NEOMICT.com is for sale!
The Kingdom of Saudi Arabia (KSA) has joined the race of development and made major advancements in its digital economy. NEOM smart city is one of them, the project of Saudi Arabia which will be deploying evolving technologies like Artificial Intelligence and Internet of Things (IoT) for solving routine issues. Mohammed bin Salman, the crown prince and chairman of the NEOM company board of directors, has announced plans to build a 100-mile long linear city, built around nature. This project will bring a revolution in urban living by incorporating smart technologies.
Neom is a planned $500 billion cross border city, in the province of Tabuk, situated in the northwest of Saudi Arabia. The smart city is a concept, where Information and communication technologies (ICT) and the Internet of Things (IoT) are incorporated for the development of an urban city, to provide ease in daily life problems. This concept has been initiated, to manage resources and assets efficiently, by properly using the information. The information is collected from users and their devices, which is later cleaned and processed for providing users services like managing transportation, power plants, water supply systems waste disposal, etc.
How IT is going to transform NEOM city?
NEOM will be using Artificial Intelligence (AI), Internet of Things (IoT), Block-chain, Big Data, Robotics, Machine Learning, 5G across the city to expand the quality of life and lessen its costs. The technology would be used for providing services like smart management, lifestyle, mobility, housing, as well as a smart economy so that upcoming social, environmental, and economic challenges can be faced efficiently using technological innovation.
NEOM is considered to be 100% ecological, where there will be no cars & zero carbon emission. The services can be acquired within five minutes of access. All this will be achieved by utilizing a large number of human and non-human resources, mobilizing a high level of intellectual assets, and implementing none other than blockchain technology.
To implement the advanced technologies, the city will be divided into three layers. The first layer would consist of 80,000 citizens, all necessities provided, at the doorstep. The second layer would put together the concealed infrastructure, comprising schools, medical and sports complexes. The last layer would be providing fast transport services, to reach the other end of NEOM within 20 minutes. The city will use its own operating system, named NEOS that will operate on data collected over different resources. The buildings and infrastructure will function by using installed IoT devices at everyone’s residence. Artificial intelligence and data mining will be used to manage equipment to alarm the users in case of any failure. A prescheduled transport system will be implemented to drop users anywhere based on their information provided, predicting their next move, by using the best of Artificial intelligence.
How businesses and companies can join Neom?
Neom offers a variety of opportunities for new businesses and companies for a wide range of industries. As a start-up, you shouldn’t miss this chance of growth and innovation to take part in ventures dealing with cutting-edge technology. To get registered in NEOM, first, you’ll need to create a profile on Neom’s official website, attach a signed supplier authorized letter along with required documents. You have to prepare a number of required documents in PDF format and submit them to the email address provided at: email@example.com after which, you’ll receive an email comprising a supplier-related questionnaire. After completing the questionnaire, you’ll be successfully registered as a supplier.
How TLS Technology – an IOR provider can help?
TLS, specializing in import and exporter of record services, has helped many clients by simplifying their international logistics over the years. TLS, with its extremely reliable and trustworthy services, has assisted many customers with their networking goods, IT Equipment, Telecom & Satellite equipment in Saudi Arabia.
Neom offers many unique investment opportunities across different industries. You can expand your footprints in the global market as a business by using services from TLS Technology. TLS will transfer all your ICT and telecommunication equipment to NEOM, without you having a physical presence in KSA. It is a one-stop solution for all your international trading needs. With TLS Technology as your supply chain partner, you don’t have to worry about the certificates and documents needed, compliance issues, and all your technology components are moved trouble-free.
by Carolyn Best
NEOM Tech & Digital Company has selected Oracle Dedicated Region Cloud@Customer to create a scalable platform for its mission-critical IT workloads. Under their collaboration, NEOM will be able to access Oracle’s portfolio of Oracle Cloud Infrastructure (OCI) public cloud services and Oracle Fusion Cloud Applications. In a press statement released by Oracle, the company affirmed that Oracle’s services would aid NEOM in meeting local data residency and latency requirements, while reducing NEOM’s operating costs for its 36 MW ZeroPoint DC data centre. This announcement reinforces the long-standing collaborative relationship between NEOM and Oracle in Saudi Arabia. In October 2021, NEOM Tech & Digital Company announced that Oracle would be the first tenant at its hyperscale data centre at NEOM. Oracle Dedicated Region Cloud@Customer is a self-contained cloud region which provides the full features of public cloud without requiring NEOM-hosted customer data to leave NEOM’s data centres. With NEOM’s adoption of Oracle’s cloud services, NEOM will be able to access new on-premise cloud services which Oracle made available in its public cloud regions. As such, NEOM will also be able to reduce database administration costs by up to 80%.
Saudi Arabia Invests in Digital Infrastructure with New Communications and Information Technology Law
June 8, 2022 Featured Articles
On May 31, 2022, the Ministry of Communications and Information Technology (MCIT) announced the approval of a new Communications and Information Technology (IT) Law with the intent of overhauling Saudi Arabia’s digital infrastructure and supporting growth in the communications and IT sectors.
The Communications and IT Law seeks to improve the flexibility and competitiveness of Saudi Arabia’s digital infrastructure and regulatory framework and continue the growth of the country’s digital economy and digital transformation of its industries. The law is expected to further solidify Saudi Arabia’s status as a regional hub for innovation and technological investment and improve the country’s global competitiveness in those sectors.
Additionally, the law aims to stimulate technical innovation, enhance the industry’s global competitiveness, and attract investment with the goal of empowering startups and small and medium-sized enterprises (SMEs). Lastly, the law aims to continue the government’s ongoing digitalization by improving transparency and promoting public knowledge of regulatory procedures in the industry. The law is expected to create or support as many as 318,000 jobs in the Kingdom.
Implementation of the law will be overseen by the MCIT, which was created to build digital infrastructure under international standards that helps innovators take advantage of the opportunities of today’s technologies and contribute to improving Saudi Arabia’s economic sustainability, global leadership, and quality of life. By 2030, MCIT aims to complete its goals of growing the ICT sector by 50 percent, increase the ICT sector’s contribution to national GDP by $13.3 billion, increase industry localization to 50 percent, attract more foreign investment, and improve women’s participation in the ICT sector. The law, according to MCIT, will help the Ministry achieve its main Vision 2030 goals of using the ICT sector to build “a digital society, a digital government, a thriving digital economy, and an innovative future for the Kingdom.”
Saudi Arabia has the largest market share of the Gulf Region’s information and communications technology (ICT) industry, estimated at $38.4 billion. The largest subsectors within the overall Saudi ICT sector are the technology market, which accounts for $19.5 billion in economic activity; the communications market, worth $18.9 billion; digital content and emerging technologies, which capture $2.9 billion each; and the cloud computing market, which is valued at $2.7 billion.
ICT Start-ups in Saudi Arabia
AUTHORED BY Rajesh Duneja
The Kingdom of Saudi Arabia’s (KSA’s) ICT start-up ecosystem is expanding and broadening. The number of new start-ups is growing year-on-year, the supporting network of incubators and investors is strengthening, and there is a government commitment to further develop the ecosystem. However, several elements are still missing. Administrative processes are complex, the investor base has limited experience of working with entrepreneurs, and attracting talent is not easy. For this report, we analyzed over 350 KSA start-ups and found that most were still focused on replicating successful business models from elsewhere, rather than generating their own new intellectual property (IP). However, this is now beginning to change.
To address the challenges for its start-up ecosystem, KSA needs to create an environment that focuses on two areas. It should look to simplify the entrepreneur’s life (such as by protecting IP, reducing the time to set up a business, and developing sandbox environments). At the same time, it should look to develop a unique value proposition in the region by leveraging its strengths in sectors such as oil and gas or its leadership position in cybersecurity (as confirmed in the Global Cybersecurity Index). In this change process, the KSA government has a key role to play. Achieving success should focus on adopting a three-level approach, centered around collaborating, coordinating and nurturing the start-up ecosystem.
1. Ecosystems as enablers of start-ups
An overall start-up ecosystem, including the ICT start-up ecosystem within it, is made up of multiple agents who interact with one another, coexisting within a specific context. These agents include entrepreneurs, investors, advisors and customers. The context is defined by the culture, regulation, market dynamics, and prevalent social norms. However, it takes more than simply the presence of these individual agents to develop a start-up ecosystem. In fact, the critical consideration that determines whether an ecosystem is effective is the level of alignment and interactions between these agents. Maintaining an overall delicate yet functional balance is crucial to the ecosystem.
Depending on the level of development and involvement of each of the agents, start-up ecosystems vary in their maturity. Based on the different criteria that influence their development, they can be classified as nascent, evolving, mature or self-sustaining. Some of the most important criteria are:
- Number and types of start-ups (e.g., total start-ups, quantity in high-tech, number in each sector).
- Support infrastructure (e.g., how many incubators, coworking spaces and start-up events there are).
- Flow of funds (e.g., early-stage funding per start-up, total capital raised, funding deals per year, exits).
- Quality and cost of human capital (e.g., salary of specialists, access to a pool of talent).
- Education and culture (e.g., entrepreneurship courses in universities, mentorship, acceptance of risk).
- Ease of doing business (e.g., time to register a company, number and complexity of administrative procedures).
2. Setting a vision for the ICT start-up ecosystem
Vision 2030 focuses on an overarching theme of economic diversification, with the target of the SME contribution to the national economy reaching approximately 35 percent. This indirectly provides a strong push to make a start-up ecosystem a strategic priority within KSA. Since the announcement of the vision in 2016, its positive impact on the country’s development has already be seen, reinforcing the transformative power such a strategy provides. For instance, by August 2019 more than 820 start-ups had been financed by Monshaat (Small and Medium Enterprises General Authority). Badir, one of the most important technology start-up incubator and accelerator programs in KSA, is well on track to achieving its goal of incubating 600 start-ups by 2020.
A strong start-up ecosystem can unlock economic development by leveraging innovative technologies and solutions, generating quality jobs, and attracting an international workforce. Additionally, it can set new competitive dynamics, promote research and innovation, foster a dynamic society, and have an indirect positive impact on the wider support network. Put into figures, the global start-up economy created almost USD 3 trillion in value between 2016 and 2018, which was more than the GDP of economies such as the United Kingdom.
Vision 2030 shows the power of a strong, aligned strategy in achieving measurable results within a short time frame. While different start-up ecosystem development visions exist among government-backed and independent organizations, KSA should strive to have an integrated and coordinated vision that aligns all relevant agents.
3. A nascent ecosystem with high growth potential
We performed an in-depth assessment to understand the current state of KSA’s start-up ecosystem. To provide global context, we analyzed KSA’s ecosystem alongside three other international benchmarks with different maturity levels: Silicon Valley (self-sustaining), Beijing (mature), and Barcelona (evolving).
The KSA start-up scene is growing, but still at the nascent level. High-level numbers for the ecosystem show promise. For example, there are now over 20 incubators in the country, with around half focused on the technology sector. However, only three were founded before 2010. Additionally, few incubators offer integrated portfolios of services (such as education & training, coaching & mentoring, financial support, office space & equipment, marketing & promotion and legal support). This requires entrepreneurs to move between incubators to receive all the support required to successfully launch a new venture.
According to the KSA Innovation Economy: Tech Startup 2017 report, the Saudi ecosystem provides essential services such as mentorship and available co-working spaces. However, the start-ups surveyed claimed that they had experienced difficulties receiving specific mentorship support in terms of legal and accounting advice, networking with potential customers, and go-to-market strategies. Likewise, the availability of talent and technology skills remains challenging: whereas needs for traditional business roles such as marketing, media, and communications are being met among more than half of startups, technical skills such as development and coding, product design, and data and analytics are less available.
Furthermore, while salaries for ICT-related professionals are in line with other global start-up hubs, the alternative to high-paying, stable government jobs in KSA prevents more professionals from venturing into the start-up world.
3.1 Moving beyond business replication to innovation
Our analysis of 350 KSA start-ups shows that three sectors, retail (20 percent), B2B services (13 percent) and food service (10 percent) together account for 43 percent of Saudi start-ups. In comparison, these accounted for less than 4 percent of total start-up investment in the US in 2018.
Globally, there has been a shift towards advanced technologies as the basis for start-ups. Although in 2010/11, the majority (77 percent) of all start-ups launched worldwide were in fintech, gaming, edtech or digital media, just seven years later, the number of new launches in these sectors had fallen to approximately 55 percent. We are now entering the era of “deep tech”, in which start-ups leveraging novel IP and emerging technologies, such as AI, blockchain and robotics applied to life sciences, advanced manufacturing, agritech & new food and cleantech, are experiencing the highest growth rates. Nearly half (45 percent) of new start-ups now focus on them.
The global shift towards advanced technology has still not reached KSA, where the percentage of start-ups in “deep tech” sectors is below 15 percent. KSA start-ups are primarily focused on replicating international successful business models, rather than creating and leveraging their own innovative and proprietary IP. The innovation component in these start-ups is limited, and in today’s global dynamic business environment, their offerings are becoming commodities. While the current business replication model is useful as a short-term solution to kick-start the ecosystem, it does not position the country as an innovative, leading start-up ecosystem.
However, there are reasons to believe that KSA will close this gap, thanks to a positive trend in the number of new technologyrelated start-ups. In 2018, 68 new tech start-ups were launched in KSA, up from 40 in 2017 and just 15 in 2012. Ten KSA start-ups are currently in deep tech sectors, with innovative propositions such as an augmented reality social network, an indoor positioning system, a virtual reality gaming hub, a 3D printing design marketplace, and robotics solutions for industrial applications.
3.2 Maturing the investment landscape beyond seed capital
Funding networks are at a similarly nascent stage. The Public Investment Fund (PIF) set up a SAR 4 billion “fund of funds” to stimulate venture capital investments in SMEs and start-ups, Monshaat created a government-owned VC firm with SAR 5 billion to invest in other Saudi VC firms and start-ups, and MCIT and the Social Development Bank launched a SAR 1 billion fund for emerging technology start-ups. However, these funds have not been effectively reaching entrepreneurs. Limited experience among investors in working with entrepreneurs results in low tolerance of risk. This greatly limits the breadth and number of start-ups in which they are willing to invest.
We analyzed 350 start-ups founded after 2007 in KSA, which had associated technology components embedded within them (ranging from e-commerce to deep tech), in order to understand the KSA start-up investment landscape. Eighty-five percent had not secured any financing, 7 percent had raised seed capital, and 2 percent had moved on to Series A. Just one out of the 350 had reached Series B. While some financing does reach seed capital, there is limited funding available for late growth and maturity stages. This prevents start-ups from scaling up, thereby limiting exits and IPOs. While most start-ups that have secured funding are those that have replicated successful business models, there are some exceptions. There are three funded fintech start-ups offering POS and payment gateway systems – two in agritech, which provide LED lighting for indoor farms and greenhouse technology, start-ups in robotics, and media; and one focusing on the IoT.
The investor base in KSA is essentially made up of institutional investors, as angel networks are mostly non-existent. Of the top 20 institutional investors, only four focus on specific sectors, including:
- Saudi Aramco’s entrepreneurship center, Wa’ed, on energy, mining and chemicals.
- KAUST, on agritech and energy.
- Riyadh Valley, on smart city developments.
Most of the others have generic investment strategies. Investors, however, do specialize in the type of investment mechanisms used. While Wa’ed mostly invests in start-ups through debt, incubators such as Flat6Labs do so exclusively through seed capital, and larger investors, such as Raed Ventures, primarily show interest in Series A and larger investment rounds.
4. Time to accelerate
Ten years ago, it was difficult to imagine any city being able to develop a start-up ecosystem at par with Silicon Valley. Today, challengers such as Beijing, New York, and Shanghai have demonstrated that it is possible, becoming dynamic hubs that foster innovative ideas, have strong flows of funds, and are established as breeding grounds for successful “unicorns”. In 2018, when 1,092 new start-ups were founded in the Bay Area, New York followed closely behind with 904. One hundred and eight started up in Beijing. Silicon Valley has seen the growth of 57 tech unicorns within its ecosystem between 2012 and 2018, and Beijing, New York and Shanghai are performing strongly, growing 29, 13 and 11 tech unicorns, respectively.
KSA has a golden opportunity at hand to develop both its broader and ICT-focused start-up ecosystems. Its young, digitally enabled population (more than 96 percent of Saudis own smartphones) provides a large local digital consumer base. Multiple governmental initiatives aim to increase the availability of support for start-ups, acting as enablers that strengthen the ICT start-up ecosystem. To succeed, KSA should not try to replicate other ecosystems, but rather, leverage its unique strengths, as other countries have done. Emerging global startup hubs such as New Zealand and Busan (South Korea) are successfully following this differentiation strategy. New Zealand, a global leader in dairy exports, is developing a strong agritech start-up ecosystem, while Busan, traditionally a ship-building city, has supported multiple marine tech start-ups.
Although the opportunity is clear, there are challenges that KSA needs to overcome to succeed in its start-up ecosystem objectives. Some of these were highlighted in our discussions with both global start-up ecosystem experts and successful Saudi entrepreneurs (listed in the acknowledgements section):
- The Saudi population tends to be risk averse, with fear of failure as a key obstacle preventing potential entrepreneurs from establishing their own businesses.
- KSA’s low-risk, yet high-paying public sector jobs continue to be aspirational for a large proportion of Saudi youth.
- Although many universities are setting up incubators and entrepreneurship centers, entrepreneurship is still not fully embedded within the education system.
- Most start-up hubs in the world have rolled out start-up visa schemes that allow entrepreneurs to relocate and start businesses with minimal criteria. However, although KSA recently announced its “Privileged Iqama” residency scheme, which does not require local sponsors, there is little clarity as to who can apply for it, what criteria must be met, and what specific benefits it provides.
- There are limited incorporation models that do not allow for stock sharing among employees, which reduces exit options for entrepreneurs.
- Although government measures can make a positive contribution to the development of a country’s start-up ecosystem, a local start-up “unicorn” will strongly accelerate the growth of KSA’s ecosystem, providing a boost to drive awareness, motivate young talent and position the country on the global stage.
5. Fixing the basics and building on strengths
Successful start-up ecosystems offer a unique value proposition, but to thrive, they require a series of key success factors to be met. These include basic elements, as well as specific, innovative factors that highlight the ecosystem’s uniqueness.
5.1 Fixing the basics
Creating an environment that simplifies entrepreneurs’ lives, as well as administrative and legal processes, is a “must have” for any successful ecosystem. IP protection is a key concern for entrepreneurs, and relevant lessons can be learned from Singapore’s approach to addressing it. In addition to encouraging development of IP through generous financial incentives and grants, Singapore created a specialized IP court to manage complex cases and a WIPO arbitration and mediation center to protect and settle IP disputes. In KSA, Saudi Authority for Intellectual Property is pushing to raise awareness of IP in the country, and to facilitate entrepreneurs’ access to key aspects of IP protection, such as patenting, copyrighting and registering of trademarks.
Ease of setting up a business and simplifying the number of administrative procedures required is also high on entrepreneurs’ priority lists. Countries across the world have taken action to address this. Estonia has launched an e-residency program that allows entrepreneurs to set up EU companies from anywhere in the world, while New Zealand enables entrepreneurs to both set up and register businesses within a day’s time.
While KSA has managed to simplify some procedures, which means a business can be registered within one day, the effective time it takes for entrepreneurs to set up companies is longer, due to complex import/export procedures and long lead times for setting up a bank account or getting an office license. For example, an entrepreneur who recently launched an online platform to organize sporting events highlighted that challenges with customs processes led to significant delays in the clearance and delivery of race-timing systems.
In February 2019, the Saudi Arabian Monetary Authority (SAMA) began designing a sandbox regulatory environment to test fintech start-ups in the country. Additionally, MCIT has recently set up an innovation hub that aims to be a technology incubator and bring in private/public partnerships and connect entrepreneurs with all relevant agents within KSA’s start-up ecosystem. Although there is progress being made, it is not being communicated well enough to ensure that entrepreneurs are fully aware of opportunities. KSA is missing a “one-stop shop”, comprehensive, nationwide entrepreneurship promotion and guidance platform to showcase available benefits and incentives and provide administrative guidance and support for start-ups.
Additionally, while over 70 percent of Saudi adults see many entrepreneurial opportunities around them, and 75 percent believe they can start businesses, these figures do not correspond with current low levels of entrepreneurial activity – with only 68 start-ups having been founded in 2018. Thirtyfive percent of Saudis cite fear of failure as the primary reason preventing them from setting up companies. Additionally, safe and high-paying government jobs disincentivize young professionals from trying entrepreneurship. According to KSA’s General Authority for Statistics’ latest information on the labor market, covering Q4 2018, the average monthly salary for Saudi citizens in government jobs is approximately SAR 11,200, while Saudi citizens working in the private sector make only about SAR 7,200 per month. Specific initiatives aimed at increasing the financial attractiveness of entrepreneurship, such as allowing equity-based compensation, could help attract more talent into start-ups.
5.2 Creating a compelling value proposition
While having these basic elements in place is considered a given for any start-up ecosystem, successful ecosystems generally supplement them with unique value propositions. Trying to replicate Silicon Valley in Riyadh, Jeddah or Dammam might not be effective, as each of these cities have their own dynamics and contexts.
Some of the expanding start-up ecosystems around the world are leveraging industry verticals in which they have traditionally been strong and creating innovative platforms to accelerate growth in these sectors. At a national level, KSA could potentially leverage its position in oil & gas and its strong status in cybersecurity to create unique start-up hubs focusing on these areas. Its breakthrough smart city initiative, NEOM, and other significant developments in Riyadh are further potential areas where KSA has an edge.
It is important to note that start-up ecosystems are developed on a “city basis” rather than a “national basis”, and entrepreneurs should not adopt a “one size suits all” approach, but rather, understand each city’s USP and select the ecosystems that are best suited to developing their ideas. In such a development process, both the public and private sectors (investors, companies) have roles to play, and should embrace a cooperative approach when doing so.
6. The government has a role to play
The government has a key role in addressing the pain points identified in KSA’s ICT start-up ecosystem. It can do so through an actionable approach aligned with MCIT’s mandate.
The approach should act on three different levels, beginning with a tactical strategy that aims to achieve “quick wins”, then moving on to higher-level initiatives that must be sustained over time, and finally, adopting an overarching, long-term strategic orientation that fosters a start-up culture.
- Collaborate focuses on a “hands on” approach, working with other ministries and agencies to undertake the most urgent and easy-to-implement initiatives, in order to create an ideal environment for entrepreneurship in the Kingdom.
- Coordinate involves high-level engagement with all stakeholders, including entrepreneurs, incubators, investors, and universities to align on a collective vision for the ICT start-up ecosystem, as well as creating an informative “onestop shop” for entrepreneurs.
- Nurture strives to achieve a shift in the cultural mind-set through a long-term strategic effort and orientation activities.
7. The road to success
Although the start-up ecosystem in KSA is developing rapidly, it still lacks coherent direction and structure. This situation is typical among nascent start-up ecosystems but must be addressed appropriately to ensure the KSA ecosystem’s current and future effectiveness and sustainability.
The large local customer base, young and tech-savvy Saudi population, growing number of innovation hubs and university research centers, availability of capital, and global leadership in specific industry verticals are all strengths that the KSA ICT start-up ecosystem can leverage. However, they have not yet been effectively brought together. Acceptance of failure, greater entrepreneurial ambition and higher risk tolerance are required from both entrepreneurs and investors. Additionally, enabling regulations should be pushed by the government to enhance the ecosystem’s attractiveness. Moving forward, KSA could follow a two-track, parallel approach:
- A long-term, strategic view that strengthens the ecosystem’s foundations – Focus on IP, innovation and new content/services development where local strengths can be leveraged.
- A short-term, “quick win” approach – Focus on triedand-tested business model application/implementation in sectors where KSA has attractive addressable markets – underserved or struggling sectors and those with large customer bases/domestic markets.
The government and policy makers could effectively leverage this proposed approach, focusing on collaborating, coordinating and nurturing to support both these tracks. This would address the short-term, tactical policy updates required to transition KSA into an attractive breeding ground for start-ups, as well as drive its longer-term transformation towards a dynamic entrepreneurial society.