Turning the Kingdom’s potential into reality
Along with Saudi Arabia’s first-ever presidency of the Group of Twenty (G20), which culminated in the virtual G20 leaders’ summit on Nov. 21, the Kingdom’s policymaking credentials and its ability to collaborate with the international community has come into sharp focus since the beginning of the year.
Following a seamless transition to hosting the G20’s roster of events virtually, the Kingdom has won praise from all corners, not just for its agility but also its ability to coordinate and align the international community on a vision for the future.
Watching the success of the Saudi presidency unfold has been a source of pride for all Saudis – at a time when we needed it most. But also, as CEO of Jada, Saudi Arabia’s fund of funds, I have been a keen observer and vested stakeholder in more ways than one.
As part of our ecosystem development mandate, Jada’s role in shaping the policy advocacy and regulatory framework for the Kingdom’s private sector to deliver programs and initiatives to accelerate the development and growth of the venture capital and private equity (VCPE) industry, is a reflection of Saudi’s role in facilitating the G20’s imperatives this year. And beyond reflections, what was proposed at the summit this year will have a direct impact on the work we do and what we can achieve.
In his opening remarks to the summit, King Salman said: “We need to promote access to opportunity for all, especially women and youth to enhance their roles in the society and in the job market through education, training, job creation, as well as supporting entrepreneurship, strengthening financial inclusion, and bridging the digital gaps among individuals.”
At Jada, our mission is to unlock the enormous potential of the Saudi market for local and international funds focused on Saudi SME investments, which can in turn become key drivers of realizing the key tenets of Vision 2030 – that of a diversified economy that offers opportunity to all.
The question then arises: What can we do at the policy advocacy level to convert this potential into reality?
First, we must point to some indicators of our success to date. Since its establishment by the Public Investment Fund (PIF), Jada has collaborated with the Saudi regulatory authorities to identify and overcome the hurdles to accelerated SME sector growth in the Kingdom.
As a result of the work we have done in this field, we have seen remarkable triple-digit growth for venture capital investments flowing into Saudi startups. In Q3 of 2020, despite the abundant challenges, we saw close to $160 million in venture capital invested in 32 Saudi-based startups, representing a staggering 357 percent year-on-year growth in the number of startups receiving funding in Q3 2019.
The numbers may not always be this high. So, we must look at making sure this growth is sustainable by forging an attractive yet robust regulatory framework. To that end, we continue to engage in policy enhancement projects. In Q3, 2020, the association held engaging workshops and submitted recommendations on the recent draft of new Companies’ Law, as a representative of the collective voice of the VCPE industry.
As well as this, we are closely tied into policy advocacy efforts with the Capital Market Authority (CMA), to amend and update the Investment Funds Regulations (IFR) and other relevant regulations to create a more attractive regulatory framework for PCVE funds looking to enter the Kingdom.
Being plugged into this framework of policy advocates and consultants, and in a position to gather and refine what is submitted to the government to further enhance access to the VCPE ecosystem for regional and international players, means Jada can not only offer the required capital to funds, but it can also offer the strategic guidance and support for fund managers entering the market for the first time.
Adel Al-Ateeq is the CEO of Jada.