Why Saudi Arabia for Web3?
Saudi Arabia is rapidly transforming into a global powerhouse for innovation and technology, driven by its commitment to economic diversification under the Vision 2030 initiative. With a vibrant and tech-savvy young population, world-class infrastructure, and government-backed programs, the Kingdom is actively opening its doors to foreign businesses looking to expand and contribute to this growing ecosystem.
Saudi Arabia presents itself as a hub for venture capital, blockchain, fintech, gaming, and digital innovation, making it an ideal destination for global entrepreneurs and investors.
01
Venture Capital and Emerging Startups: An Ecosystem for Growth
Saudi Arabia’s venture capital (VC) market has experienced significant growth, particularly in early-stage funding. A Flat6Labs report reveals that Series A funding surged by 141% in the first half of 2024, reflecting growing confidence in the Kingdom’s startup ecosystem. With over 109 active investors—up from 84 in previous years—this increase in capital inflow is particularly beneficial for Web3 startups looking to scale.
The Kingdom’s VC market represents less than 0.1% of its GDP, signaling substantial room for expansion, particularly in sectors like blockchain, decentralized finance (DeFi), and non-fungible tokens (NFTs). This growth is supported by strategic partnerships with global Web3 accelerators, including Adaverse and Outlier Ventures' collaboration with the National Technology Development Program (NTDP)
The 2024 KSA Venture Report by Adaverse highlights a resurgence in early-stage funding, with Series A investments growing by 141% year-over-year. Saudi startups received 51% of the total MENA funding in Q1 2024, reflecting the country’s growing prominence in the region. While fintech and e-commerce have historically dominated, sectors like SMB SaaS, EdTech, logistics, and blockchain are emerging as new areas of opportunity.
Leading this transformation are startups such as MRHB Network, which recently secured funding from Orbit Startups to develop the world’s first Shariah-compliant DeFi products. Similarly, Adaverse has strategically invested in several Saudi-based ventures, with a commitment to deploy $10 Million in the next 2 years, further signalling the Kingdom’s commitment to fostering blockchain-based businesses.
02
Saudi Arabia’s Crypto Adoption in 2024
According to Triple-A's "State of Global Cryptocurrency Ownership" report, Saudi Arabia stands out with 15% of its population actively owning or using cryptocurrencies. This places the Kingdom in 12th position worldwide, reflecting a steady increase in interest and adoption of digital assets.
The global cryptocurrency market saw significant growth in 2024, with the number of users jumping from 420 million in 2023 to 562 million—a 33% rise. Saudi Arabia's strong presence in this surge signals the country’s growing influence in the global crypto space.
Additionally, data from the 2024 Chainalysis Global Adoption Index further underscores Saudi Arabia’s position as a leading player in the crypto ecosystem. The Kingdom ranks highly in various subcategories related to DeFi (decentralized finance) usage and retail cryptocurrency transactions, indicating that digital assets are becoming increasingly integrated into everyday financial activities in the country
03
Blockchain and Web3: Saudi Arabia's First DLT Infrastructure
One of the most exciting developments in Saudi Arabia is the rapid growth of the Web3 ecosystem, underpinned by the Kingdom’s proactive stance on blockchain technology.
Throughput Research Labs is building Saudi Arabia’s First Distributed Ledger Technology (DLT) Infrastructure, conjoined with a $70 Million Fund, and a Physical Development Hub, poised to revolutionize the Web3 gaming industry and beyond. With the government's commitment to the sector, highlighted by $37.7 billion earmarked for e-sports and $13.3 billion for gaming, Saudi Arabia is well-positioned to become a global hub for blockchain innovation.
04
Vision 2030: A Fertile Ground for Foreign Investment
Saudi Arabia’s Vision 2030 initiative is a driving force behind the country’s rapid digital transformation. The government is actively fostering the growth of blockchain and Web3 technologies by creating an enabling environment through regulatory frameworks and partnerships. For example, the Hashgraph Association has partnered with the Ministry of Investment of Saudi Arabia (MISA) to establish a deeptech venture studio in Riyadh. This initiative is crucial for nurturing Web3 startups and attracting global talent to Saudi Arabia.
The Saudi Food and Drug Authority (SFDA) is also utilizing blockchain technology to enhance transparency in food safety, providing a practical use case for Web3 technologies in the Kingdom. Moreover, Saudi Arabia continues to explore Central Bank Digital Currency (CBDC) solutions through the Saudi Central Bank (SAMA), signalling the government's forward-thinking approach to integrating blockchain into the broader financial system.
The Saudi Arabian General Investment Authority (SAGIA) is working closely with international businesses to facilitate entry into the Saudi market, making it easier for global companies to tap into the Kingdom’s growing opportunities across various industries. As Saudi Arabia continues to invest in its digital infrastructure, the government’s focus on blockchain and Web3 technologies is creating a dynamic ecosystem that supports both startups and established companies.
05
Success Stories: Startups Leading the Charge
Saudi Arabia's startup ecosystem is witnessing the rise of some innovative companies that are shaping the future of the Web3 landscape. Key players include:
MRHB Network: A pioneer in ethical finance, MRHB offers a suite of Shariah-compliant crypto products, becoming the go-to platform for halal investments.
Mithu: A blockchain-based loyalty platform that integrates AI-driven analytics to enhance customer engagement.
Sorbet: A DeFi platform empowering freelancers with instant cross-border payments.
Nuqtah: The first Saudi-licensed blockchain infrastructure builder, focused on NFTs and creative industries.
Takadao: A decentralized insurance platform offering cooperative and community-driven insurance alternatives funded and backed by the legendary Tim Draper.
Tharawat Green Exchange (TGE): A blockchain-powered marketplace for carbon credits, aimed at supporting Saudi Arabia’s sustainability goals.
These startups are part of a growing community of Web3 innovators who are leveraging blockchain technology to address specific market needs, from financial inclusion to environmental sustainability.
06
Why Saudi Arabia is the Next Global Tech Hub
Saudi Arabia offers a unique combination of factors that make it an attractive destination for global businesses:
Youthful, Tech-Savvy Population: With 63% of the 36 million population under the age of 30, and over 97% smartphone penetration, Saudi Arabia is a digitally engaged market ready for innovation.
Strategic Location: As the largest market in the GCC, Saudi Arabia provides a gateway to the broader Middle Eastern and African regions, with access to a consumer base of over 450 million.
Government Support: Initiatives like Vision 2030 provide a clear roadmap for economic diversification, with significant investments in digital infrastructure, regulatory reforms, and innovation hubs.
Access to Capital: Saudi Arabia is attracting record levels of venture capital, with local and international investors supporting a wide range of startups across sectors like blockchain, fintech, gaming, and EdTech.
07
Key Developments and Partnerships
Blockchain in Food Safety:
The SFDA has implemented blockchain technology to enable consumers to trace food sources, enhancing transparency and trust in the food supply chain (spa.gov) (The Free Library).
International Partnerships:
Saudi Aramco and Japan’s SBI Holdings have formed a groundbreaking partnership in the crypto and semiconductor sectors, highlighting the Kingdom's commitment to advancing technological frontiers.
Metaverse and Gaming:
The Sandbox has teamed up with Sandsoft to expand its presence in Saudi Arabia, while the Royal Commission for AlUla has entered the metaverse with a 3D model creation of the Hegra Tomb of Lihyan.
Strategic Partnerships:
The Hashgraph Association has announced a strategic partnership with the Ministry of Investment of Saudi Arabia (MISA) to launch a deeptech venture studio in Riyadh (FastCo ME). Outlier Ventures, in collaboration with the National Technology Development Program, has also launched a Web3 accelerator partnership to drive the growth of the startup ecosystem in Saudi Arabia (FastCo ME). Additionally, Adaverse has launched in Riyadh, bridging Web3 innovation with Saudi Vision 2030 (FastCo ME).
Market Assessment and Strategy Development
Conduct a Market Assessment: Evaluate the demand, competition, and regulatory environment in Saudi Arabia specific to Web3 technologies to tailor your entry strategy.
Develop a Go-to-Market Strategy: Create a roadmap that includes market positioning, target audience, and marketing strategies tailored for blockchain and decentralized technologies.
Legal and Regulatory Compliance
Obtain a MISA License: The Ministry of Investment of Saudi Arabia (MISA) offers licenses for 100% foreign-owned entities, making it easier to set up without a local partner
Register with Relevant Authorities: Complete the necessary registrations with MISA, Ministry of Commerce, and other relevant bodies for blockchain and crypto operations
Meet Tax and Compliance Requirements: Ensure compliance with corporate tax, VAT, and other regulatory requirements to avoid penalties.
Operational Setup
Establish Your Entity: Set up your business operations, including office space, HR, and administrative functions. Utilize local expertise in navigating the regulatory landscape for blockchain businesses
Leverage Local Support: Utilize services like virtual GRO (Government Relations Officer) to handle all government interactions efficiently.
Access to Funding and Investment
Explore Funding Opportunities: Saudi Arabia offers various fundraising options to support your expansion, including venture capital and government grants focused on tech and blockchain.
Join Market Entry Programs: Participate in initiatives like the FDC Market Entry and Expansion Program, Outliers Riyadh Base Camp, and Adaverse Accelerator to gain additional support and incentives for Web3 companies.
Government Support and Vision 2030
Vision 2030: Saudi Arabia's ambitious Vision 2030 plan aims to diversify the economy and promote technological advancements, including blockchain, decentralized finance (DeFi), and other Web3 innovations
Regulatory Initiatives: Initiatives like the Saudi Central Bank’s (SAMA) deployment of blockchain for financial operations and the Fintech Saudi Initiative highlight the government's commitment to blockchain and fintech growth
Market Potential in Numbers
Foreign Direct Investment (FDI): Saudi Arabia's FDI inflows have increased significantly, from SAR 27 billion in 2017 to SAR 122 billion in recent years, with a target to further increase the contribution to 5.7% of GDP by 2030.
Crypto Adoption: With 14% of adults already using cryptocurrency, Saudi Arabia is poised for significant growth in the Web3 sector.
Blockchain Investments: The government and private sector are investing heavily in blockchain infrastructure, creating ample opportunities for Web3 startups
New Residency and Visa Programs
Investor and Entrepreneur Visas: Saudi Arabia's new long-term residency visas aim to attract high-wealth investors and entrepreneurs in the blockchain space, facilitating easier business operations and family visas
HQ Programme: Encourages international Web3 companies to establish their regional headquarters in Riyadh, boosting business infrastructure and opportunities
Recent Investments in Saudi Web3 Startups
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