Saudi Arabia is on a mission to attract foreign deeptech startups to build up its own industry. They realize their local sci-tech scene isn’t robust enough to meet their ambitious goals for becoming a global tech leader.
The challenge became clear in a 2019 Boston Consulting Group study. Out of 8,600 deeptech companies worldwide, the Middle East had only five—three in the UAE and two in Iran—while the US led with 4,198 and the UK had 435. Fast forward to 2022, and the Kingdom had ramped up to 43 deeptech firms as the Ministry of Communications and Information Technology launched a roadmap for achieving global prominence.
They’ve made some significant investments in international firms to establish a deeptech presence. This approach allows them to cultivate an ecosystem while they work on developing homegrown talent and investment. The government is also reforming regulations to eliminate barriers that hinder local entrepreneurs and foreign startups.
At King Abdullah University of Science and Technology in Riyadh, Saudi Arabia is seeing success in spinning off deeptech startups. The focus is on building advanced research facilities and providing funding to help researchers turn ideas into viable businesses.
Education is another cornerstone of their strategy. They’re pushing STEM education in schools, which has funneled two million students into university programs. In the past year, 20,000 deeptech researchers were reported in universities—a 75% increase over five years. The goal is to grow that number by another 700% in the next five years, with existing researchers ranking among the best globally.
To support this growth, Saudi Arabia pledged to boost public spending on research and innovation tenfold. They aim to cut red tape, simplify business operations, and create special economic zones with fewer restrictions.
However, systemic issues persist. With a brain drain of around 81%, many scientists are leaving the country. While startup funding is rising, much of it hasn’t flowed into deeptech due to its early-stage development. The bulk of funding comes from public sources like Wa’ed Ventures, Aramco’s investment arm, and Kaust. The ecosystem’s current setup lacks the capability to cater to deeptech’s unique needs for scientific expertise and funding over long R&D cycles.
Experts suggest it might take up to ten years for Saudi Arabia to cultivate a mature deeptech industry. Alizée Blanchin from Hello Tomorrow analyzed their roadmap and noted the number of university spinouts is still quite small.
As a result, the Saudi monarchy sees partnerships with foreign startups as crucial. They’re opting to invest in these companies to help develop their ecosystem. Blanchin points out that Saudi Arabia emphasizes speed and decisiveness, contrasting with Europe’s slower pace in decision-making and execution.
One key example of their strategy is Aramco’s upcoming launch of the world’s largest industrial quantum computer, supported by French startup Pasqal. Wa’ed Ventures has invested in Pasqal and participated in a €108 million consortium investment while the company was still relatively young. Pasqal now operates a regional base at Kaust. The collaboration illustrates how Saudi Arabia is leveraging international expertise to build its tech capabilities.
Pasqal CEO Georges-Olivier Reymond emphasized the unique opportunity Aramco offered, marking a pivotal moment for the company as a private entity investing in a quantum computer—an unprecedented move in their sector.
The goals for developing practical applications of quantum computing symbolize the type of collaborations Saudi Arabia is pursuing. Other foreign alliances mentioned aim to harness systems that utilize quantum technologies, further reinforcing their strategy of learning from existing expertise rather than solely focusing on building it from scratch.
Jean-François Bobier from BCG remarked on the willingness of Saudi corporations to experiment with and invest in new technology, suggesting this creates an attractive environment for innovation.
Currently, MCIT, Kaust, and Aramco aren’t available for comment on these developments.
