Tawaref Series: an entrepreneur's journey in Saudi Arabia, from bootstrapping to big bucks

Tawaref Series: an entrepreneur's journey in Saudi Arabia, from bootstrapping to big bucks

As an entrepreneur considering a landing in Saudi Arabia and the establishment of a company, a crucial decision awaits: whether to navigate the process independently or to engage the expertise of a corporate service provider (CSP).

As the saying goes, "a story is worth a thousand lectures," and this case study promises to impart invaluable insights.

Let's take a real-life example of what we see every day when it comes to landing startups while remaining completely truthful and objective. This real-life image serves as a helpful parallel, demonstrating the optimal profile and lifecycle found in very successful landings. 

Chapter 1: Bootstrapping

Meet John, a European national who, in 2020, bootstrapped his B2B SaaS product in a GCC country, obtaining the necessary work visa and securing angel investments to develop the minimum viable product (MVP).

Following this initial phase, incorporating feedback from ten successful paying customers, John improved his MVP through multiple iterative pivots. In 2022, John had 200+ satisfied paying clients, leading to the establishment of an offshore tech team consisting of ten full-time employees.

By late 2022, amidst a period of skyrocketing valuations, John had accomplished a significant milestone by successfully raising $4 million at a post-money valuation of $20 million. This funding was sourced from a renowned Saudi family office, a UAE-based VC, and a select group of super angel investors. 

Only 50 per cent of the capital is earmarked for product development, with the remaining for market expansion. Interestingly, both tracks were strategically aligned to prioritise Saudi Arabia. The focus of product development centred on localisation and arabisation efforts to penetrate the Saudi market, while market expansion obviously revolved around establishing a legal presence within Saudi Arabia.

Significantly, the allure of Saudi Arabia played a pivotal role in attracting investor interest. John's Saudi investors made their investment contingent upon his swift entry into the Saudi market, a requirement that resonated well even with his non-Saudi investors, who eagerly embraced the prospect of "Saudi" expansion as an integral part of the company's growth trajectory.

Signifying a noteworthy trend, John observed that the mere mention of "Saudi" held transformative power, instantly capturing the attention of investors and engendering heightened receptiveness towards his entrepreneurial vision.

Chapter 2: The Struggle of Starting

In 2023, John commenced the process of establishing his ADGM holding company, with the subsequent goal of establishing a subsidiary in Saudi Arabia.

John encountered a multitude of conflicting viewpoints and recommendations regarding the feasibility of managing the process independently versus the necessity of partnering with a professional entity. Faced with this dichotomy, and with the counsel of the Saudi Family Office, John made the decision to enlist the services of a CSP, signalling the commencement of his collaborative journey with them…

It did not take him long to see the complexity of the procedure for first-timers. Although it seemed simple at first, he soon realised how many intricate details there were—things that, in the absence of professional guidance, may cause the process to take much longer than expected and require more iterations. Reflecting on this, John remarked, "The Saudi landing process seemed simpler than immigrating to Canada or Australia; it was very transparent and accessible, with all the necessary information readily available. Although it's possible to navigate the process independently with ample time for research, the expertise and efficiency provided by a professional in the field are unmatched."

Chapter 3: The Process of Landing 

Once John signed with the CSP, they promptly provided him with a comprehensive form encompassing the entire three-month application process. After diligently filling out the required paperwork, he received an email for e-signing, containing all the necessary documents as per MISA's regulations, such as name reservation forms, powers of attorney, and partner resolutions. 

Subsequently, the CSP advised John to attest these documents in his country of residence, supplying a detailed guide and contact information for a facilitating third party if he sought to expedite the process. After spending approximately $3,000–$4,000, John managed to have all the papers attested within 2-3 weeks.

Within a few days, the CSP informed John of his successful acceptance by the Ministry of Investment, obtaining an Entrepreneurial License, marking the initial step in the process. This allowed the Saudi government to acknowledge him as a foreign investor under the guise of an entrepreneur.

John encountered the challenge of reserving a name, navigating the Saudi government's restriction on non-Arabic names. With the CSP's guidance, however, he learned that an English name could be secured if he proved its existence in his country of residency.

Reserving a name may seem straightforward, but it entails complexities. Selection involves specifying the business activity and selecting an appropriate suffix. With the CSP's guidance, John navigated this process, including choosing an English name and proving his existing company in a GCC country.

The next step is a key one, involving establishing the company. Utilising a profile provided by the CSP, John designated over 400 authorities to himself and his co-founder, simplifying the process with a few clicks. Shortly after, the Ministry of Commerce in Saudi Arabia accepted his profile, and his authorised Saudi lawyer proceeded to physically verify the previously attested documents, which John appreciated as it alleviated the need for him to travel to Saudi Arabia solely for this purpose.

Chapter 4: Welcome to Saudi 

John received a congratulatory email from the Saudi Business Center informing him that his company is established! He could now enter and start working in Saudi Arabia, but he wouldn't be able to open a bank account until he had his Iqama. Consequently, despite being able to undertake contracts in Saudi Arabia, he couldn't receive any funds. 

John arrived in Saudi Arabia on a business visa with the intention of growing his network at the LEAP exhibition, during which the CSP introduced him to ten new strategic investors, some of whom offered joint ventures while others expressed interest in franchising his software. This led to John securing ten strategic investors and a dozen potential customers.

In the following weeks, the CSP facilitated the issuance and attestation of the General Manager (GM) visa by the Ministry of Labour. The Ministry of Labour required a Saudi representative, which John did not have. However, the CSP provided a temporary representative lawyer to fulfil this requirement and issue the visa. The visa then had to be attested by the Ministry of Investment before being issued by the Saudi embassy of his country of residence. This process took 2-3 weeks, but he encountered a complication when the Ministry mistakenly issued the visa to his mother country in Europe! John notified the CSP of the error, explaining that he was coming from a GCC country where he currently lived. As a result, the CSP had to return to the ministry to rectify the mistake. John realised that he would have had to travel to Saudi Arabia personally to address this error, and he felt grateful for the value that a capable CSP brings in handling such situations.

Within the following two weeks, while arranging the visa, the partner also organised medical insurance for John, ensuring that he obtained the most cost-effective coverage from the providers. Considering that he did not plan to stay in Saudi Arabia for an extended period, John was specifically seeking the most economical options.

Chapter 5: Post-Landing 

After completing the entire process, John finally arrived in Saudi Arabia. The CSP advised him to stay in the country for 7 days until he was issued the Iqama (residency). During this period, he had minimal obligations and utilised his time to meet with a couple of potential investors he had connected with at the LEAP event. The CSP provided him with 2-3 options for renting a coworking space, allowing him to commence meetings with numerous investors and customers.

The CSP also connected John with 2-3 key banks to initiate the process of opening bank accounts. These "startup friendly" banks offered services tailored to startups, including provisions for loans, payment gateways, and other corporate banking services typically inaccessible to non-blue chip entities.

Concurrently, the CSP took care of necessary administrative work by acquiring and registering John on the Absher, Tax/Zakat, Social Security, and Muqeem (resident) platforms, among other platforms. It was a procedure that John was not too familiar with. In order to assist him, the CSP offered a one-hour training session that covered how to use these platforms and comprehend the obligations related to compliance, such as submitting quarterly VAT reports, annual audited reports, and connecting him with auditors.

For John, the entire three-month process of starting his business in Saudi Arabia turned out to be both a business venture and an educational one. He was able to successfully traverse the challenges of establishing a presence in a new market with the help and direction of the CSP, ultimately leading to the successful execution of three contracts just two months later.

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