Hala Ventures on Supporting Global-Minded Saudi Startups
HALA Ventures is a Saudi venture capital firm which started operating in 2014 under the umbrella of its affiliate company, Financial Horizon Group, as a Corporate Fund investing in various Asset-Classes including Venture Capital. HALA Ventures was later established as a stand-alone VC firm in 2018, with offices in both Khobar & Riyadh.
Today, 37% of Hala Ventures’ portfolio companies are Saudi-based, with 10 deals inked in the Kingdom so far. To date, the VC firm has seen 3 successful exits, though only one of the three exits was a Saudi-based startup.
Lucidity Insights spoke with Founder and Chairman of Hala Ventures, Ali Abussaud. Abussaud is an investor at heart; he comes from an institutional banking background, having spent 2 decades working at leading institutional banks and running a private investment fund, before embarking on a full-time VC career. Regarding Hala Ventures’ formative years, Abussaud says, “you know, back then, my business partner and I were doing a lot of angel investments and decided to join forces by forming a Corporate Fund back in 2014 and realized that there really were no VCs in the market, and so Hala became one of the first.” He continues, “Before then, family offices in some sense laid a lot of the foundational groundwork for venture capital in the Kingdom, filling gaps and funding startups that institutional banks wouldn’t touch with a 10-foot pole.”
Abussaud continues, “2018-19 was when we saw a real shift in the market. Monsha’at came onto the scene with various well-funded initiatives to stimulate SMEs and entrepreneurship. SVC and Jada both came online with their Fund of Funds with a combined US$ 2 billion to deploy. At this time, I also saw a lot of family offices starting to allocate a portion of their annual investments to go towards tech startup investments.”
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When we begin discussing why Saudi Arabia is such a hot market, Abussaud has an interesting take. “It’s population and scalability, but it's also purchasing power and the consistency of that purchasing power. Saudi Arabia doesn’t really have that a summer lull period like some of its neighboring countries. 70% of the users on platforms in Saudi are local Saudis, so they might go on holiday here or there, but most of them stay right here in the Kingdom all year around.” And for those reasons and more, Hala Ventures seems to be increasingly betting on Saudi startups. Until 2018, Hala Ventures really didn’t invest in any Saudi startups, choosing instead to back founders in the UAE, Egypt and Jordan. Today, it seems the tides have turned, and investments in Saudi startups are multiplying. “Today, one-third of our portfolio are Saudi startups, and we only started investing in Saudi shortly before the pandemic.”
“Investors and startups shouldn’t underestimate the Saudi market. Vision 2030 clearly states that it is trying to expand SME driven GDP from 20% to 35% by 2030. That additional 15% accounts for more than US $560 million annually. It’s no small feat, but that’s also why there is support from every possible level of government, because startup success in the Kingdom, is success for the entire Kingdom.”
When it comes to advice for founders in the Kingdom, Abussaud had this to say:
1. Think Big & Think Expansion Sooner
“Founders need to start thinking beyond the MENA region into the EU, Asia, India and Africa. Investors need scale. Success needs scale. So do it quickly.”
2. Choose Investors Wisely
“Picking investors is as important as picking your wife or husband. They are partners for life. Founders must identify who are value investors, that are ready to go the long-haul with you, and those that are ready to invest into you in future rounds.
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