Prince Khaled bin Alwaleed Urges Entrepreneurs To Leverage Regional Strengths Over Replicating Foreign Models "I don't want the next Tesla or the next Uber- I want to know what makes you stand out without comparing yourself to a trillion-dollar company."

On the morning of May 1, 2024, the 25Hours hotel in Dubai was abuzz with a convergence of entrepreneurs, investors, and other stakeholders from the UAE entrepreneurial ecosystem, all of whom were set to partake in the Demo Day of the seventh cohort of the Mohammed Bin Rashid Innovation Fund (MBRIF) Accelerator program.

But ahead of the pitch competition that would see 18 MBRIF-graduated startups present their business ideas to a panel of regional investors, the audience was treated to a fireside chat between HRH Prince Khaled bin Alwaleed bin Talal Al Saud, founder and CEO of KBW Ventures, and Aby Sam Thomas, Editor in Chief of Entrepreneur Middle East.

Over the course of a half-hour conversation, Prince Khaled shared his candid thoughts on the current investment landscape from both a global and regional perspective, and, in the process, revealed that KBW Ventures is set to launch a new fund. "At KBW Ventures, we see that the Middle East holds great potential for startups, but I would love to see more homegrown companies," Prince Khaled said. "We're actually in the process of starting our own fund -it would be our second fund- which will be somewhere between a US$50 million and $100 million fund. We will be investing in local companies as well as international companies, with the mandate of exposing local companies to the international markets."

Aby Sam Thomas, Editor in Chief of Entrepreneur Middle East (left), and HRH Prince Khaled bin Alwaleed bin Talal Al Saud, founder and CEO of KBW Ventures. Source: Entrepreneur Middle East/Alexander Bungas

With the new fund, Prince Khaled is hoping to cater to a gap that he's spotted in the regional investment landscape. "I think there is a void that we don't really talk about here in the region, which is the growth stage," he noted. "At the end of the day, as soon as you start an actual business, you have to learn how to scale. There is a huge void really beyond Series C; so, that is what we're trying to address." Having founded KBW Ventures a decade ago, the new fund also comes after Prince Khaled has borne witness to the evolution of the regional entrepreneurial landscape. That'd also explain why, while he exhibited much optimism about the future, the investor also did not shy away from presenting a very realistic appraisal of the Middle East's startups. "We [at KBW Ventures] have invested in only about a handful of companies here in the Middle East," he said. "While we've got around 90 active investments [in our overall portfolio], maybe less than 10 are based here in the Middle East. But there's a reason for that."

"The scarcity of quality companies back then was, well, you could tell," he continued. "But more importantly, the valuations were blown out of proportion- especially with Amazon's acquisition [of e-commerce platform Souq in 2017], and Uber's acquisition [of on-demand ride-hailing platform Careem in 2019] here. It really gave a false narrative that the Middle East is the next Silicon Valley. But the next Silicon Valley is Silicon Valley. And I am not downplaying the Middle East; I am not downplaying Europe or Asia, for that matter. But at the end of the day, we're always going to be second-tier, and that's the reality. We should just embrace it and learn from it, and only good companies will come out of this region as soon as we understand this."

Prince Khaled's statements, however, raised an inevitable question: what should startups in the Middle East be doing differently to achieve success? And according to the Saudi royal, the answer lies in avoiding the replication of strategies and ideas that have worked well in the West. "Look, you don't have to be the hero for everyone," Prince Khaled explained. "You can just focus on what propels the Middle East forward from other markets- in America, it is the entrepreneurial spirit; you can literally start from zero and become Jeff Bezos. But here in the Middle East, there are a few strengths that we have. For example, renewable energy- arguably, the sun shines 11 months out of the year here, so we can take advantage of that. We have endless resources for oil, so we can use that for funding other purposes of innovation. That doesn't mean it is an evil commodity; it's just a way for us to move forward. If we start vilifying other types of energy, then we're not going to get anywhere, so we just need to embrace the strengths that we have. There's also food security- we have a huge focus on that here… So, I really do believe that we have to focus on the strengths that we have, and forget about the other innovations that aren't really going to do much for us here."

Source: Entrepreneur Middle East/Alexander Bungas

In terms of industries Prince Khaled has personally been interested in, he is already known to be one of the region's foremost investors in foodtech; indeed, he's been especially in the news for his support of vegan companies across the globe. However, he noted that he is no longer investing in only vegan companies, which signals a trajectory shift on his part. "My approach has changed," he said. "My outlook on how to work with the wider food system has expanded to include roadmaps for the way forward with cellular agriculture. Plus, we can steer non-vegan companies towards more sustainable practices. If we only look at vegan companies, we are handcuffing ourselves to a subsegment of a subsegment of an entire ecosystem. That's not what we are about; we are sector-agnostic investors at heart."

When it comes to pitching an idea to investors, Prince Khaled reminded entrepreneurs that it is always important to get the fundamentals of startup building right. "I want to see passion, and a dedication to their companies," he noted. "I also want to see a really good percentage of ownership in the company. It depends on how early these companies are, but if they're growing in revenue year over year, where are their margins (if they have any) at? I really focus on these things. I like to be active- active, in terms of really helping companies drive growth, and even open up markets in the Middle East." Perhaps unsurprisingly, Prince Khaled's advice for startup success is deeply intertwined with investor sentiments as well. "As soon as someone says they're the next Uber or the next Tesla, I am done listening to them," he admitted. "I don't want the next Tesla or the next Uber- I want to know what makes you stand out without comparing yourself to a trillion-dollar company… I'm focused on companies that really drive an industry forward, and I want to back great entrepreneurs."

In the midst of imparting advice for entrepreneurs in the region, Prince Khaled reiterated, multiple times during the chat, his eagerness to "to walk entrepreneurs through how to grow their startups from where they are, to the next stage of their lifecycles." And as it turns out, such a sentiment has a lot to do with the immense potential that the region offers startup founders. "There has never been a better time to be an entrepreneur in the region," Prince Khaled declared. "We've been seeing Saudi Arabia change its laws dramatically in the last six-seven years, and we've seen a huge push from Dubai and Abu Dhabi to set the stage for entrepreneurship and the ecosystem. There is also a lot of money that wants to be deployed into the region- there's been a lot of dry powder parked to the side because of the COVID-19 pandemic. So, right now, there is a lot of money to be pumped into these companies. I think it has never been a better time here in the region specifically, because this is where my heart resides, this is where I live, and this is where I will always back. If you have a dream, and a passion that will help you grow, and make money, and [if it can] be sustainable- then go for it."