In this episode of the podcast, Omar Al-Jariesi discusses with Professor Abdulaziz Al-Imran, co-founder and CEO of Impact 46 Fund, many key topics related to venture capital and Saudi Vision 2030. The discussion covers how the venture capital landscape has evolved in the Kingdom before and after the vision, and how opportunities have turned into tangible realities thanks to government support and economic transformations. Al-Imran reviews their experience in establishing Impact 46 Fund, which achieved astonishing returns of up to 400% in a short period, in addition to their notable investments in companies like “Jahez”. The conversation also discusses the challenges investors face in light of changing economic conditions, such as rising interest rates and how they affect company valuations. There is also talk about the vital role that personal relationships play in venture capital, and the criteria that investors rely on to choose the right opportunities. The conversation highlights the importance of innovation and adaptability in work environments, with references to inspiring success stories and impactful experiences in the investment world. This episode represents a valuable opportunity to understand the dynamics of investment in startups and a promising future vision for the sector in the Kingdom.
Establishing Impact 46 Fund
Impact 46 Fund was established as part of Saudi efforts to support innovation and investment in startups. This fund came at a critical time as the Saudi market experienced significant transformation towards supporting entrepreneurship. The main goal of the fund was to empower startups by providing the necessary capital for growth and expansion. The fund was established with the participation of local investors and limited government support, reflecting the desire to enhance local investments. Initially, the fund aimed to invest 100 million Saudi Riyals, but due to the strong demand from investors, this figure was raised to 250 million Riyals.
The fund has played a fundamental role in developing the investment environment, having invested in a diverse range of startups, focusing on areas such as financial technology, logistics, and e-commerce. Additionally, there was significant interest in creating new job opportunities and boosting the local economy. In light of these objectives, the fund managed to achieve excellent investment returns, contributing to attracting more investors to enter the Saudi market.
Transformations in the Venture Capital Landscape
Before 2016, the venture capital landscape in Saudi Arabia suffered from a lack of funding and government support. Investments heavily relied on individual efforts, and the available opportunities for investors were extremely limited. With the emergence of Saudi Vision 2030, a significant shift occurred in this landscape. The government began launching initiatives to support entrepreneurship, leading to an increase in the number of venture capital funds. This new environment encouraged entrepreneurs to create new companies, and the government started providing financial and logistical support.
The new funds that appeared in the market began offering various programs to support startups, leading to a diversification of available opportunities. These changes were accompanied by improvements in legislation and regulations governing the market, helping investors feel secure and confident in their investments. The increase in the number and quality of startups also helped entice investors, as they began to see the potential returns from their investments.
Investors started to recognize the importance of diversifying their portfolios and began looking for opportunities that yield high returns. This shift created competitive pressure among funds, driving them to improve their strategies and offer better deals to attract investors.
Success Stories of Impact 46 Fund
Since the establishment of Impact 46 Fund, it has achieved a number of notable successes. One of the most prominent of these successes was the fund’s investment in Jahez, which is considered one of the leading companies in the delivery sector. When investing in Jahez, the challenge was significant as many other investors were hesitant due to market risks at that time. However, the fund made a bold decision to invest, resulting in massive investment returns.
After
The investment of the fund in Jahez has witnessed tremendous growth, as the company’s sales have significantly doubled in a short period. This success demonstrates the fund’s ability to identify promising opportunities in the market and enhances investors’ confidence in its strategies. In addition to Jahez, the fund has invested in other companies such as Tameni and Flourh, which have also achieved great success in the market.
The experiences of these companies have succeeded in generating high investment returns, contributing to a strong reputation for Impact 46 Fund as one of the prominent venture capital funds in Saudi Arabia. The success of the fund is not limited to financial returns; it also extends to a positive impact on the local economy by creating new job opportunities and enhancing innovation.
Challenges and Opportunities in Venture Capital
Despite the great successes achieved by Impact 46 Fund, there are ongoing challenges facing the venture capital sector. One of these challenges is economic volatility that affects the market. Rising interest rates and changes in government policies can significantly affect the valuation of startups, potentially leading to reduced investment returns.
Additionally, funds face challenges in identifying good opportunities amidst the large number of startups. The wide diversity in sectors makes it difficult for investors to choose to invest in the most promising companies. Therefore, it is essential for investors to continue developing their skills and market knowledge for a better understanding of the risks and opportunities available.
Despite these challenges, the future looks promising for the venture capital sector. With continuous government support and increased awareness among investors about the importance of supporting startups, this sector can become one of the main pillars of the Saudi economy. The opportunities available in technology, finance, and health sectors are promising, providing investors with significant growth opportunities.
Future Trends for Impact 46 Fund
Impact 46 Fund plans to continue expanding its investment portfolio. With the launch of the third fund, which focuses on modern technologies, the fund looks forward to investing more in startups representing the future. New investments are expected to focus on areas such as artificial intelligence, blockchain, and financial technologies.
The management is looking to achieve strategic partnerships with local and international companies to enhance growth and expansion. The fund also intends to strengthen its efforts in supporting entrepreneurs by providing training programs and consultancy, enhancing their capabilities to succeed in the market.
The approach of Impact 46 Fund reflects Saudi Arabia’s Vision 2030 in promoting innovation and supporting startups, contributing to building a strong and sustainable investment environment. Investing in modern technologies will enhance the fund’s ability to achieve high returns and open the door for new investments that boost economic growth.
The Entrepreneur’s Responsibility and Rapid Growth
An entrepreneur is considered the primary person responsible for all aspects related to the company they manage, especially when it comes to making quick decisions that may lead to positive or negative results. Sometimes, excessive enthusiasm arises among entrepreneurs, which may lead to hasty decisions that could have negative long-term consequences. It is crucial for the entrepreneur to always remember that any decision they make impacts the company as a whole, and they must bear the consequences, whether positive or negative. In the context of rapid company growth, the cost can be high, so expansion must be approached cautiously and with careful planning. For example, rapid expansion may lead to increased operational costs, which could harm profitability in the long term.
Unemployment and Localization Issues in Saudi Arabia
The issue of unemployment in Saudi Arabia is one of the major challenges facing the national economy. Many experts have pointed out that the optimal solution lies in achieving job localization, meaning that Saudi citizens should be able to obtain suitable job opportunities. If we can address this issue, many other economic problems will begin to be resolved. The unemployment rate represents one of the vital indicators in any economy, and it is important to work on improving this rate by providing job opportunities for the youth. But the main problem lies in the fact that the cost of employing a Saudi worker is higher than that of employing a foreign worker, which makes business owners tend to choose the cheaper option.
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Previous experiences suggest that government directives related to localization have not always been effective. New reforms may enter the labor market, but they may be followed by setbacks that prevent the achievement of the desired goals. It is important to understand the reasons behind these challenges; one of the main problems lies in the low cost of foreign labor, making it the most attractive option for employers in sectors requiring a labor-intensive workforce.
Labor Market Dynamics and Current Challenges
The dynamics of the labor market refer to the ability of individuals to move easily from one job to another, which is considered a core feature of a healthy labor market. However, many factors limit this dynamism, including restrictions on foreign labor. For example, if a foreign worker cannot easily transition between jobs, it reduces market flexibility and prevents the necessary balance between supply and demand for jobs.
It is also clear that there is a need to change the current perspective on the proposed solutions to the unemployment problem. Instead of focusing on quotas or fees, it is important to begin viewing wage levels as an indicator of the success of reforms. If the cost of employing a foreign worker is lower than that of employing a Saudi worker, no real change will occur in the labor market. We must work to raise wage levels in general to ensure that the labor market is attractive to citizens.
Focus on Improving Wage Levels and Supporting the Private Sector
Improving wage levels is vital to addressing the unemployment problem in the Kingdom. If we can ensure that wages offered to workers are competitive with those offered by foreign companies, it will encourage many citizens to engage in the labor market. Additionally, improving wage levels will enhance the living conditions of citizens, contributing to a more prosperous society.
There should be a balance between wage levels and the cost of living in the country. If wages are high, but the cost of living is high as well, individuals will not feel an improvement in their financial situation. Therefore, it is important for efforts to be coordinated between the government and the private sector to achieve this balance. Supporting the private sector is also essential, as governments should encourage companies to create more job opportunities by offering appropriate incentives.
Work Technology and Its Role in Addressing Unemployment
With the increasing use of technology across various sectors, there is a significant opportunity to enhance productivity and reduce reliance on cheap labor. The use of machines and modern technologies can help reduce operational costs, allowing business owners to employ more Saudi citizens at better wages. For example, if the use of technology facilitates production processes, it can reduce the need for a large number of workers while simultaneously allowing for the employment of highly skilled workers at higher salaries.
However, there is a challenge facing this trend, as it must be ensured that Saudi labor has the required skills to adapt to this technology. This requires investments in education and vocational training, enabling Saudi youth to compete in the evolving labor market. Educational institutions must develop training programs that meet market needs, enhancing the readiness of youth to enter the labor market.
This episode was summarized using Artificial Intelligence ezycontent
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