With the allure of substantial housing benefits, complimentary workspaces, and the prospect of forming partnerships with the government, startup founders are increasingly eyeing Saudi Arabia as the ideal locale for their budding artificial intelligence enterprises.
DXwand, an AI startup from Cairo that specializes in automated customer service solutions, is now operating from Riyadh, capitalizing on the Saudi government’s generosity. SambaNova, a chipmaker from Palo Alto, is also exploring opportunities in the region, having dispatched a pair of representatives to evaluate potential business partnerships and real estate opportunities.
For larger enterprises like Vast Data, a multi-billion-dollar entity in AI data storage management, the incentives have proven particularly enticing. Having cemented its market position in the Middle East, Vast Data is relocating its regional base from Dubai to Riyadh, a move that has been financially rewarding.
“This isn’t just an office relocation; it represents a tactical pivot,” explained Abdullah Al Gallaf, Vast Data’s Country Manager in Saudi Arabia. He attributes the move to Saudi Arabia’s ambitious Vision 2030 and the nation’s considerable investments in technology as the main reasons for the headquarters shift.
Vast Data is among the legion of companies setting up shop in the kingdom, a trend encouraged by Saudi Crown Prince Mohammed bin Salman, who is keen on nurturing such growth by injecting billions of dollars into the venture to make the kingdom an appealing business hub.
The strategy to draw in global businesses combines incentives with mandates. Companies that fail to establish a regional headquarters in Saudi Arabia are excluded from government contracts, as per a new regulation enforced this year. Goldman Sachs made headlines last month as the inaugural Wall Street bank to secure a license for a Riyadh-based headquarters.
The kingdom’s National Strategy for Data & AI outlines clear benefits for promising startups, aiming to forge a $20 billion AI sector buoyed by both private and governmental funds by 2030. The newly formed Saudi tech fund Alat, supported by the Public Investment Fund, has committed to pouring $100 billion into partnerships and advanced manufacturing within the AI industry.
“Establishing our headquarters in Saudi Arabia brings us into the heart of the action,” noted Al Gallaf. “Our physical presence here strengthens partnerships and supports the kingdom’s futuristic vision.”
The Ministry of Investment in Saudi Arabia presents an array of enticements through its Regional Headquarters (RHQ) program, which includes limitless employee visas, a decade-long reprieve from Saudization hiring quotas, exemption from professional accreditation if valid in the employee’s home country, no corporate income tax, and a fixed withholding tax rate for three decades post-RHQ license issuance.
“Simplified business laws and robust R&D support have been instrumental,” said Al Gallah.
The kingdom is particularly keen on attracting AI-driven companies, offering them appealing housing stipends and office spaces. With the backing of new government investment funds and a commitment to developing leading-edge infrastructure, Saudi Arabia is nurturing a nascent startup ecosystem.
Professional services giant PwC forecasts Saudi Arabia’s AI industry could generate a staggering $135 billion for the national economy by 2030, potentially outpacing the projections of Vision 2030.
“We’re excited to contribute to the kingdom’s tech evolution, especially in fields like healthcare, finance, and logistics where AI can vastly enhance efficiency and outcomes,” Al Gallaf added.
Vast Data’s local collaborations with companies like MBUZZ, as well as partnerships with industry giants including Nvidia, Google Cloud, AWS, and Hewlett Packard Enterprise, are set to significantly increase its influence throughout the kingdom.
In line with the new headquarters policy, Vast Data’s move to Saudi Arabia unlocks opportunities for partnerships with public institutions such as universities and government bodies.
DXwand’s founder and CEO, Ahmed Mahmoud, sees the establishment of a Saudi office as providing “strategic advantage, market access, and a chance to substantially contribute to the region’s transformative agenda.”
Mahmoud expects to grow DXwand’s clientele in the kingdom, with plans to staff a Riyadh office with a fraction of its workforce, following a recent $4 million funding round aimed at expansion.
“Saudi Arabia is cultivating several tech-driven cities, like NEOM and King Abdullah Economic City, attracting talent and fostering a culture of innovation,” Mahmoud remarked. “DXwand stands to gain from this skilled labor pool and the dynamic R&D ecosystem.”
Even without a formal headquarters, SambaNova is investing in Saudi Arabia, recognizing the region’s strategic importance for AI as a cornerstone of economic growth and a hub for knowledge-driven innovation, as per Marshall Choy, the company’s Senior Vice President of Product.