Saudi Arabia shifts investment focus from resources to talent, says Al-Falih

RIYADH: The strong investment growth in Saudi Arabia’s economy has led 50 British companies to set up regional headquarters, joining over 1,300 UK firms already operating in the Kingdom, said a senior UK trade official.

The UK is positioning itself as a long-term partner in the Kingdom’s economic transformation, with bilateral trade already surpassing £17 billion ($22.55 billion) and expected to grow further in line with Vision 2030.

“The UK and the Kingdom of Saudi Arabia have enjoyed a warm and deep trading relationship for a long time,” said Peter Ashby, deputy UK trade commissioner for the Middle East, in an interview with Al-Eqtisadiah. 

“So, we are starting from strong foundation and a place of friendship and mutual respect,” added Ashby, who is also the director of trade and investment at the British Embassy in Riyadh. 

Both governments, he said, “are working extremely hard to strengthen our trading relationships and to create quality jobs in new sectors under Vision 2030 and the UK’s upcoming Industrial Strategy.”

Ashby said the UK-Saudi Strategic Partnership Council — led by Saudi Commerce Mnister Majid bin Abdullah Al-Kassabi and UK Secretary of State for Business and Trade Jonathan Reynolds — has been central to advancing bilateral initiatives across economic and social pillars.

‘Great Futures’ initiative

A flagship effort under that framework is the ‘Great Futures’ campaign, which Ashby described as a “joint initiative to promote trade, tourism, innovation and cultural partnerships.” It has supported deals in priority sectors such as critical minerals and AI-enabled technology.

“The campaign continues, with GREAT FUTURES supporting business engagement in the UK and Saudi Arabia, including bespoke events such as the UK-Saudi Skills Forum at the upcoming HCI (Human Capability Initiative) and EDGEx Education Global Exhibition,” Ashby said.

The campaign’s impact was tangible from the outset. “The event delivered more than 50 agreements across priority sectors and was the catalyst for the partnerships worth over £7.7bn and delivering 4000 jobs in both Kingdoms, announced during the UK Prime Minister’s visit in December last year,” he said.

One of those deals involved hydrogen-focused UK firm HYCAP, which partnered with Saudi companies “to invest over £750 million in hydrogen mobility infrastructure solutions between both our countries, securing over 1000 jobs across Northern Ireland and the rest of the UK.”

Vision 2030 alignment

Ashby pointed out that the UK is “strategically aligning its expertise with Saudi Arabia's Vision 2030 priorities, particularly focusing on supporting the Kingdom's transition into non-oil sectors.”

The UK is concentrating on industries where it already leads globally — “including energy, financial services, clean technology, advanced manufacturing, digital innovation, healthcare, biotech, creative industries, and defence.”

Recent milestones include the announcement of a UK-Saudi Sustainable Infrastructure Assembly, aimed at enhancing collaboration between UK financial and professional services and Vision 2030’s sustainable infrastructure projects.

He also cited the example of UK-based Phytome Life Sciences, which launched “a UK-Saudi innovation-investment bridge with the Research, Development and Innovation Authority (RDIA), to accelerate research, development and investment in medicines, materials and agricultural solutions.”

Academic collaboration is another key focus. “Our UK universities have already been working in this space, with one notable example being the partnership in AI for precision medicines between the University of Oxford and King Abdulaziz University, and we hope to see more partnerships thrive,” he added.

“With more than 1300 UK firms operating in Saudi Arabia and more than 50 UK companies establishing regional headquarters in the Kingdom,” Ashby said, “the export of UK skills and expertise to the country puts the UK in a strong position to support the transformation that is taking place through Vision 2030.”

Supporting giga-projects

UK firms are also playing a growing role in the Kingdom’s giga-projects, including NEOM and the Red Sea Project. “UK firms are making substantial contributions to Saudi Arabia's giga-projects, bringing world-leading expertise in innovation, sustainability, and technical excellence,” he said.

He cited Graphene Innovations, a Manchester-based firm that “recently announced the world’s first commercial production plant for graphene-enriched carbon fibre with NEOM.” The facility is expected to “generate £250 million of investment into a research and innovation hub in Greater Manchester and is expected to create more than 1,000 skilled jobs in the region.”

On the Saudi side, the project is expected to “contribute over 4,500 skilled jobs to Saudi Arabia’s economy by 2030, generating revenues exceeding $1.6 billion.”

Ashby said these partnerships showcase “the UK's strengths in clean technology, advanced materials, and sustainable infrastructure — all critical components of Saudi Arabia's ambitious giga-projects as they move from strategy into delivery phase.”

Clean energy, smart Infrastructure and capital markets

Clean energy partnerships between the UK and Saudi Arabia are valued at £7.7 billion and are “set to create over 4000 UK jobs,” Ashby noted.

Among them is Carbon Clean’s work with Aramco on modular carbon capture, and Next Generation SCM’s deal with City Cement Co. to produce 2.5 million tonnes of sustainable cement and concrete materials annually.

On financial services, Ashby emphasized the UK’s global role: “All Saudi Arabian bond and sukuk issuances have been made through The London Stock Exchange (LSE), with $41.8 billion in capital raised in 2024 alone. This demonstrates the deep trust Saudi institutions place in UK financial markets.”

By leveraging this expertise, UK firms are “supporting the development of more sophisticated capital markets, and facilitating Saudi companies' access to global investment.”

UK-GCC FTA 

Looking ahead, Ashby underscored the strategic significance of a UK-Gulf Cooperation Council Free Trade Agreement. “This could grow trade between the UK and the GCC by 16 percent, adding an extra £8.6 billion a year to trade. Of course, this would further help to grow the UK-Saudi trade relationship.”

He acknowledged that one of the main challenges isn’t regulation, but perception. “In fact, many UK companies are surprised by how straightforward it is to do business in Saudi Arabia — so I would say that making sure that business leaders fully understand the market is probably the biggest challenge,” he said.

“Many business leaders talk of understanding the Gulf, but the countries within the region are very different. Saudi Arabia is a unique country, with extraordinary, hard-working, and innovative leaders in business and government.”

His advice to executives: “I would encourage all leaders with a serious interest in partnering in the Kingdom to come and build relationships directly here.”

Future opportunities

Ashby said the UK’s upcoming Industrial Strategy “emphasises the importance of shaping markets to meet rapid global economic changes ensuring that the UK remains at the forefront of innovation and investment opportunities.”

He identified growth sectors aligned with Saudi Arabia’s trajectory: “Advanced manufacturing, especially involving innovative materials like graphene-enriched carbon fibre, offers substantial growth potential. The creative industries, digital technology, healthcare, and biotech sectors also present significant opportunities.”

On tourism and entertainment, he added: “Saudi Arabia's focus on developing tourism and entertainment infrastructure creates openings for UK firms with experience in these sectors.”

“As Saudi Arabia continues its impressive delivery of Vision 2030, I see great potential and opportunities for UK and Saudi businesses to contribute to the growth and prosperity of each other’s economies.”

RIYADH: As startups approach the critical stage of an initial public offering, one of their biggest challenges is the transition from a fast-paced, founder-driven company to one that must meet the rigorous demands of public markets.  

This shift often requires a fundamental change in mindset — particularly in areas such as governance, financial discipline, and regulatory compliance.  

The journey from a nimble startup to a publicly traded company is a transformative one, and it is a challenge many companies in Saudi Arabia’s rapidly evolving startup ecosystem will soon face.  

Historically, strategic acquisitions were the primary exit strategy for startups seeking liquidity. However, with an increasing number of late-stage companies reaching scale, IPOs are rapidly emerging as a viable — and increasingly attractive — option.  

As the Kingdom’s entrepreneurial landscape matures, the path to public markets is becoming a more prominent choice for startups looking to grow beyond their founding teams and tap into the capital needed to expand. 

“Many startups struggle in this arena because what worked in their early years — fast decisions, aggressive growth, and loose structures — won’t hold up under public scrutiny,” said Mohammed Al-Meshekah, founder and general partner of Outliers, an early investor in Saudi Arabia’s Tabby, now valued at $3.3 billion and on track for an IPO.

Speaking to Arab News, Al-Meshekah said that “the right investors work with founders to institutionalize their company without killing its agility.”    

He added: “This means tightening financial discipline early, not as a last-minute fix, ensuring reporting is clean, unit economics are sustainable, and capital allocation is intentional.”  

Mohammed Al-Zubi, managing partner and founder of Nama Ventures, which backed Saudi unicorns Salla and Tamara — both preparing for public listings — echoed this sentiment, saying that the best approach is to build with IPO-level governance long before it becomes necessary.   

“This means structuring financial reporting properly, ensuring compliance frameworks are in place, and building a leadership team that can transition into a public company environment,” Al-Zubi told Arab News.  

Regulatory hurdle   

Regulatory compliance is another hurdle, particularly in regions where high-growth technology startups must navigate frameworks originally designed for traditional industries.    

“At the same time, there’s an opportunity to evolve regulatory frameworks in the region to better support high-growth companies,” Outliers’ Al-Meshekah said.   

“Many existing standards were designed with traditional industries in mind, which naturally differ from the structure and scaling needs of technology-driven businesses,” he added, noting that regulators must strike a balance between ensuring market stability and enabling companies with global potential to list locally.    

“Striking this balance could position Saudi Arabia and the region more broadly as a leading destination for high-growth IPOs, attracting not just companies built in the region but those from around the world looking for a strong public market to scale.”    

Investor alignment also plays a key role in a smooth IPO transition. “Startups that have investors who prioritize short-term gains over sustainable growth often face challenges when transitioning to public markets,” Al-Zubi said.    

“Those backed by long-term partners who guide them toward disciplined execution, regulatory readiness, and scalable operations are the ones that make the leap successfully.”   

IPO as the new exit strategy   

Al-Zubi said that just five years ago, IPOs were not considered a viable exit path for startups in the region — with strategic acquisitions seen as the only clear exit strategy.   

“While acquisitions provided liquidity, they often left a lot of money on the table because startups were being acquired before realizing their full potential,” he said.   

Today, Al-Zubi noted, the dynamics are changing. “IPOs are now the dominant exit strategy, and we’re seeing more late-stage startups actively preparing for public markets. Companies like Tamara and Salla are proof that regional startups can scale to IPO readiness, and as capital markets continue to evolve, this trend will accelerate.”    

However, acquisitions and secondary sales will continue to play a role, particularly in industries where global players are looking for entry points into the Saudi market.    

“With IPOs now a real option, founders are no longer forced to sell prematurely,” Al-Zubi added. “Instead, they can scale further, capture more value, and exit at a much higher valuation through public markets.”  

  Al-Meshekah agreed that IPOs will become an increasingly important part of the exit landscape but noted that they will complement acquisitions or secondary sales, not fully replace them.   

“As more Saudi startups mature, we’ll see a broader mix of exit strategies, with IPOs becoming a key path for companies that can sustain independent growth. But the best companies aren’t built for a single outcome; they create lasting value with optionality, whether through an IPO, acquisition, or secondaries,” he added, pointing to historical trends in the US to illustrate how dynamics evolve in maturing ecosystems.    

“If we look to the US as a reference point, IPOs once dominated venture-backed exits, accounting for over 80 percent in the 1980s, before dropping to 50 percent in the 1990s and falling below 10 percent in the past 25 years,” he said.    

“It’s natural for IPOs to lead in a developing ecosystem, with M&A following as incumbents acquire innovation to stay competitive.”  

Role of investors post-IPO  

While going public is a significant milestone for any startup, it marks the beginning of a new phase rather than the end of the journey.    

The transition from a venture-backed private company to a publicly traded entity brings new challenges, requiring founders to shift their focus from high-growth execution to long-term financial discipline and shareholder management.    

“Going public isn’t the finish line. It’s just another phase of a company’s evolution,” Al-Meshekah said.   

“The role of investors at this point shifts to long-term stewards, helping ensure a successful transition into the public markets without losing what made them great in the first place.”    

He warned that one of the biggest risks post-IPO is “short-termism” — the pressure to prioritize quarterly performance over long-term value creation.   

“Early-stage VCs who’ve been with the company since its inception play a key role in keeping the leadership grounded in its original vision while adapting to the new expectations of public shareholders,” Al-Meshekah said.   

He added that the best companies “balance financial discipline with the agility to innovate, resisting the urge to optimize for near-term stock price movements at the expense of long-term market leadership.”    

Al-Zubi highlighted how the investor base also changes once a company reaches public markets.   

“Every stage of a startup’s journey requires a different set of investors with specialized expertise,” he said.    

“Early-stage VCs play a critical role in getting a company from idea to scale, but once a startup reaches the public markets, the baton must be passed to public equity investors and institutional funds that are better suited for this phase.”    

At this stage, a startup is no longer judged solely on its growth potential but also on its ability to deliver sustainable profitability, shareholder value and robust governance.   

“Early-stage VCs, whose expertise lies in navigating uncertainty and scaling startups, must step back and allow the company to be guided by those with deep public market experience,” said Al-Zubi.    

That doesn’t mean early investors disappear entirely. “Some remain involved through board positions, but their influence naturally diminishes as new stakeholders, financial structures, and operational expectations take priority,” he explained.    

Al-Zubi emphasized that founders must embrace this transition and surround themselves with the right advisers.    

“IPOs are not just exits — they’re a shift to a new way of operating, and founders who understand this transition will be the ones who thrive in the public markets.”    

Al-Meshekah echoed this sentiment, noting that successful tech IPOs share common traits.    

“They don’t just scale their existing product; they expand into new markets, deepen customer relationships, and build sustainable competitive moats,” he said.    

“Early investors who stay engaged can provide continuity, supporting founders as they navigate this shift while maintaining the principles that drove their early success.”