Incubating A Knowledge-Based Economy

Khaleej Times, Dubai, United Arab Emirates

In a quest to diversify its economy, Saudi Arabia has been working to shift the country’s main source of income away from oil.

One of the main focuses for the government is moving towards startups and incubation programs.

Over the years the authorities have been trying to diversify the economy through the development of non-oil technology industries, with the objective of building knowledge-based economy.

In one such move, King Abdulaziz City for Science and Technology (KACST) launched Badir Program for Technology Incubators, a Saudi national programme, in 2007 to stimulate innovation-based entrepreneurship through technology incubation and capacity building programmes.

With the phenomenal success of social networking app Sarahah, which means ‘frankness’ or ‘honesty’ in Arabic, the efforts seem to be paying off.

Sarahah rocketed to the top of the charts to become the most popular free download from the US iOS App Store, and the second most popular free app on Google Play, according to App Annie.

Sarahah, with almost 95 million registered users, is one of the main projects that were incubated by Badir.

“Badir provided all kinds of support, whether logistical or consultative, as well as cooperation opportunities, distinguished services and necessary guidance to promote Sarahah’s growth and develop its business,” Zain Al Abidin Tawfiq, the app’s founder, said.

Badir has served more than 200 startups since its inception. The programme has also incubated 127 technical projects through its five incubators, generating a market value of SR331 million ($88.26 million) for 34 of these projects alone, creating 786 jobs for young Saudis.

Badir Program seeks to activate and develop technical business incubators, enhance the concept of technical entrepreneurship and transform projects and technical research into successful business opportunities through the support of entrepreneurship, innovation and technology incubators and the provision of an appropriate environment for the growth of emerging technical institutions. These are based on the principle of risk reduction and focus on business development leading to a knowledge-based society and economy,” Nawaf Al Sahhaf, CEO of Badir Program for Technology Incubators, told Khaleej Times.

Sahhaf recalled that when Badir was launched there was no angel investment network, there was no network for incubators and accelerators in the kingdom, no seed funds existed and none of the regulations — which are in place today — existed back then.

“Badir took steps to create the missing links in the ecosystem. In 2009 it created the Saudi business incubator network [SBIN] paving the way for unifying the regulations and standards for operating business and accelerators in the kingdom. Down the line, Badir also created the Saudi angel investors network [SIRB], which filled a big gap between entrepreneurs and investors,” he said.

The CEO said Badir is focusing on expansion of its innovation and entrepreneurial hubs across the kingdom to achieve its KPIs of creating 600 startups and 3,600 jobs by 2020.

“Badir currently has innovation and entrepreneurial hubs in three cities — Riyadh, Jeddah and Taif — and plans to expand to Dammam, Buraidah and Abha in its first expansion phase to be followed by three other locations in the foreseeable future,” Sahhaf said.

“That plan falls within the policy of KACST that consists of encouraging, supporting and promoting the cognitive economy and entrepreneurship. It also constitutes a positive step in the government’s thrust to diversify sources of economy by developing non-oil technical industries and promoting innovations and creations,” he noted.

Ahmed Bukhamseen, founder and CEO of Quant Data & Analytics, said Badir clearly contributed to Quant’s start by introducing a variety of services through the incubator itself or through its communications network.

This year, the program has launched Soft-Landing Program to attract business startups in the GCC countries and the Middle East, the US, the UK, and East Europe and at the same time startups from Malaysia and Singapore to enter the Saudi market and enable their possible collaboration with local counterparts.

“The Soft-Landing Program works closely with Badir 5 incubators across the kingdom who have experience in assisting overseas companies with market feasibility and market orientation in Saudi Arabia.

“Badir has established the Soft-Landing Program with the aim to provide foreign startups access to Saudi market, logistics and contacts. The soft-landing ensures that any foreign startups understand business culture and practices in Saudi Arabia through training and orientation. The aim of this programme is to have foreign startups account for 20 per cent of the overall incubated startups,” Sahhaf said.

“Badir has a pipeline of 10 foreign startups of which one Kuwaiti startup has already been incubated in fintech. At the moment, we have nine startups from around the world under evaluation, as the programme selects only one startup from each country to maintain diversity,” Sahhaf said.

“Our engagement with Badir, to date, has been through their Soft-Landing Program where they supported a few of our portfolio companies with market entry into KSA. Their support in that field has been excellent. We look forward to increasing our collaborations with Sahhaf and the Badir team in the future,” Yousef Hammad, managing partner at BECO Capital, said.

“We have been actively monitoring some of the Badir startups. Once the right opportunity that fits our investment remit comes to play we would surely make a move,” he added.

Sahhaf claimed that Badir had a very stringent graduation criterion, “we only graduated startups that have managed to sustain their operations and assure their growth to investors. That is why we can proudly say that 100 per cent of our graduated startups survive after five years of graduation”.

Established in 2015, the Investors Service Office under Badir has reviewed over 3,000 applications. Only in 2016, more than 55 patents were granted to this incubation program.

“Badir is providing seed funding for accepted projects in the accelerator stage. For later stages, we facilitate the funding through matching investors with entrepreneurs via our quarterly held demo days,” Sahhaf concluded.