GEW Kicks Off in Saudi Arabia with Inaugural Board Meeting
Jonathan Ortmans @jortmans
Nov 12, 2012
I am in Jeddah, Saudi Arabia today to kick-off Global Entrepreneurship Week (GEW)--under the patronage of the Ministry of Labor presented at the board by Dr. Abdulaziz I. Abdulaziz, General Manager of SME support programs. After chairing our first GEW / Saudi Arabia Board meeting, I joined senior officials and decision makers including Deputy Minister of Labor for Planning and Development Eng. Abdullah Alhaqbani and Deputy Minister for Industrial Affairs Eng. Gasem Al–Maimani for an event entitled Made in Saudi Arabia: Challenges and Opportunities.
My day here has left me with an impression that the Kingdom of Saudi Arabia is committed to building a robust startup ecosystem.
There is much to work with here. While Arab economies have an average ranking of 98th among 183 economies globally, Saudi Arabia is ranked on the strong end (22nd) of the World Bank Doing Business Study. Saudi Arabia’s worldwide rank has rapidly moved to the top 25 economies from 35th in 2004. Further, in the World Economic Forum’s Global Competitive Index, Saudi Arabia moved from 27th in 2008-2009 to 18th in 2012-2013 due to improvements in institutional frameworks and market efficiency.
Beyond the regulatory environment, the country is also working hard on strategy and the impact it seeks to leverage from its entrepreneurs. The Kingdom has paid special attention to fast growing companies. Saudi Arabia’s General Investment Authority (SAGIA) produces the Saudi Fast Growth 100 (SFG 100), a list of the Kingdom's fastest growing enterprises in two categories: companies over five years and start-ups. Interestingly, over 70 percent of the Saudi Fast Growth CEOs are serial entrepreneurs who have founded other companies, the majority of which are still in business. The key for Saudi Arabia now lies in expanding that pool of entrepreneurs for maximum economic impact.
Efforts in this regard are not just driven by a desire to diversify the Saudi economy, but also out of a need to respond to demographic realities. With around 40% of Saudi Arabia's population under the age of 14, the country cannot rely solely on its oil sector to create careers for its younger generations. In fact, a World Bank study estimated that despite making up more than half of the country’s GDP, the oil sector employed less than 5% of the workforce. The entrepreneurial career path is therefore an important strategy for the future welfare of this society. Not surprisingly, the Saudi Minister of Labor has announced his patronage of the 2012 Global Entrepreneurship Week.
In Saudi Arabia’s tool chest to unleash entrepreneurship is also the world-renown King Abdullah University of Science and Technology (KAUST). This research university has gained respect across the globe as a “startup university” as a result of a serious strategy involving international academic relationships, research collaborations, and innovation commercialization. The VentureLab acceleration program housed in the KAUST Entrepreneurship Center, for example, is designed to give any member of the KAUST community, from students to faculty members, researchers, and staff a chance to launch a startup by attending evening lectures and coaching sessions. The focus of VentureLab is one the most essential parts of any early stage venture: prototype, customer validation and business model. We heard of equally impressive work underway at Umm Al-Qura University in Makkah and King Abdulaziz University in Jeddah, also partners in GEW.
There is also a growing appreciation for informal networks. Saudi women, in particular, have been contributing to building a critical mass of female entrepreneur role models. While Global Entrepreneurship Monitor data shows that in Saudi Arabia men’s entrepreneurial activity exceeds that of women by several times, the impact of female entrepreneurs is clearly visible. According to a World Bank study, female-owned firms in Saudi Arabia have increased their work force faster than male-owned firms. Take, Maria Mahdaly, who in 2007, at age 19, started Rumman, a media and publishing house, which runs two ventures: a monthly city magazine called Destination Jeddah and a social network called Fainak. By 2010, Rumman was ranked as Saudi Arabia's fastest growing startup, with a growth rate of nearly 600%. Like other women-run businesses, Mahdaly's staff is 80% female. Mahdaly recently told CNN she feels she is benefiting from changing attitudes and increased support from other businesses, the media and individuals, in general. Moreover, anecdotal evidence from other Saudi women startup entrepreneurs suggests that a high percentage of their employees then move on to launch their own startup companies. These developments bode well for the future of this entrepreneurship ecosystem in a nation where law, religion, culture and business are all intertwined.
In addition to the informal networks of entrepreneurs, formal alliances are also organically building a respectable startup ecosystem. Organizations such as the Jeddah Chamber of Commerce, the Centennial Fund in Riyadh, and the Riyadh Technology Incubation Center – all leaders on GEW’s Board here, for example, have plenty of new firm founders who are actively working to seed a startup culture among Saudis. Endeavor also entered the Saudi entrepreneurship scene last July to promote high impact entrepreneurs. Like all Endeavor affiliates, the Saudi office is spearheaded by a local board of leading businesspeople.
After I spoke, we heard from a number of other ambitious players including: Nael Al Fayez with INJAZ which has multiple chapters in the Kingdom for its Junior Achievement entrepreneurship programs; Hesham Rowaihy with BADIR whose presentation outlined ambitious plans for incubators, accelerators and perhaps most importantly an Angel Investor Network. Ali Al-Othaim talked of a younger businessman committee within the Council of Saudi Chambers and even Saudi Arabia’s “Oprah” style media personality Muna AbuSulayman took the stage to discuss her own entrepreneurship program for women entrepreneurs.
Where there are gaps in this enlarging support network, the entrepreneur-led Qotuf, managed by Tuba Terekli, will seek out partners and funding. Qotuf has also been appointed to manage GEW operations in Saudi Arabia, enabling the team in conjunction with Badir to integrate efforts to build out a startup community and ecosystem throughout the nation. Other entrepreneurs themselves are also actively working to add in the missing ingredients for more startup creation. With Gallup poll results showing that only very small shares of Saudi Arabia's adult population plan to open a business in the next year (4% of respondents in major cities and 2% in minor ones) current entrepreneurs are trying to smooth the path for the next wave of startups. For example, there is now a new breed of social media platforms for crowd sourcing (e.g. kickstarter and Indiegogo), where entrepreneurs are directly accessing common investors, hoping that a plethora of small contributions will help to raise the necessary seed money.
We will learn more at the upcoming 2012 Global Entrepreneurship Summit in the United Arab Emirates in December, where the focus will be on the Middle East and North Africa (MENA). For now, I am off to Europe for more Global Entrepreneurship Week fun and report back in next from Romania.