The Saudi start-up ecosystem is a rapidly growing and diversifying space with, according to data from dealroom, a combined value surpassing $11 billion in 2022 – a year in which many countries experienced a slowdown in the technology industry. Additional figures from startupblink show that Saudi Arabia’s start-up ecosystem is currently ranked fourth in the Middle East, jumping six positions in 2023 and now surpassing Egypt.
No wonder that, in partnership with the Saudi National Bank (SNB) and Saudi Arabia’s Ministry of Communications and Information Technology (MCIT), seed accelerator Techstars launched two new Founder Catalyst programmes in the Kingdom.
Founded in the US by a group of entrepreneurs who shared the fundamental belief that entrepreneurs can come from everywhere, Techstars has been around for 14 years. It helps create a vibrant start-up community with programmes that provide mentorship, financial assistance, and growth opportunities to early-stage companies around the world. In partnership with governments, corporates, venture partners, and others, it runs about 50 accelerators in over 180 cities and has seed-invested in over 3,700 early-stage start-ups, including 20 unicorns, whose total collective value has just hit $100 billion.
Techstars’s two new programmes in Saudi Arabia run in the Jeddah and Al Asha regions They are open to applicants from all over the world but give special attention to Saudi start-ups. Applicants have until August to register their interest. Sector agnostic, they will empower budding entrepreneurs to reach their next phase of development, funding, and overall venture readiness.
Oko Davaasuren, Senior Director at Techstars, tells us more.
How were the new Saudi programmes developed?
In line with Vision 2030, MCIT wanted to have a large impact on young entrepreneurs as early and as much as possible, creating the right support structure for it. They also wanted to design programmes that support entrepreneurs and create additional hubs around the country, not only in Riyadh.
We’ve had an engagement with MCIT and SNB for many years running our Riyadh accelerator, so we defined what the new programmes would be, working closely together from pre-programme planning to post-programme. Then, we launched, meaning we opened applications and start-ups have started applying. Meanwhile, our programme team are proactively recruiting start-ups that might be a good fit.
Between the two programs, we’re hoping to invite 50+ start-ups, more than half of which will, hopefully, be local.
There will be 10 master classes, workshops, 40+ mentors per cohort. We have a pool of local mentors that have already been vetted and trained. We’ll be doing a lot of basic stuff – KPIs, initial modelling – product development, customer discovery, customer development, fundraising.
And each programme will run for 10 weeks, the Jeddah one starting on September 18 and the Al Asha one two weeks later.
What is the typical format of a Techstars accelerator pre-accelerator programme?
Most of our programmes run two classes per year, depending on the ecosystem and the goals that we have set for the community, and each class takes up to 12 start-ups, which seems to be the most effective size.
Then we surround these founders with as many great mentors as possible. In an average Techstars class of 13 weeks, a founder meets with 100 mentors, most of whom are coming from the local community, our network, the industry, and our partners.
And each of the start-ups selected to join our programme are offered a deal comprising a $20,000 investment for about 6% of their value and an option for 100,000 convertible notes that they can apply for.
What are the selection criteria for start-ups?
We have five criteria.
The first one is people, the second one is people, and the third one is people. I’m not joking. If we were investing in later-stage companies, our criteria would be very different, but we are an early-stage investor. We know from experience that a lot of the things that the company is doing right now will change dramatically in the next six months or one year. The one thing that we can rely on is the people. Are they coachable? Are they obsessed? We talk about the fundamental characteristics of successful entrepreneurs.
That’s why it’s people, people, people. Then, there's market and then, product.
How do you spur start-ups’ interest?
Firstly, it helps that Techstars is considered a top seed investor globally. Brand awareness is there, and a lot of start-ups find value in the institution, so to speak. On average, a start-up graduating from a Techstars class raises close to $1 million post-programme.
Secondly, we partner with amazing partners such as SNB and MCIT in Saudi Arabia. We run programmes with Barclays, Polygon, Disney, Microsoft, etc.
Thirdly, Techstars is not just the 300+ people running it; it’s our community of about 10,000 mentors. We work through them and our 5,000 to 6,000 alumni.
How and why do mentors get involved?
Our mentors do this for free. So, there’s a reason why they’re coming to organisations such as ours.
Number one, working with start-ups allows them to tap into what’s new out there. Many are experienced businesspeople or industry deep-knowledge experts. They want to be at the forefront of innovation. They want to know what these crazy young people are up to, who’s coming up with what, and who is looking at a problem that maybe nobody is looking at.
Number two, they’re looking for opportunity. Many of these mentors end up engaging founders and start-ups in the long term, joining as advisors or board members, or becoming early-stage investors.
Lastly, it’s fulfilling. At some point, as you succeed as an individual, you want to give back and contribute to your community.
We come in with a fully organised platform and playbook to ensure that they engage with founders effectively. Our mentor manifesto explains the attitude and training; we facilitate office hours, meeting engagements, classes, and all the different ways for them to continue building relationships. And, towards the end, they can join our network. Whether you’re a founder or mentor, if you join the Techstars network, you’re here for life.
What’s the desired outcome for the new Saudi pre-accelerator programmes?
Our Riyadh accelerator is running already so, in a year’s time, as we graduate these companies and transfer them over to our Riyadh accelerator, we know we’ll have some pretty incredible successes. And when amazing companies come out and become stories around the world, we succeed, MCIT succeeds, SNB succeeds, and the ecosystem succeeds.