in 2022, start-up data platform Magnitt’s Venture Capital Report found.
The kingdom was the second-most funded country after the UAE in the Middle East and North Africa last year, and accounted for 31 per cent of total capital invested in the region, the report said.
Flat6Labs, which manages several seed funds, with total assets under management of more than $85 million, provides investment ticket sizes ranging from $50,000 to $500,000, supporting start-ups.
More than 25 institutions have invested into Flat6Labs' managed funds.
