Kholoud Hussein 

In the world of entrepreneurship, the strength of an economy is not measured solely by the number of companies it creates, but by the number it can help survive when adversity strikes. Financial distress is no longer an exception in today's business landscape; it has become an inevitable phase in the corporate lifecycle, particularly for startups navigating volatile markets, tightening funding conditions, rising operating costs, and rapidly evolving customer demands.

For decades, bankruptcy carried a deeply negative connotation across much of the Middle East. It was widely perceived as the final chapter in a company's journey—an admission of failure that inevitably led to liquidation, reputational damage, and prolonged legal disputes. That perception, however, has begun to change in Saudi Arabia with the introduction of the Kingdom's Bankruptcy Law, legislation that fundamentally redefines bankruptcy not as the end of a business, but as an opportunity to preserve one.

More than a legal reform, the law represents a shift in economic philosophy. It aligns closely with the ambitions of Saudi Vision 2030, which seeks to build a diversified, competitive, and resilient economy capable of encouraging innovation while managing business risks more effectively. Rather than forcing financially distressed companies into immediate liquidation, the framework allows viable businesses to restructure their obligations, reorganize their finances, and continue operating—preserving jobs, protecting creditors' rights, and maintaining economic value.

For startups, this legal framework has become one of the defining characteristics of a mature entrepreneurial ecosystem. Venture capitalists understand that innovation inherently involves uncertainty, and that not every business succeeds on its first attempt. What matters is not eliminating risk altogether, but creating mechanisms that allow promising companies to recover from temporary setbacks. By providing those mechanisms, Saudi Arabia has taken an important step toward strengthening investor confidence and encouraging greater capital deployment across its growing startup ecosystem.

From Punishment to Business Recovery

Saudi Arabia's Bankruptcy Law, enacted under Royal Decree No. M/50 in 2018, marked a turning point in the Kingdom's commercial legal framework. Replacing outdated insolvency provisions that were no longer suited to the needs of a rapidly diversifying economy, the law introduced internationally recognized restructuring principles while adapting them to Saudi Arabia's legal and economic environment.

At its core lies a simple but transformative principle: financial distress does not necessarily mean a business has reached the end of its life cycle. Many companies experience temporary liquidity shortages, operational disruptions, or financing challenges that can be overcome through restructuring rather than liquidation.

To address varying degrees of financial distress, the law establishes several judicial procedures, each designed to preserve economic value whenever possible. These include:

• Preventive Settlement, allowing debtors to negotiate repayment agreements with creditors before insolvency escalates. 
• Financial Restructuring, enabling companies to reorganize their debts while continuing day-to-day operations under court supervision. 
• Liquidation, which remains the final option when a business is no longer economically viable. 

This graduated approach represents a fundamental departure from traditional insolvency regimes. Instead of treating bankruptcy as a legal penalty, the Saudi framework views it as a structured process aimed at business recovery whenever feasible.

Why Startups Stand to Benefit the Most

No segment of the economy illustrates the importance of such legislation better than startups.

Globally, the majority of startups encounter cash flow challenges during their early years—not because their products lack potential, but because they often expand rapidly, depend heavily on external financing, and require years before achieving profitability. Market fluctuations, delayed fundraising rounds, changing investor sentiment, or unexpected economic shocks can quickly place otherwise promising companies under financial pressure.

Saudi Arabia's startup ecosystem has expanded significantly over the past decade. Government-backed initiatives, venture capital funds, accelerators, incubators, and regulatory reforms have fueled rapid growth across sectors such as fintech, e-commerce, digital health, artificial intelligence, logistics, and enterprise software.

As the ecosystem matures, financial distress becomes an inevitable reality for some companies. The critical question is no longer whether businesses will encounter challenges—but whether the legal environment enables them to recover.

Unlike traditional businesses whose value often lies in physical assets, startups derive much of their worth from intangible assets: proprietary technology, software platforms, intellectual property, customer relationships, data, and brand equity. Immediate liquidation frequently destroys much of that value. Restructuring, by contrast, preserves these assets while allowing management to stabilize operations and pursue long-term recovery.

Equally important, the Bankruptcy Law provides distressed businesses with breathing space. Under judicial supervision, companies can negotiate with creditors, suspend certain enforcement actions, and develop restructuring plans without the immediate threat of business closure. This period often proves critical in restoring liquidity and rebuilding operational stability.

Investors Fear Uncertainty More Than Failure

Contrary to popular belief, bankruptcy legislation does not encourage reckless business behavior. In reality, sophisticated investors have never expected every startup to succeed.

The venture capital model itself is built on the assumption that only a small percentage of portfolio companies will generate extraordinary returns, compensating for the inevitable failures elsewhere. Failure, therefore, is already priced into the investment equation.

What investors fear is not failure itself, but uncertainty surrounding failure.

When insolvency procedures are unclear, recovery mechanisms are weak, and creditor rights are poorly defined, investment risk increases substantially. Conversely, transparent bankruptcy frameworks reduce uncertainty by establishing predictable legal pathways for debt restructuring, creditor negotiations, and business continuation.

This is precisely why insolvency reform has become an important indicator of a country's investment climate. International institutions and legal experts consistently regard efficient restructuring frameworks as essential components of business-friendly economies because they improve legal certainty, facilitate capital allocation, and reduce systemic financial risk.

Saudi Arabia's Bankruptcy Law forms part of a broader package of economic reforms designed to improve the Kingdom's ease of doing business, strengthen investor protection, and position Saudi Arabia as one of the region's leading destinations for entrepreneurship and foreign investment.

When Financial Distress Becomes Part of the Growth Story

Some of the world's most recognizable companies demonstrate why restructuring laws matter.

During the 2008 global financial crisis, General Motors underwent one of the largest corporate restructurings in history. Rather than disappearing, the company successfully reorganized its operations, emerged from bankruptcy protection, and returned to profitability.

More recently, WeWork, once considered one of the world's fastest-growing startups, entered restructuring proceedings after facing mounting debt and declining valuations. Instead of immediately ceasing operations, the company used the legal framework to renegotiate obligations, reduce costs, and reposition its business model.

Similarly, LATAM Airlines, severely affected by the COVID-19 pandemic, utilized restructuring procedures to reorganize billions of dollars in liabilities while maintaining operations across Latin America before ultimately emerging with a stronger financial foundation.

These cases do not suggest that every financially distressed company can—or should—be saved. Rather, they demonstrate that modern bankruptcy laws seek to distinguish between businesses that have become fundamentally unviable and those suffering from temporary financial challenges. For the latter, restructuring protects enterprise value, preserves employment, and often delivers better outcomes for creditors than immediate liquidation.

Saudi Arabia's Bankruptcy Law embraces this same philosophy by recognizing that preserving a viable business frequently creates greater economic value than dismantling it.

Changing the Culture Around Failure

Perhaps the greatest impact of Saudi Arabia's Bankruptcy Law extends beyond the courtroom.

Its true significance lies in reshaping how entrepreneurs, investors, lenders, and society perceive business failure.

In the world's most innovative economies, failed entrepreneurs are rarely viewed as permanent failures. Instead, they are often regarded as individuals who have accumulated valuable experience that increases their chances of succeeding in future ventures.

By contrast, where bankruptcy carries social stigma or severe legal consequences, entrepreneurs may delay seeking help until recovery becomes impossible.

Saudi Arabia's framework encourages earlier intervention. Rather than waiting until a company has exhausted every option, the law incentivizes businesses to pursue preventive settlements and financial restructuring before financial distress becomes irreversible.

As Saudi Arabia continues to accelerate its transition toward a knowledge-based economy, this cultural transformation may prove just as important as the legal reform itself. A thriving startup ecosystem is not one in which companies never fail; it is one in which innovative businesses are given every reasonable opportunity to recover, adapt, and create value once again.

Building Confidence Through a Culture of Business Recovery

The true success of a bankruptcy framework is rarely measured by the number of companies that enter its procedures. Instead, it is measured by whether entrepreneurs, investors, lenders, and the wider business community develop sufficient confidence to use it before financial distress becomes irreversible. In Saudi Arabia, that confidence has been steadily building since the Bankruptcy Law came into force, reflecting a broader transformation in how financial distress is perceived within one of the Middle East's fastest-growing entrepreneurial ecosystems.

For decades, insolvency was often associated with corporate failure, reputational damage, and the inevitable dissolution of a business. Companies experiencing liquidity shortages frequently delayed seeking legal protection, hoping that market conditions would improve or additional financing would materialize. By the time many businesses acknowledged the severity of their financial challenges, recovery had become significantly more difficult, leaving liquidation as the only viable option.

Saudi Arabia's Bankruptcy Law seeks to reverse that pattern. Rather than encouraging companies to wait until collapse is unavoidable, the legislation promotes early intervention, allowing businesses to negotiate with creditors while they remain operational and economically viable. This subtle shift in timing has profound implications. A company that enters restructuring before exhausting its resources stands a far greater chance of preserving jobs, protecting supplier relationships, safeguarding intellectual property, and ultimately returning to sustainable growth.

The growing acceptance of this philosophy is becoming increasingly evident. According to data released by the Saudi Bankruptcy Commission, bankruptcy applications have continued to rise over recent years—not because more businesses are necessarily failing, but because awareness of the legal framework has expanded among companies, financial advisers, and creditors. More importantly, a growing proportion of these filings involve Preventive Settlement and Financial Restructuring procedures rather than liquidation, suggesting that businesses are increasingly viewing the law as a mechanism for recovery instead of a final exit from the market.

This distinction is particularly important for startups. Young, high-growth companies operate under financial dynamics that differ significantly from those of traditional businesses. Rapid expansion often requires substantial upfront investment, while revenues may take years to reach levels capable of supporting profitability. During this period, startups remain highly sensitive to changes in funding conditions, shifts in investor sentiment, supply chain disruptions, or unexpected economic shocks. Financial distress, therefore, is not always a reflection of poor management or a flawed business model; it is often a consequence of the inherently uncertain nature of innovation.

The venture capital industry has long understood this reality. Professional investors rarely expect every company within their portfolios to succeed. In fact, the venture capital model is built upon the assumption that only a relatively small number of investments will generate exceptional returns capable of offsetting losses elsewhere. Failure, therefore, is not an anomaly—it is embedded within the economics of innovation itself.

What concerns investors is not the possibility that a startup may struggle, but the absence of predictable legal mechanisms to manage those struggles. Every investment decision incorporates an assessment of institutional risk alongside commercial potential. Investors want to know how creditor claims will be handled, whether management can continue operating during restructuring, how quickly courts can resolve disputes, and whether enterprise value can be preserved while financial obligations are reorganized.

In this context, Saudi Arabia's Bankruptcy Law performs an important function beyond corporate recovery. It reduces uncertainty.

Legal certainty has become one of the defining characteristics separating mature investment destinations from emerging markets. Countries capable of providing transparent restructuring procedures, efficient judicial oversight, and balanced protection for both debtors and creditors generally attract greater volumes of long-term investment because they offer investors confidence that business risks can be managed within a predictable legal environment.

This institutional maturity has become increasingly important as Saudi Arabia's venture capital market continues its rapid expansion. Over the past several years, the Kingdom has consistently ranked among the largest recipients of venture capital investment in the Middle East and North Africa, supported by government initiatives, sovereign-backed investment vehicles, corporate venture funds, and an increasingly active private investment community. The growing number of technology startups operating across fintech, artificial intelligence, logistics, digital health, retail technology, and enterprise software demonstrates the remarkable pace at which the entrepreneurial landscape is evolving.

Yet every mature startup ecosystem eventually reaches a point where supporting successful companies alone is no longer sufficient. It must also develop sophisticated mechanisms for managing unsuccessful ones.

This is where bankruptcy legislation assumes strategic importance.

Modern innovation economies recognize that preserving viable businesses often creates significantly greater economic value than liquidating them. Startups rarely derive their worth from factories, machinery, or real estate. Their greatest assets are typically intangible: proprietary software, patented technologies, customer databases, algorithms, digital platforms, data assets, intellectual property, and highly specialized human capital. These assets frequently lose much of their value when companies are dismantled through liquidation.

Restructuring offers an alternative. By allowing companies to continue operating while negotiating revised financial obligations, bankruptcy procedures preserve the knowledge, innovation, and commercial relationships that have often taken years to build. Employees remain productive, customers continue receiving services, suppliers retain business relationships, and investors maintain the possibility of recovering value from their investments.

The international experience provides compelling evidence of this approach. Some of today's most recognizable companies owe their continued existence not to uninterrupted commercial success, but to legal systems capable of facilitating corporate recovery.

The restructuring of General Motors during the global financial crisis remains one of the most widely studied examples of modern corporate rehabilitation. Faced with unprecedented financial losses, the automotive giant reorganized its operations through court-supervised restructuring rather than outright liquidation, enabling the company to preserve industrial capacity, protect thousands of jobs, and eventually regain profitability.

More recently, WeWork's highly publicized restructuring demonstrated that even companies once celebrated as symbols of innovation can experience severe financial distress. Rather than disappearing entirely, the company utilized bankruptcy procedures to renegotiate leases, reduce debt, streamline operations, and reposition itself within a changing commercial environment. Likewise, LATAM Airlines emerged from one of the aviation industry's largest restructurings after reorganizing billions of dollars in liabilities while maintaining operations during the COVID-19 pandemic.

These examples should not be interpreted as evidence that every struggling business deserves rescue. Bankruptcy laws are not designed to preserve companies that lack viable business models or sustainable market demand. Instead, they are intended to distinguish between temporary financial distress and permanent commercial failure—a distinction that is essential in economies driven by innovation, where early-stage companies often require time to transform promising ideas into profitable enterprises.

Perhaps the most significant impact of Saudi Arabia's Bankruptcy Law, however, extends beyond legal procedure and financial restructuring. It is gradually reshaping the culture surrounding entrepreneurship itself.

In many established innovation hubs, including Silicon Valley, entrepreneurial failure is often regarded as an educational experience rather than a permanent stigma. Investors frequently back founders who have previously experienced unsuccessful ventures, recognizing that practical experience acquired through failure can improve leadership, operational discipline, and strategic decision-making in future businesses.

Historically, many entrepreneurs across emerging markets have operated under very different assumptions. The social and legal consequences traditionally associated with insolvency often encouraged founders to conceal financial problems rather than address them openly. This reluctance frequently delayed restructuring efforts until recovery was no longer possible.

Saudi Arabia's evolving legal framework encourages precisely the opposite behavior. By providing structured pathways for preventive settlement and financial restructuring, it incentivizes earlier dialogue between businesses and creditors, increasing the likelihood that viable companies can recover before financial deterioration becomes irreversible.

This cultural evolution aligns closely with the broader objectives of Vision 2030. Economic diversification depends not only on encouraging entrepreneurs to establish companies but also on creating institutions capable of supporting businesses throughout every stage of their development—from incorporation and fundraising to expansion, restructuring, acquisition, and, where necessary, an orderly exit from the market. In that sense, the Bankruptcy Law complements a much wider program of commercial reforms designed to strengthen investor confidence, modernize the judicial system, improve the business environment, and position Saudi Arabia as one of the region's leading destinations for entrepreneurship and innovation.

Ultimately, the Bankruptcy Law is not simply legislation governing financial distress. It is an institutional signal that Saudi Arabia has embraced a more sophisticated understanding of how modern economies grow. Innovation requires ambition, ambition inevitably involves risk, and risk occasionally leads to failure. Sustainable entrepreneurial ecosystems are therefore built not on the unrealistic expectation that companies will never fail, but on the confidence that when viable businesses encounter temporary setbacks, the legal system provides them with a genuine opportunity to recover.

That may prove to be one of the Kingdom's most important competitive advantages in the years ahead. As Saudi Arabia continues to attract entrepreneurs, venture capital, and technology investment from around the world, its Bankruptcy Law serves as a reminder that resilient economies are not defined by the absence of failure—they are defined by their ability to transform failure into a foundation for future growth.

Ghada Ismail

Imagine a startup that has been around for six years; it has an office, a team of employees, and a product with a loyal customer base. Every few months, it announces a new feature. Every year, it raises just enough funding to keep operating.

At first glance, everything seems fine, but behind the scenes, revenue hasn't grown in years. Investors have stopped asking about the next funding round. The founders spend more time extending the company's runway than planning its future. The dream of becoming the next unicorn has quietly been replaced by a much simpler goal: surviving another quarter.

The startup isn't thriving, but it isn't dead either; this is what economists call a Zombie Startup.

What Is a Zombie Startup?

A zombie startup is a company that continues operating despite losing its growth trajectory. It generates enough revenue—or raises just enough funding—to cover expenses, but not enough to scale, attract major investors, or become a market leader.

Think of it as a car with the engine running but stuck in traffic. It's still moving, but it's not getting any closer to its destination.

Unlike a failed startup, a zombie startup hasn't shut down. Customers still use its product, employees still come to work, and the founders haven't given up. The problem is that the business has become trapped in survival mode. Growth has stalled, innovation has slowed, and every decision is focused on staying alive rather than moving forward.

How Does a Startup Become a Zombie?

Zombie startups rarely appear overnight. Instead, they gradually lose momentum.

One common reason is weak product-market fit. The product solves a problem, but not one that enough customers are willing to pay for. As demand slows, so does growth.

Scaling too early is another frequent mistake. Hiring aggressively, expanding into new markets, or overspending on marketing before validating the business model can quickly drain cash.

Competition can also take its toll. Larger rivals often have stronger brands, deeper pockets, and more resources to improve their products, making it difficult for smaller startups to keep pace.

Sometimes, however, the biggest obstacle is emotional. Founders become deeply attached to the company they've built. Rather than making difficult decisions—such as pivoting, downsizing, or even shutting down—they continue operating in the hope that things will eventually improve.

Warning Signs You Shouldn't Ignore

Zombie startups don't suddenly stop growing. Their decline is usually slow, making it easy to mistake stagnation for stability.

Some of the most common warning signs include:

• Revenue has remained flat for an extended period.
• Customer acquisition has slowed significantly.
• The company relies on small funding rounds just to survive.
• Product innovation has stalled.
• Talented employees begin leaving.
• There is no clear path to profitability or long-term growth.

Not every startup experiencing these challenges is a zombie. Markets fluctuate, fundraising becomes difficult, and even successful companies go through slow periods. The difference is persistence. If these issues continue year after year without meaningful progress, the startup may have entered survival mode.

Can a Zombie Startup Recover?

The answer is yes, but only if founders are willing to make difficult decisions.

Some startups regain momentum by pivoting to a different market or narrowing their focus to a customer segment where they have a stronger competitive advantage. Others recover by cutting unnecessary costs, simplifying their products, or building a more sustainable business instead of chasing rapid growth.

Of course, not every company can be saved. Sometimes the smartest decision is to close the business and apply the lessons learned to the next venture. Many successful entrepreneurs have built their greatest companies only after walking away from one that wasn't working.

Ultimately, entrepreneurship isn't about keeping a startup alive at all costs. It's about building a company that creates value and continues to grow. Recognizing the signs of a zombie startup early gives founders the best chance of changing course before survival becomes the company's only achievement.

Because in the startup world, staying alive isn't the same as moving forward.

Noha Gad

Investors and advisors often evaluate opportunities through multiple aspects: capital appreciation, total return, tax effects, and, crucially, cash flow. Cash-on-cash return (CoC) isolates the cash dimension of an investment by measuring the annual pre-tax cash income relative to the actual cash outlay required to acquire and prepare the asset. This focus on realized cash yield makes CoC an essential metric for income-oriented strategies, portfolio liquidity planning, and financing comparisons.

Unlike valuation-based metrics that ignore financing, CoC reflects the combined effect of operating performance and debt service, revealing how leverage and funding costs alter an investor’s immediate cash experience. It is simple enough for quick screening yet informative when paired with deeper analysis, helping to identify properties that deliver steady distributable income versus those that rely primarily on future price appreciation.

What is cash-on-cash return (CoC) and how does it impact real estate investments?

The cash-on-cash return is a straightforward metric that measures the annual return on cash invested in real estate, particularly commercial properties. Unlike standard return on investment (ROI), it focuses solely on the cash invested, offering clearer insight into an investment's performance, especially for properties with long-term debt. This calculation is pivotal in assessing potential cash distributions and understanding the effectiveness of a property investment strategy.

Calculations based on standard ROI take into account the total return on an investment. Meanwhile, Cash-on-cash return only measures the return on the actual cash invested, providing a more accurate analysis of the investment's performance.

CoC is calculated using an investment property's pre-tax cash inflows received by the investor and the pre-tax outflows paid by the investor. Essentially, it divides the net cash flow by the total cash invested.

By capturing the cash-generating performance of an investment in a single, easy-to-understand ratio, CoC has significant importance in:

• Reflecting financing effects. By using pre-tax cash flow after debt service, CoC reveals how leverage, interest rates, and loan terms change an investor’s cash position. Two properties with similar operating income can produce very different CoC outcomes depending on financing structure.
• Comparing multiple deals. CoC is quick to compute and useful for comparing multiple deals on a cash-yield basis during early-stage screening. It helps prioritize opportunities for deeper due diligence.
• Supporting liquidity and cash planning. For income-focused strategies and investors with near-term cash requirements, CoC helps forecast actual cash available for reinvestment or distribution.
• Early expectations. This metric provided an intuitive number for presenting expected annual cash returns to partners, lenders, or investors, aiding transparency in deal memos and investor presentations.

CoC is useful as a quick cash-flow snapshot, but it can easily mislead investors if they treat it as a complete measure of performance, as it has many pain points:

• Ignoring taxes. CoC return is calculated before tax, so it does not show the investor’s true net outcome. This can make an investment look stronger than it really is, especially in markets where taxes materially affect returns. 
• Missing long-term value growth. The metric focuses only on annual cash flow and does not account for property appreciation, principal paydown, or exit profits. Thus, it can undervalue investments that build wealth over time rather than producing immediate cash.
• Excluding time value of money. CoC treats all cash as equal, whether it is received now or later. This makes it less suitable for comparing investments with different holding periods or delayed payback profiles.
• High sensitivity to assumptions. Small changes in rent, vacancy, operating expenses, or financing terms can change the result significantly. If the inputs are overly optimistic, the return figure can give a false sense of confidence.

Finally, cash-on-cash return is a valuable metric because it shows how much actual cash an investment generates relative to the cash an investor puts in. It is especially useful for evaluating leveraged real estate deals, comparing opportunities quickly, and understanding how financing affects short-term performance. However, it must be treated as one part of a broader investment analysis, not the final answer, as it excludes taxes, long-term appreciation, time value of money, and many risk factors.

For this reason, the most effective approach is to use CoC alongside other measures such as cap rate, IRR, and stress-tested cash flow assumptions. This gives investors a clearer view of both immediate income potential and long-term investment quality.

Kholoud Hussein 

The Kingdom is no longer simply digitizing public services or investing in technology. It is attempting something far more ambitious: rebuilding its economic architecture around data, artificial intelligence, entrepreneurship, and digital infrastructure. The question is no longer whether Saudi Arabia can diversify beyond oil, but whether it can redefine what a modern digital economy looks like in the Middle East.

The Economy Saudi Arabia Is Really Building

For more than eight decades, Saudi Arabia's economic story has been inseparable from oil. Hydrocarbons transformed the Kingdom from a largely desert economy into one of the world's most influential energy producers, financing decades of infrastructure, industrialization, education, and social development. Oil was not merely a source of government revenue; it became the foundation upon which the modern Saudi state was built.

Today, however, Saudi Arabia is pursuing a transformation that is arguably even more profound than the discovery of oil itself. While much of the global conversation continues to focus on the Kingdom's diversification efforts under Vision 2030, a quieter yet far more consequential shift is unfolding beneath the surface. Saudi Arabia is no longer asking how to reduce its dependence on oil. Instead, it is asking what the country's next economic operating system should look like.

Economic diversification has traditionally meant expanding into new industries, whether tourism, manufacturing, logistics, mining, or entertainment. A digital economy, however, represents something fundamentally different. Rather than creating another sector alongside existing ones, it reshapes every sector simultaneously. It changes how governments deliver services, how companies produce goods, how entrepreneurs build businesses, how consumers spend money, and ultimately how economic value itself is created.

In this new model, data becomes a productive asset. Algorithms become economic infrastructure. Cloud computing replaces physical limitations. Artificial intelligence evolves from a technological tool into a driver of productivity, competitiveness, and innovation. The economy becomes less dependent on physical resources and increasingly powered by digital capabilities that transcend geography.

Saudi Arabia's ambitions therefore extend well beyond becoming a technology hub or attracting multinational technology companies. The Kingdom is attempting to redesign the foundations of its economy so that digital technologies become embedded across government, finance, healthcare, education, manufacturing, logistics, energy, and commerce. Success will not be measured by the number of technology companies operating in Riyadh or the volume of venture capital invested in startups alone. It will be determined by whether digital technologies become the default mechanism through which economic activity is created, exchanged, and scaled.

This is precisely why Saudi Arabia's digital transformation deserves to be viewed through an economic rather than a technological lens. Around the world, many countries have successfully digitized government services or expanded internet connectivity. Far fewer have attempted to rebuild their entire economic model around digital capabilities.

The Kingdom believes it can become one of them.

Yet ambition alone has never transformed economies. History offers countless examples of countries that invested billions in technology parks, innovation districts, and digital infrastructure without fundamentally changing how their economies functioned. Building a digital economy requires far more than laying fiber-optic cables or launching government applications. It requires rethinking regulation, attracting capital, cultivating entrepreneurial talent, building trust in digital services, encouraging private-sector innovation, and ensuring that digital technologies generate productivity rather than merely convenience.

Saudi Arabia's challenge, therefore, is not simply technological. It is structural.

The Kingdom must prove that digital transformation can become an engine of sustainable economic growth capable of generating new industries, creating high-value employment, increasing productivity, and positioning Saudi Arabia as a global exporter of digital innovation rather than a consumer of imported technologies.

It is an ambition that reaches beyond Vision 2030 itself. It is about defining what the Saudi economy looks like long after oil ceases to dominate global growth.

More Than Diversification: Redefining Economic Value

When policymakers first began speaking about economic diversification in Saudi Arabia, the objective appeared relatively straightforward: reduce dependence on oil revenues by expanding sectors such as tourism, mining, manufacturing, entertainment, logistics, and financial services. These industries would create new jobs, attract foreign investment, and generate alternative sources of national income.

A decade later, that conversation has evolved significantly. Today, diversification is increasingly viewed not as an end goal but as one component of a much larger economic transformation. The emergence of artificial intelligence, cloud computing, advanced analytics, and digital platforms has fundamentally altered how wealth is created in the global economy. Competitive advantage is no longer determined solely by natural resources or industrial capacity. It is increasingly shaped by a country's ability to generate, process, and commercialize data.

This shift helps explain why Saudi Arabia's investments in digital infrastructure have accelerated alongside investments in traditional economic sectors. The Kingdom is not merely building new industries; it is building the digital foundations upon which those industries will operate. The distinction is subtle but profound.

A tourism strategy can increase visitor numbers. A digital economy transforms the entire tourism value chain, from digital visas and intelligent transportation systems to AI-powered hospitality services, cashless payments, predictive demand forecasting, and personalized travel experiences. Manufacturing no longer depends exclusively on factories but on connected supply chains, industrial automation, predictive maintenance, and real-time analytics. Financial services become embedded into digital platforms rather than confined to bank branches.

In this sense, digital transformation ceases to be an ICT initiative and becomes national economic policy.

This is one of the defining characteristics of Saudi Arabia's approach. Rather than treating technology as a standalone industry, policymakers increasingly present digital capabilities as horizontal enablers capable of increasing productivity across virtually every sector identified in Vision 2030.

The result is a new understanding of economic value. Instead of asking how many barrels of oil the Kingdom exports, policymakers are beginning to ask how many digital transactions are processed daily, how much private capital flows into technology ventures, how many startups commercialize locally developed innovations, and how effectively data can be transformed into economic output.

Such questions would have seemed peripheral to Saudi Arabia's economic strategy only a decade ago. Today, they sit much closer to its center.

And perhaps that is the clearest indication that Saudi Arabia is pursuing something more ambitious than diversification. It is attempting to redefine the very mechanisms through which economic growth is generated.

Building the Digital Backbone: Why Infrastructure Became Saudi Arabia's New Strategic Resource

Every industrial revolution has depended on infrastructure. The railways powered the first age of industrialization. Electricity transformed manufacturing in the twentieth century. Highways connected national markets and accelerated trade. Today, the infrastructure that determines economic competitiveness is far less visible. It consists of fiber-optic cables buried beneath cities, hyperscale data centers, cloud computing platforms, artificial intelligence clusters, and billions of digital transactions flowing silently through secure networks every day.

Saudi Arabia recognized early that becoming a digital economy would require far more than launching government applications or encouraging online commerce. Digital services can only flourish when supported by an infrastructure capable of processing vast amounts of data securely, reliably, and at scale. In other words, before building digital businesses, the Kingdom first had to build a digital backbone.

That realization has fundamentally shaped Saudi Arabia's digital strategy over the past decade.

Unlike many countries where digital infrastructure evolved gradually through private-sector investments, Saudi Arabia adopted a coordinated national approach. Government entities, regulators, sovereign wealth funds, and global technology companies have worked simultaneously to establish the physical and regulatory foundations of the digital economy. The objective has never been limited to improving internet speeds or expanding telecommunications coverage. Instead, the Kingdom has sought to create an environment where digital businesses can emerge, scale, and compete internationally.

This explains why investments in telecommunications infrastructure have been accompanied by equally significant reforms in digital governance, cybersecurity, cloud regulation, spectrum allocation, and data management. Digital infrastructure, in the Saudi context, is viewed not as a utility but as a productive economic asset capable of attracting investment, reducing transaction costs, and increasing national competitiveness.

The impact of this strategy becomes particularly evident when examining how businesses now operate. A startup launching today in Riyadh enters a fundamentally different environment than one established only ten years ago. Cloud services can be deployed almost instantly. Payment systems are increasingly integrated. Government licensing has become significantly faster. Digital identity solutions simplify customer onboarding, while advanced logistics and communications networks enable companies to reach customers across the Kingdom with unprecedented efficiency.

For entrepreneurs, this infrastructure removes many of the barriers that once slowed business creation. For investors, it reduces operational risk. For multinational corporations, it provides the confidence to establish regional operations capable of serving broader Middle Eastern markets.

In many respects, infrastructure has become Saudi Arabia's most important competitive advantage.

This advantage extends well beyond connectivity. The Kingdom has increasingly positioned itself as a regional destination for cloud computing, recognizing that data storage and processing capacity will become as strategically important in the twenty-first century as ports, highways, and industrial zones were in previous decades.

The arrival of global technology companies reflects this shift. International cloud providers have announced significant investments in Saudi Arabia, encouraged by regulatory reforms, expanding demand, and the government's commitment to developing local digital capabilities. Rather than exporting data abroad, Saudi Arabia is gradually building the capacity to process, store, and analyze information domestically, strengthening both economic resilience and digital sovereignty.

The importance of cloud infrastructure cannot be overstated. Artificial intelligence applications require enormous computing power. Digital banking depends on secure cloud environments. Smart factories generate millions of data points daily. Autonomous transport systems rely on real-time information processing. None of these innovations can scale without robust digital infrastructure operating continuously behind the scenes.

As digital technologies become embedded across every industry, infrastructure itself begins to influence productivity. Faster networks reduce business costs. Secure cloud environments accelerate innovation. Reliable digital identity systems simplify financial transactions. Integrated government platforms reduce administrative burdens. Each improvement may appear incremental, yet together they reshape how economic activity occurs.

This transformation has also altered the relationship between the public and private sectors.

Historically, governments built roads, airports, and power stations while businesses invested in commercial opportunities. In the digital economy, these roles increasingly overlap. Governments establish digital platforms and regulatory frameworks, while private companies build products and services on top of them. The result is a more collaborative model in which public infrastructure creates opportunities for private innovation rather than replacing it.

Saudi Arabia's digital government initiatives illustrate this evolution particularly well. Instead of merely digitizing paperwork, government agencies have developed interoperable digital platforms that businesses can integrate directly into their operations. Entrepreneurs no longer spend weeks navigating administrative procedures that once required multiple physical visits to government offices. Licensing, taxation, customs, and regulatory compliance are increasingly handled through integrated digital systems, allowing companies to devote more resources to growth and innovation.

This seemingly administrative transformation carries profound economic implications. Time, after all, is one of the most valuable resources for any entrepreneur. Reducing bureaucratic friction does more than improve convenience; it lowers the cost of doing business. For startups operating with limited capital and tight timelines, these efficiencies can determine whether a company succeeds or fails.

Infrastructure has therefore become an invisible form of venture capital. Instead of financing individual companies, the government finances the environment in which thousands of companies can emerge.

Perhaps the most striking aspect of Saudi Arabia's digital infrastructure strategy is that it has been designed with future technologies in mind rather than current demand alone. Investments in artificial intelligence, edge computing, high-performance cloud services, cybersecurity, and advanced connectivity anticipate an economy that does not yet fully exist but is expected to emerge over the coming decades.

This long-term perspective distinguishes infrastructure planning from many earlier digital initiatives around the world, which often focused on solving immediate administrative problems. Saudi Arabia is instead attempting to create digital capacity before demand reaches its peak, positioning itself to capture future industries rather than reacting to them after they mature elsewhere.

Yet infrastructure alone cannot produce innovation.

Fiber-optic networks do not create startups. Data centers do not invent new business models. Artificial intelligence platforms do not automatically generate globally competitive companies. They provide the conditions under which innovation becomes possible, but they cannot substitute for entrepreneurship itself.

That is where the private sector enters the story.

As Saudi Arabia's digital foundations have matured, a new generation of startups has begun transforming public investment into commercial opportunity. They are not merely benefiting from the Kingdom's digital transformation; increasingly, they are becoming the mechanism through which that transformation reaches consumers, businesses, and global markets.

The digital backbone may have been built by national strategy, but its true economic value will ultimately be measured by the companies that grow upon it.

The Startup Layer: Where National Strategy Meets Entrepreneurial Innovation

Governments can build infrastructure. They can modernize regulations, invest in artificial intelligence, establish cloud regions, and digitize public services. Yet history has consistently shown that governments rarely create the innovations that transform everyday economic life. Those breakthroughs almost always emerge from entrepreneurs who recognize market inefficiencies long before policymakers do.

Saudi Arabia appears to understand this distinction. While much international attention has focused on the Kingdom's multi-billion-dollar investments in digital infrastructure and flagship projects such as NEOM, an equally significant transformation has been unfolding within its entrepreneurial ecosystem. Over the past decade, startups have evolved from peripheral players into one of the principal instruments through which the Kingdom's digital ambitions are being translated into commercial reality.

This shift represents a fundamental change in how economic development is being pursued.

For decades, economic growth in Saudi Arabia was largely driven by public expenditure. Government investments created industries, generated employment, and stimulated private activity. Today's digital economy, however, operates according to different rules. Innovation moves too quickly to be directed exclusively through public institutions. Consumer preferences evolve faster than regulation. Technologies become obsolete within years rather than decades. Under these conditions, entrepreneurship becomes not merely desirable but indispensable.

The Kingdom's role, therefore, has gradually evolved from being the primary driver of economic activity to becoming an enabler of entrepreneurial innovation.

This philosophy is increasingly visible across the Saudi startup landscape.

Rather than attempting to build digital services directly, public institutions have concentrated on creating the conditions in which private companies can solve market problems more efficiently. The result is an ecosystem where government provides the infrastructure, regulatory certainty, and access to capital, while entrepreneurs compete to create scalable solutions for consumers and businesses alike.

It is a relationship that has become one of the defining characteristics of Saudi Arabia's digital transformation.

Perhaps nowhere is this more evident than in electronic commerce.

Only a decade ago, launching an online retail business in Saudi Arabia presented significant logistical and operational challenges. Payment systems remained fragmented. Small businesses struggled to establish digital storefronts. Inventory management, shipping integration, customer analytics, and marketing tools were often inaccessible or prohibitively expensive for entrepreneurs.

Today, much of that complexity has disappeared.

Companies such as Salla and Zid have fundamentally changed how commerce operates across the Kingdom. Rather than simply providing website-building software, these platforms have developed integrated ecosystems that allow thousands of small and medium-sized enterprises to establish digital businesses with unprecedented speed. Payments, logistics, inventory management, marketing automation, customer engagement, and analytics are increasingly delivered through unified digital platforms, lowering the barriers to entrepreneurship for an entirely new generation of business owners.

In doing so, these companies have accomplished something larger than technological innovation. They have democratized access to entrepreneurship itself.

A similar transformation has occurred within financial technology.

Traditional banking systems often struggle to serve rapidly evolving digital businesses whose operational models differ significantly from conventional enterprises. Fintech startups have emerged precisely because they can respond more quickly to changing customer expectations.

Companies such as Tamara, which pioneered the rapid adoption of Buy Now, Pay Later (BNPL) services across the Gulf, have redefined consumer finance for younger generations accustomed to seamless digital experiences. Rather than viewing finance as a standalone banking product, these companies have embedded financial services directly into digital commerce, shortening purchasing journeys and expanding access to credit.

The significance of this innovation extends beyond consumer convenience.

Embedded finance fundamentally changes how money circulates within the economy. Transactions become faster, merchants experience improved cash flow, consumers gain greater purchasing flexibility, and digital commerce accelerates. What appears to be a simple payment option ultimately increases economic activity across multiple sectors simultaneously.

Equally transformative has been the emergence of Saudi startups specializing in artificial intelligence.

While much global discussion surrounding AI continues to revolve around large language models and consumer-facing applications, several Saudi companies have chosen a different path, focusing on enterprise solutions tailored to regional markets.

Companies such as Mozn have demonstrated how artificial intelligence can address highly specialized challenges in financial crime detection, compliance, fraud prevention, and risk management. Their success illustrates an important evolution within Saudi entrepreneurship. Rather than replicating Silicon Valley consumer applications, an increasing number of Saudi startups are developing technologies designed to solve complex business and institutional problems.

This transition from consumer applications to enterprise technology represents a critical milestone in any innovation ecosystem.

It indicates that entrepreneurship is beginning to create intellectual property rather than simply adapting existing business models.

A similar trend can be observed in companies like Lucidya, whose artificial intelligence platform enables organizations to analyze Arabic-language digital conversations across social media and online channels. By developing technologies specifically optimized for Arabic, Lucidya addresses a challenge largely overlooked by many global software providers.

Its competitive advantage lies not merely in technology, but in contextual understanding.

This highlights another defining characteristic of Saudi Arabia's startup ecosystem. Increasingly, local companies are identifying opportunities that international competitors cannot easily replicate because they require deep familiarity with regional languages, consumer behavior, regulatory frameworks, and business culture.

In many ways, localization itself has become a strategic advantage.

The construction and industrial sectors offer another compelling example.

Saudi Arabia's unprecedented investment in megaprojects has created demand for digital solutions capable of improving safety, productivity, and operational efficiency. Companies such as WakeCap have responded by integrating wearable technologies and real-time analytics into construction sites, enabling project managers to monitor workforce movements, improve safety standards, and optimize project execution through data-driven insights.

These innovations may appear highly specialized, yet their cumulative economic impact is substantial.

Construction productivity influences infrastructure delivery. Infrastructure affects logistics. Logistics shapes manufacturing competitiveness. The ripple effects extend throughout the broader economy.

The same pattern is emerging across healthcare, education, logistics, cybersecurity, climate technology, and industrial automation.

They identify inefficiencies invisible to large institutions and transform them into scalable business opportunities.

That capacity for experimentation may ultimately become one of Saudi Arabia's greatest competitive advantages.

Unlike traditional economic development strategies, which often depend upon large industrial investments with long implementation cycles, startups compress innovation into months rather than years. New products are tested rapidly, customer feedback is incorporated continuously, and successful models scale across markets with remarkable speed.

This entrepreneurial agility has become increasingly important as digital technologies evolve faster than regulatory frameworks can adapt.

Recognizing this reality, Saudi Arabia has invested heavily not only in startups themselves but in the ecosystem surrounding them.

Events such as LEAP have evolved into global platforms connecting founders with venture capitalists, multinational technology companies, policymakers, and institutional investors. Initiatives led by Monsha'at, the National Technology Development Program (NTDP), and innovation hubs such as The Garage have sought to reduce many of the structural obstacles traditionally associated with entrepreneurship, including access to funding, mentorship, technical expertise, and international networks.

The Public Investment Fund has further reinforced this momentum by channeling significant capital into technology-focused initiatives and attracting global venture investors to the Kingdom.

The cumulative effect is becoming increasingly visible. Saudi Arabia is no longer merely producing successful startups. It is beginning to produce an innovation economy. A startup ecosystem measures the number of companies created.

An innovation economy measures how effectively those companies reshape productivity, generate intellectual property, attract global capital, and create entirely new industries.

Saudi Arabia appears increasingly focused on the latter.

Yet becoming the Middle East's first truly digital economy will require more than a vibrant startup ecosystem. It will require demonstrating that digital technologies can transform not only new companies, but also traditional industries that continue to account for the overwhelming majority of national output.

The next phase of Saudi Arabia's transformation, therefore, may prove to be its most difficult: extending digital innovation beyond startups and embedding it into the wider economy, from manufacturing and logistics to healthcare, tourism, mining, and energy itself.

Mohamed Ramzy

Egypt's fintech sector is undergoing a period of rapid transformation, driven by the expansion of digital transformation, growing adoption of non-banking financial services, and continuous improvements to the regulatory landscape. These developments have enabled startups to introduce increasingly innovative solutions that address the evolving needs of both consumers and businesses.

Amid these changes, competition among fintech companies is no longer limited to offering payment or financing services. It has expanded to include the use of artificial intelligence and data analytics to build integrated financial platforms that deliver more seamless and personalized user experiences.

Klivvr is one of the companies embracing this shift. In a relatively short period, it has evolved from a digital financial services platform into a comprehensive financial ecosystem that combines payments, consumer finance, cards, and intelligent financial services, with technology serving as the primary driver of its growth.

In this interview, Sharikat Mubasher spoke to Omar Sherif, Co-founder and Chief Technology Officer of Klivvr, who discussed the company's growth trajectory, the role of artificial intelligence in shaping its products, the impact of support from Orascom Financial Holding, as well as his outlook on the future of fintech and Klivvr's expansion plans.

Klivvr has grown rapidly in a short period. How would you assess the company's performance today?

Since launching Klivvr, our objective has been to build a customer base driven by genuine engagement rather than simply increasing the number of registered users. We have focused on developing services that make the app an essential part of customers' everyday financial lives, and that strategy has clearly translated into strong usage metrics.

Today, the platform serves more than 700,000 users, including approximately 250,000 monthly active users, while around 25,000 customers use the app every day. We consider these figures far more meaningful than the total number of registered users because they reflect the extent to which customers rely on the platform for their daily financial transactions.

Going forward, we will continue expanding our user base while enhancing our services, all while maintaining the high-quality user experience that defines Klivvr.

Klivvr is backed by Orascom Financial Holding. How has this support accelerated the company's growth?

Being part of Orascom Financial Holding, together with the involvement of Onsi Sawiris as a co-founder, has added tremendous value to Klivvr since its inception. This goes beyond strengthening customer confidence; it has also provided us with invaluable strategic business expertise.

His continued participation in discussing the company's strategy, combined with his extensive network, has helped accelerate our growth and opened up new opportunities for Klivvr.

We see this relationship as much more than a financial investment. It is a genuine strategic partnership that actively contributes to building and developing the company.

Klivvr aims to build a fully integrated financial platform. How have the company's services evolved?

From the outset, our vision was never to offer a single service, whether in payments or financing. Instead, we set out to build a comprehensive financial ecosystem that addresses customers' diverse financial needs through one application.

The launch of our payment cards marked an important milestone in driving daily engagement with the platform. The cards now serve as a payment tool alongside our consumer finance services, enabling users to manage a significant portion of their financial activities within a single platform.

We are also preparing to launch a new feature that will allow customers to access their approved consumer finance credit limit directly through their cards, once we receive the necessary regulatory approvals.

Artificial intelligence has become a major focus across the fintech industry. How is Klivvr leveraging AI?

Artificial intelligence is now one of our top investment priorities because it has become a fundamental component of financial services improvement and customer experience enhancement.

We use AI technologies to deliver a more personalized experience for every user by analyzing financial behavior and recommending products and offers that best match individual needs.

AI also plays a key role in assessing creditworthiness and managing risk, helping us make better financing decisions while reducing default rates. In addition, these technologies support our internal teams by improving operational efficiency and accelerating product development.

From our perspective, artificial intelligence will become the cornerstone of the fintech industry over the coming years because of its ability to enhance efficiency while delivering faster, smarter, and more accurate financial services.

How do you view the growth opportunities in the Egyptian market?

The Egyptian market remains our largest growth opportunity. We believe the fintech sector is still in its early stages, and there are broad customer segments that have yet to benefit fully from digital financial services.

That is why we have invested heavily in building a robust technology infrastructure that enables us to scale quickly and efficiently within Egypt, while continuously developing products and services that meet customers' evolving needs.

What about Klivvr's plans to expand beyond Egypt?

Regional expansion is certainly part of our long-term strategy, but it is not our immediate priority. For now, our focus remains on achieving our objectives within the Egyptian market.

When we decide to enter new markets, expansion will not be pursued for its own sake. Instead, we will adopt the model that creates the greatest value, whether through organic growth, strategic partnerships, or acquisitions, depending on the characteristics of each market and the opportunities it presents.

How do you see Klivvr's future as the fintech industry continues to evolve rapidly?

Over the coming period, we will continue investing in technology and product innovation while expanding our customer base and strengthening our position in the Egyptian market.

We firmly believe that the future of financial services will be increasingly driven by data and artificial intelligence. That is why we continue investing in these technologies to deliver smarter, more efficient, and more user-friendly solutions that enhance the customer experience and support Klivvr's long-term growth.

Translation by: Ghada Ismail