November 28, 2022

Tech Startups in Saudi Arabia – Are They Overvalued

Tech Startups in Saudi Arabia :

Saudi Arabia is said to have the most significant technology market in the Middle East, with the technology sector valued at $40 billion. The country has always prioritized the pivotal role of technology in its economy. On the other hand, it has equally placed startup development at the core of its visions and goals, and this has projected thousands of startups, each with value delivered to the country. Saudi Arabia has also resolved to invest billions of dollars in tech startups and digital technology that can aid their activities.

However, companies’ profits and value, despite significant government efforts, have declined, and their valuation must show such a decline. In the next section, this article will look at the current valuation of tech startups in Saudi Arabia and if they are up for a re-valuation.

What is the Current Valuation of Tech Startups in Saudi Arabia?

Tech startups in Saudi Arabia have always been unique in their ventures and the capital invested in them. Many have opined that this interest is due to the 2030 vision goals that Saudi Arabia hopes to achieve. On the other hand, startups have brought much to the table regarding economic and technological contributions to the country.

Although startups in the country have enjoyed a 35% increase in the investment deals apportioned to them this year, one has to wonder if the investments are not made on mistaken assumptions of the value of the companies in question.

Currently, tech startups have been making progress in strides and flying the Kingdom’s flag high. Various startups have been dealing with emerging technology and recording significant growth. Saudi Arabia may be the next technology capital of the world.

Are Tech Startups in Saudi Arabia Considered Overvalued

While it may seem that the tech startups in Saudi Arabia are on a short journey to global recognition and growth, a weakness may significantly reduce the value of these companies. These factors have foregrounded the assumption that tech startups in Saudi Arabia are overvalued.

For one, the tech sector has struggled with human capital and talent provision. Tech startups in Saudi Arabia must hire unique hands from other countries within the region or outside it. In some instances, companies have to relocate their headquarters to other countries in the Middle East to offset the limitations resulting from local markets. Although the country has increased its financial investment in the sector, the gulf in human capital has reduced effectiveness, increased cost, and may look like a gradual decline.

While Saudi Arabia has got the technical aspect of the sector down to the letter, it still has several things to do about the human capital state of the companies and any problems of tech startups in the country.

Conclusion

The Saudi Arabian government has taken the extra step to be sure that its technology industry is distinct and sets the pace for similar in other countries. However, this pace may be a bit uneven and the country has very little human capital to function in the places it has invested. This dilemma has, on some occasions, resulted in profit decline and unsustainability of these startups.

Read Previous

How to Quantify the Risks for Saudi Startups at Early Stages

Read Next

How to Attract Investments in Saudi Arabia Using Spvs

Most Popular