Kholoud Hussein 

Saudi Arabia's Vision 2030 is a comprehensive plan to diversify the Kingdom's economy and reduce its dependence on oil revenues. A pivotal component of this vision is the development of a robust fintech sector, which is expected to play a significant role in modernizing the financial landscape and driving economic growth. As of 2024, the Kingdom has made substantial progress toward becoming a leading fintech hub, with ambitious targets set for 2030.

Growth of Fintech Startups Driven by AI and Blockchain Technologies

The fintech landscape in Saudi Arabia has experienced remarkable growth in recent years. In 2020, approximately 60 fintech companies were operating in the Kingdom. By 2024, this number had surged to 226, representing a compound annual growth rate (CAGR) of 61%. This rapid expansion is largely attributed to the integrating of advanced technologies such as artificial intelligence (AI) and blockchain, which have enabled startups to offer innovative financial solutions.

AI has enhanced customer experiences through personalized services, efficient customer support, and improved risk assessment models. Blockchain technology, on the other hand, has facilitated secure and transparent transactions, fostering trust among users. The convergence of these technologies has led to the development of cutting-edge solutions in payments, lending, and wealth management, positioning Saudi Arabia as a burgeoning fintech hub in the region.

Impact of Open Banking Regulations Introduced by SAMA

The Saudi Central Bank (SAMA) has played a crucial role in fostering fintech innovation through the introduction of progressive regulations. One of the most significant developments is the implementation of the Open Banking Framework, which allows third-party providers to access financial data (with customer consent) to offer tailored financial services.

This initiative has spurred competition and collaboration between traditional banks and fintech startups, leading to a more dynamic financial ecosystem. By promoting transparency and data sharing, open banking has empowered consumers with greater control over their financial information and has encouraged the development of personalized financial products.

Trends in Mobile Payments, Digital Wallets, and AI-Powered Lending Platforms

The adoption of digital financial services has accelerated in Saudi Arabia, with mobile payments and digital wallets becoming increasingly prevalent. The introduction of the Fatoora Platform, an electronic invoicing system developed by the Zakat, Tax and Customs Authority (ZATCA), has further streamlined digital transactions.

AI-powered lending platforms have also gained traction, offering quick and efficient loan approvals by leveraging machine learning algorithms to assess creditworthiness. These platforms have improved access to credit for individuals and small businesses, contributing to financial inclusion and economic growth.

Saudi Arabia's Positioning as a Regional Fintech Hub

Saudi Arabia's strategic initiatives have positioned it on a promising trajectory to achieve its goal of hosting 525 fintech companies by 2030, supported by over SAR 12.2 billion in direct venture capital. The approval of three digital banks, offering a range of traditional banking services via smartphones and online channels, signifies a significant advancement in the Kingdom's digital banking landscape.

The government's commitment to economic transformation is evident in its support for the fintech sector. Finance Minister Mohammed Al-Jadaan emphasized this dedication, stating, "We are not 'complacent' about Saudi Vision 2030". This unwavering focus on economic diversification underscores the importance of fintech in the Kingdom's future.

Key Players, Investments, and Innovations

The fintech ecosystem in Saudi Arabia comprises a diverse range of startups and established financial institutions. Significant investments have been made to support this growth, with the fintech sector expected to reach $63.90 billion by 2024, driven by substantial state and private investments.

Innovations in the sector include the development of AI-driven tools for ESG compliance, green financing trends, and the rise of "quick commerce" startups impacting the logistics sector. These advancements reflect the dynamic nature of Saudi Arabia's fintech landscape and its alignment with global technological trends.

Finally, Saudi Arabia's fintech boom, underpinned by Vision 2030, represents a transformative journey toward economic diversification and modernization. The integration of advanced technologies, supportive regulatory frameworks, and significant investments have collectively positioned the Kingdom as a burgeoning fintech hub in the region. As Saudi Arabia continues to implement its Vision 2030 initiatives, the fintech sector is poised to play a pivotal role in shaping the future of the nation's economy.

Ghada Ismail

When starting a company, the excitement of innovation and ambition often overshadows the critical legal and financial groundwork needed to secure a startup’s future. Yet, ensuring clear agreements and protecting intellectual property from the outset can save co-founders from potential disputes down the road. In this installment, we explore the essential legal and financial considerations every co-founder must address to build a stable foundation for their venture.

1. The Importance of Clear Co-Founder Agreements

From day one, having a co-founder agreement in place is non-negotiable. This document should outline key elements such as equity ownership, roles, decision-making authority, and an agreed-upon exit strategy.

Without such an agreement, even the strongest partnerships can falter under pressure. Questions such as "Who owns how much?" or "What happens if one of us leaves?" can lead to conflicts that are avoidable with a clear legal framework. These agreements serve as a reference point during challenging times, ensuring transparency and mutual understanding.

2. Dealing with Equity Splits: Fair and Transparent Agreements

Determining how to split equity is one of the most delicate conversations co-founders will have. A fair split isn’t always 50-50; it’s about aligning contributions—both financial and operational—with ownership stakes.

To achieve this, co-founders should openly discuss:

• The value of each co-founder’s input (time, expertise, and capital).
• Vesting schedules to ensure equity is earned over time, safeguarding against early departures.
• Future roles and their impact on the company’s growth.

Transparency during these discussions builds trust and prevents misunderstandings later on.

3. Protecting Intellectual Property (IP)

For many startups, intellectual property is their most valuable asset. Co-founders must establish clear ownership rights for anything created during the course of the venture.

Key steps include:

• Defining who owns what in terms of IP contributions.
• Registering patents, trademarks, or copyrights under the company’s name to avoid individual claims.
• Drafting confidentiality agreements to protect sensitive information.

These measures ensure that the startup’s core innovations remain safeguarded, regardless of changes in the co-founder team.

4. Preparing for Exit: Buyouts, Acquisitions, and Co-Founder Exits

While no one likes to think about it, co-founders must plan for scenarios where one partner decides to leave. Exit strategies are crucial for ensuring the business can continue without disruption.

Key considerations include:

• Buyout clauses that allow remaining founders to purchase the departing founder’s equity at a fair value.
• Provisions for handling acquisitions or mergers, including how proceeds are distributed.
• Non-compete agreements to prevent departing co-founders from starting a competing business.

Addressing these scenarios early provides stability and protects the company’s interests in the long term.

Final Thoughts

Starting a company with a co-founder offers immense benefits, but it also requires careful planning and open communication about legal and financial matters. Clear agreements, equitable arrangements, and robust protections for intellectual property are not just safeguards—they are enablers of trust and long-term success.

By addressing these considerations from the outset, co-founders can focus on building a thriving business, confident that their shared vision is well-protected. Ultimately, the strength of a co-founder partnership lies in its ability to combine shared ambition with sound strategies, creating a legacy that extends beyond individual contributions.

With this, we conclude our mini-series on co-founders. Whether you're just starting your journey or navigating the complexities of an established partnership, remember that the foundation you build today will shape the success of your startup for years to come.

Kholoud Hussein 

Startups represent innovation, ambition, and the promise of transforming industries. However, the harsh reality is that a significant percentage of startups fail within their first few years. According to a CB Insights report, 70% of tech startups fail, with 38% citing a lack of funding or cash flow as a primary reason. While these statistics are sobering, understanding the causes behind such failures can help entrepreneurs better navigate their journey and build sustainable businesses.

This blog explores the key reasons why startups falter in their early stages, supported by research, expert insights, and real-world examples.

1. Lack of Market Need: The Fatal Flaw

One of the most common reasons for startup failure is creating a product or service that the market does not need. CB Insights highlights this as the top cause, with 35% of failed startups identifying it as their downfall.

Why This Happens:

• Entrepreneurs often fall in love with their ideas without validating their demands.
• Insufficient market research leads to misconceptions about customer pain points.

Startup founder John Greathouse shared his experience in an interview with Forbes: “We built a solution looking for a problem. It was an amazing piece of technology, but we didn’t fully understand our customers’ real needs.”

2. Poor Financial Management: The Cash Flow Crunch

Startups often operate on razor-thin margins, making financial mismanagement a critical threat. U.S. Bank data shows that 82% of business failures are due to cash flow problems.

Challenges:

• Misjudging burn rate (the speed at which cash reserves are spent).
• Failing to secure enough funding for the operational runway.
• Overestimating revenue growth or underestimating costs.

David Skok, a venture capitalist, explains: “Startups underestimate how long it will take to reach cash flow positivity and fail to raise enough capital. A lack of working capital is like trying to climb Everest without oxygen.”

3. Ineffective Team Dynamics

Building the right team is critical to a startup's success. CB Insights found that 23% of failed startups attributed their demise to team issues.

Common Problems:

• A lack of complementary skills among founders.
• Internal conflicts that distract from operational priorities.
• Hiring the wrong people in key roles, such as sales or technology.

A clear example of that is the downfall of the startup Quibi, despite its $1.8 billion in funding, is often attributed to leadership missteps and a failure to align the team around a clear strategy.

4. Competition: The Unseen Threat

Many startups underestimate the level of competition in their industry. CB Insights notes that 20% of failed startups cited competition as a significant factor.

Why Startups Struggle Against Competitors:

• Lack of differentiation: Offering similar products or services as established players without a compelling unique value proposition (UVP).
• Insufficient resources to compete with well-funded incumbents.

5. Marketing and Customer Acquisition Missteps

Even the best products fail if they don’t reach the right audience. Many startups underestimate the importance and cost of customer acquisition.

According to a Startup Genome Report, 74% of startups fail because they scale prematurely, often spending excessively on marketing before product-market fit is achieved.

Challenges in Marketing:

• Misaligned messaging that fails to resonate with target audiences.
• Over-reliance on paid advertising without diversifying acquisition strategies.

Startup founder Sara Johansson remarked: “We spent heavily on ads, assuming they’d generate consistent returns. Instead, we burned through our budget without building lasting customer relationships.”

6. Overexpansion: Growing Too Fast, Too Soon

Startups often rush to expand into new markets or introduce new products, stretching their resources thin. This approach can backfire, especially without a stable foundation.

Why Overexpansion Fails:

• Increased operational complexity leads to inefficiencies.
• Diverting focus from core products or markets.

7. Inadequate Adaptability: Failing to Pivot

Startups often face unexpected challenges and must pivot their business model or product offering to survive. Failure to do so can result in stagnation or irrelevance

.

8. External Factors: The Uncontrollable Variables

Economic downturns, regulatory changes, or supply chain disruptions can also contribute to startup failures. While these factors may be beyond our control, resilience, and preparedness can mitigate their impact.

The COVID-19 pandemic forced many startups to shut down due to disruptions in operations or demand. However, companies that adapted to the new normal, such as Zoom, thrived.

Turning Challenges into Opportunities

While the statistics on startup failures are daunting, they also provide valuable lessons. By understanding common pitfalls—such as market misalignment, poor financial management, or ineffective teams—entrepreneurs can take proactive steps to increase their chances of success.

As the famous startup mantra goes, “Fail fast, fail forward.” Every challenge presents an opportunity to learn and improve. By leveraging these insights, aspiring founders can navigate the turbulent early phases of their journey and build businesses that thrive in the long term.

Noha Gad

As the digital landscape continues to evolve, Saudi Arabia is positioning itself at the forefront of Web3 and blockchain technologies, driven by a strategic vision to harness innovation for economic growth. The Kingdom's commitment to advancing these technologies is evident through various initiatives, including the establishment of dedicated hubs and partnerships aimed at fostering a vibrant ecosystem. 

As part of Vision 2030, the Kingdom has been actively investing in emerging technologies, recognizing blockchain's potential to enhance transparency, security, and efficiency in both public and private enterprises.

In this rapidly evolving ecosystem, Web3 has emerged as a transformative force that reshapes industries and creates new opportunities for innovation and entrepreneurship in Saudi Arabia.

Adaverse, a prominent player in the Web3 investment landscape, is actively contributing to this burgeoning market. As one of the leading venture funds and blockchain accelerators in the region, Adaverse invested in several startups, such as Takadao, UmrahCash, Tharawat Green Exchange (TGE), and Grintafy, as part of its mission to empower local entrepreneurs and facilitate the growth of decentralized technologies across the region.

In this regard, Sharikat Mubasher held an interview with Vincent Li, Founding Partner at Adaverse, to learn more about the company’s activities in Saudi Arabia and his insights on the future of Web3 and blockchain technologies in the Kingdom and the region.

What sets Adaverse apart from other venture funds and blockchain accelerators in the region?

What sets us apart is our unique approach to building the Web3 ecosystem through a venture-building partnership model. We have successfully invested in around 100 founders across multiple regions, including Asia, Africa, and now Saudi Arabia. Our philosophy is centered on supporting persistent founders with necessary web3 knowledge throughout the whole startup journey, and valuable experiences and resources from other markets in the globe.

Unlike traditional venture funds, we focus on projects that solve real-world problems and drive mass adoption of blockchain technology. Our flat organizational structure and partnership-based approach allow us to work closely with founders, empowering them rather than simply providing capital.

What motivated Adaverse to commit $10 million to Saudi Web3 startups?

Our decision to commit to Saudi Arabia was driven by extensive market research and field visits that highlighted Saudi Arabia's significant potential for Web3 development. This commitment aligns with Saudi Vision 2030 and the country's digital transformation goals. 

We have already invested in several promising Saudi ventures, including Grintafy, UmrahCash, TGE (Tharawat Green Exchange), TakaDAO, and others, with more investments in the pipeline. 

The unique government support we have received has reinforced our conviction that Saudi Arabia is positioned to become a global Web3 hub. This investment represents our long-term commitment to fostering innovation and supporting the local ecosystem.

In your opinion, what are the unique opportunities that blockchain and Web3 technologies offer in Saudi Arabia?

Saudi Arabia presents unique opportunities for blockchain and Web3 technologies, particularly in solving real-world challenges. Let me share some concrete examples from our portfolio with the disclaimer that the list is non-exhaustive: 

We have invested in TGE, which is revolutionizing carbon offsetting by connecting carbon offsetters with local nurseries and land projects via blockchain technology, directly supporting Saudi Arabia's ambitious goal of planting 10 billion trees by 2040. 

In the sports sector, we have backed Grintafy, which is transforming football talent discovery through blockchain technology, serving over 2 million users across its ecosystem.

We are also seeing great potential in projects like Mithu App, which addresses the underserved loyalty program market in Riyadh, where only 2.5% of restaurants currently offer such programs. 

Similarly, solutions like UmrahCash demonstrate how blockchain can revolutionize financial services for the 21 million migrant workers and religious visitors in Saudi Arabia.

What makes Saudi Arabia particularly exciting for Web3 development is the strong government support for technology innovation, combined with the Kingdom's strategic position and vision for digital transformation.

These opportunities align perfectly with our focus on practical applications that drive mass adoption. The diversity of use cases, from environmental sustainability to sports tech to financial services, shows how Web3 can create real value across multiple sectors in the Saudi economy.

What key challenges has Adaverse faced in adopting blockchain technologies in the Kingdom, and how has the company tackled them?

The key challenges we have faced primarily revolve around achieving mass adoption and educating the market about Web3's potential. While blockchain technology is still consolidating its foundations, we have tackled these challenges by focusing on projects that address tangible problems. Our approach has been to invest in startups that make blockchain technology accessible and practical for everyday users. We have also worked closely with regulatory bodies and government institutions to ensure our initiatives align with local requirements. 

What are the company’s strategic plans for further expansion in Saudi Arabia and the region?

Our strategic plans for expansion in Saudi Arabia and the region focus on three key areas. First, we are continuing to identify and invest in promising Web3 startups that solve real-world problems. Second, we are actively building partnerships with local institutions and government bodies to strengthen the ecosystem. 

Third, we are organizing events and initiatives to promote Web3 adoption locally and connect valuable investment and market resources internationally.

We are particularly excited about upcoming projects in the social network and real estate markets, which we believe have significant potential in the region. Our strategy remains aligned with our long-term perspective of supporting persistent founders and nurturing projects over time.

How do you see the long-term impact of Web3 technologies on Saudi Arabia's economic and social landscape?

Looking at the long-term impact of Web3 technologies on Saudi Arabia's landscape, I believe we are at the beginning of a transformative journey. Based on our experience across multiple markets, we see Web3 playing a crucial role in achieving Saudi Vision 2030's goals. The technology will enable new models of value exchange, enhance transparency in various sectors, and create new economic opportunities. We are already seeing this impact through our portfolio companies, which are addressing real challenges in areas like financial services, loyalty programs, and digital asset management. The key is to focus on practical applications that can drive mass adoption and create tangible value for the Saudi economy. 

How does Adaverse contribute to the development of a vibrant Web3 community in Saudi Arabia?

Adaverse contributes to the Web3 community development through multiple strategic initiatives. Most recently, we released our landmark report, "State of Web3 in Saudi Arabia," which serves as a comprehensive guide for entrepreneurs, investors, and talent looking to participate in the Kingdom's Web3 ecosystem. The report highlights tremendous opportunities in sectors like gaming, fintech, e-commerce, and proptech, demonstrating our commitment to building knowledge in the ecosystem.

Beyond research, we actively organize events and knowledge-sharing sessions, bringing together founders, investors, and technology enthusiasts. We work closely with local institutions to create opportunities for collaboration and innovation. 

Our approach is not just about providing capital – we are helping to shape Saudi Arabia's transformation into a tech-driven powerhouse by building alliances and partnerships that strengthen the entire ecosystem. Through these efforts, we are positioning the Kingdom as a premier destination for Web3 innovation, attracting both local and international talent to contribute to this growing community.

What are Adaverse’s plans to nurture Saudi talent in the blockchain and Web3 space?

During our extensive research for the "State of Web3 in Saudi Arabia”, one of the key findings was that we need more Web3 talent in Saudi, and we are committed to helping achieve that! We are implementing a multi-faceted approach that encourages young entrepreneurs to be curious and experimental with frontier technologies. 

First, we are creating opportunities for hands-on experience through our portfolio companies, where Saudi talent can join startups and immerse themselves in the ecosystem. 

Second, we have a plan to develop partnerships with local educational institutions and tech hubs to provide training and mentorship programs. 

As I often tell aspiring youth in the Web3 landscape, do not be afraid to experiment, fail, and learn from your experiences. 

This practical approach, combined with our long-term commitment to the region, will help develop the next generation of Web3 innovators in Saudi Arabia. The key is to empower local talent by asking questions rather than giving assignments, maintaining our philosophy of partnership-based growth.

Kholoud Hussein 

As sustainability becomes a critical priority for businesses worldwide, integrating Environmental, Social, and Governance (ESG) principles transforms the financial sector. For Saudi Arabia, where Vision 2030 emphasizes sustainable economic growth, financial institutions increasingly turn to artificial intelligence (AI) to align their strategies with ESG goals. By enabling better reporting, transparency, and green financing, AI is helping these institutions create a more sustainable and socially responsible financial ecosystem.

This final installment in our blog series explores how AI is supporting ESG objectives in Saudi Arabia’s financial market. From advanced tools for reporting to real-world applications, we’ll highlight the transformative potential of AI in fostering a greener and more equitable financial future.

1. Aligning ESG Goals with AI in Saudi Arabia

Saudi financial institutions are embracing AI to seamlessly integrate ESG considerations into their operations and investment decisions.

Meeting Sustainability Goals through AI

AI provides financial institutions with the tools to measure, analyze, and improve their sustainability performance.

• Environmental Impact Analysis: AI helps organizations assess their carbon footprint by analyzing data across operations, supply chains, and investments.
• Social Responsibility Metrics: Advanced algorithms evaluate labor practices, community engagement, and diversity policies, enabling institutions to monitor and improve their social impact.
• Governance Insights: AI systems enhance governance practices by analyzing board structures, compliance adherence, and corporate ethics.

Alignment with Global ESG Frameworks

AI-driven platforms enable Saudi institutions to align with global ESG standards, such as the United Nations’ Sustainable Development Goals (SDGs) and the Task Force on Climate-related Financial Disclosures (TCFD). These tools ensure financial activities contribute to sustainable development while maintaining compliance with international benchmarks.

2. AI-Powered Tools for ESG Reporting and Green Financing

AI is revolutionizing ESG reporting and green financing, empowering financial institutions to deliver on their sustainability promises effectively.

Advanced ESG Reporting Tools

Traditional ESG reporting can be time-consuming and prone to inconsistencies. AI-powered solutions streamline this process by automating data collection, analysis, and presentation.

• Data Integration: AI systems consolidate data from diverse sources, including corporate reports, satellite imagery, and IoT sensors, to provide a holistic view of ESG performance.
• Real-Time Monitoring: AI tracks key ESG metrics in real-time, enabling institutions to identify risks and opportunities more quickly.
• Predictive Analytics: By analyzing historical data, AI can predict ESG trends and guide strategic decision-making.

Green Financing Enablement

Green financing, including funding for renewable energy projects and sustainable infrastructure, is a key pillar of ESG efforts. AI facilitates this by:

• Risk Assessment: AI evaluates the financial and environmental risks of green investments, ensuring projects align with both profitability and sustainability criteria.
• Project Selection: AI algorithms prioritize green projects based on their ESG impact and feasibility.
• Attracting Investors: Transparent AI-driven reports attract ESG-conscious investors by providing detailed insights into project sustainability.

3. Promoting Transparency in Investments Through AI-Driven Analytics

Transparency is a cornerstone of ESG-focused investing, and AI is playing a critical role in fostering it across Saudi Arabia’s financial sector.

Enhanced Due Diligence

AI-powered tools perform thorough due diligence by analyzing vast datasets, including financial reports, environmental impact statements, and media coverage.

• These tools identify greenwashing (misleading claims about sustainability) by detecting discrepancies between stated goals and actual performance.
• Machine learning models flag companies with poor ESG compliance, helping investors avoid reputational and financial risks.

Investor Confidence Through Transparency

By providing detailed and verifiable insights into ESG performance, AI builds investor confidence.

• Portfolio Optimization: AI-driven platforms recommend ESG-compliant investments, allowing asset managers to build portfolios that align with sustainability goals.
• Impact Measurement: AI tracks the social and environmental impact of investments, ensuring alignment with both financial and ethical objectives.

4. Examples of ESG-Focused AI Applications in Saudi Arabia

Saudi Arabia’s financial market is already witnessing the transformative impact of AI in advancing ESG initiatives.

Renewable Energy Financing

AI is aiding financial institutions in evaluating and funding renewable energy projects such as solar and wind farms.

• Advanced algorithms assess project feasibility, environmental impact, and long-term profitability, ensuring sustainable investments.
• For example, a Saudi renewable energy fund used AI to optimize its portfolio, achieving higher returns while reducing carbon emissions.

AI-Powered ESG Indexing

Some Saudi investment platforms have introduced AI-powered ESG indices that rank companies based on their sustainability performance.

• These indices help investors identify top-performing ESG-compliant firms, driving capital toward responsible businesses.

Smart Supply Chain Management

Financial institutions are leveraging AI to support companies in adopting sustainable supply chain practices.

• AI tools monitor supplier compliance with ESG standards, promoting ethical sourcing and reducing environmental impact.

5. AI and ESG: A Perfect Partnership for Vision 2030

Saudi Arabia’s Vision 2030 underscores the importance of sustainability and innovation in driving long-term economic growth. AI’s role in advancing ESG goals is perfectly aligned with these ambitions.

• By leveraging AI, Saudi financial institutions are not only meeting global sustainability standards but also positioning themselves as leaders in ethical finance.
• The integration of AI and ESG frameworks supports Vision 2030’s objectives of reducing carbon emissions, fostering social responsibility, and enhancing economic governance.

Looking Ahead: A Sustainable Financial Future

As Saudi Arabia’s financial institutions continue to embrace AI for ESG integration, the future of sustainable finance looks brighter than ever. However, the journey is ongoing, and challenges such as data availability, regulatory alignment, and cultural shifts must be addressed.

The completion of this blog series marks the beginning of broader conversations about how AI can redefine financial services in Saudi Arabia and beyond. By prioritizing ESG goals and leveraging cutting-edge technology, Saudi Arabia is setting a global benchmark for innovation in sustainable finance.

To conclude, AI is revolutionizing ESG adoption in Saudi Arabia’s financial market by enabling robust reporting, promoting transparency, and driving green financing initiatives. Through real-world applications and alignment with global frameworks, financial institutions are achieving both ethical and economic objectives.

As we conclude this series, one thing is clear: AI is not just a tool for transformation—it is the foundation for building a sustainable, transparent, and inclusive financial ecosystem. Saudi Arabia’s commitment to innovation and sustainability ensures that its financial sector will continue to thrive while contributing to a better future for all.