The journey of VC in Saudi Arabia: A conversation with Waleed Al Ballaa, Sukna Ventures

As we enter a new year, it is befitting to shine the spotlight on some of the regions that are poised to be the big talking points within the global private markets industry, and there is no doubt, that Saudi Arabia and the GCC is one of such regions. In the coming weeks we will be speaking to local private market leaders about what's shaping different parts of the industry in the region, how international investors can approach the area and how it differs from more mature markets such as Europe and the US. This week we're speaking to Waleed Al Ballaa, General Partner, Sukna Ventures, about how VC is developing, ways to drive sustainable growth and advice for starting your VC journey in Saudi Arabia.

How is venture capital developing in Saudi Arabia and what role do you think it has to play in the future of private markets in the region?

Perhaps the most notable developments in Saudi Arabian venture capital can be seen across four dimensions:

a. Supply-side evolution: Deep-tech startups are entering the local deal flow in force, potentially enabling a much higher ceiling for returns—albeit with higher risk levels and longer time horizons. Additionally, the rapid rise in serial entrepreneurs launching new ventures is markedly influencing the quality of local deal flow.

b. Demand-side evolution: Saudi's capacity for innovation is increasing rapidly thanks to deregulation, IP reforms, and heavy investment in infrastructure and supply chains. In addition, new sectors are opening up for innovation such as Space and Biotech and large established sectors, such as defense and mining, are starting to warm up to the participation of startups.

c. Asset class expansion: More types of LPs are contributing to the VC capital pool—especially banks and corporates with Sharia-compliance requirements—by investing in local VC funds. Moreover, and as VC has now demonstrated the attractiveness of the Saudi tech market this has encouraged more traditional asset classes such as private equity and private credit to enter, including large overseas players like TPG and General Atlantic.

d. Economic contribution: The strong performance of VC-backed Insurtech (such as Rasan) and increased M&A activity by major private players acquiring VC-backed startups point to an improved outlook for VC exits. Going forward, this is one of the most critical success factors that will need to be proven out in Saudi’s VC, as robust exits can help drive downstream market growth as well as stimulate the growth of the LP capital pool for Venture Capital.

You work particularly with early-stage tech startups. What are some of the biggest challenges startups and tech companies face in the region, and how can they be addressed to secure growth?

When Saudi Arabia’s startup ecosystem was in its infancy, it benefited from a support-driven approach (e.g., accelerators, sandboxes, hackathons) that helped it take root and overcome market-entry barriers. Now that the ecosystem is entering its scale-up phase, it requires a shift to a demand-driven approach focusing on integrating with the broader economy. This transition calls for a different toolkit that includes government procurement, taxation, deregulation, exports, and a reevaluation of the division of roles between the public and private sectors—particularly in areas where technological sovereignty depends on building a robust, deep value chain. The faster we can switch gears here the more likely our startup ecosystem will be able to hit escape velocity and transform into a scaleup ecosystem.

What are the most popular strategies that drive sustainable, long-term growth within tech in Saudi Arabia?

Alignment with the broader economic direction will remain a cornerstone of any successful strategy. Saudi Arabia’s large GDP (it surpassed the $1 trillion mark in 2023) and the dynamism injected by Vision 2030 create a fertile environment for tech to flourish. In my view, two areas are especially promising:

• Technological sovereignty: This includes GenAI, fabless semiconductors, data centers, and clean energy.

• Cross-border expansion: Favoring playbooks that leverage Saudi Arabia as a launchpad for the wider region or beyond. A good example here is Classera, one of our portfolio companies in the edtech space. It began in the Saudi market and now operates across 40 countries worldwide.

What would be your best advice to someone looking to expand their VC portfolio into Saudi Arabia and the rest of the Middle East?

Many misconceptions—and outdated perceptions—about this market no longer match the realities on the ground. The openness and dynamism in Saudi Arabia must be experienced firsthand to be truly understood. Most VCs here believe the market is far from saturation and are keen to collaborate to accelerate its growth. Therefore, I would advise those interested in expanding into Saudi (and the MENA region at large) to go beyond transactional relationships. Invest time and effort in building deeper, more meaningful connections with the local VC community, whether through formal organizations like the Saudi VC/PE Association or less formal networks and one-on-one relationships.