Saudi Arabia is moving rapidly to cement its position as the region's leading hub for venture capital. That ambition was reflected in a record 38 percent increase in the number of investors backing Saudi startups, bringing the total to 194, driven by a 65 percent rise in international investor participation. Reflecting this momentum, Amal Dokhan, Managing Partner at global investment firm 500 Global, which manages $2.3 billion in assets, outlined the contours of the Kingdom's evolving investment landscape in an exclusive interview with Asharq Al-Awsat. She said artificial intelligence is no longer simply an added feature but has become the primary tool for reshaping business models and building sustainable competitive advantages that will pave the way for the region's next generation of billion-dollar companies. Speaking on the sidelines of the Global AI Show, held in Riyadh on June 29 and 30, Dokhan said Saudi Arabia offers a rare combination of qualities that investors seek. These include strong government support for innovation, a digitally savvy population, abundant capital, and ambitious goals to diversify the economy. She added that what makes the Saudi market particularly attractive is that it is not only witnessing broader adoption of emerging technologies but also a simultaneous transformation of business models across multiple sectors. This creates opportunities for founders to build companies capable of redefining their markets rather than merely offering incremental improvements. Betting on Artificial Intelligence Dokhan expects the region's next wave of billion-dollar technology companies to emerge in sectors that align with Saudi Arabia's strategic priorities. These include AI-powered enterprise software, fintech infrastructure, health technology, logistics and supply chain technologies, climate and energy technologies, industrial technologies, and platforms that support the digital transformation of government entities and large enterprises. She noted that 500 Global is placing increasing emphasis on startups developing the infrastructure needed to enable AI adoption, rather than companies that simply add AI as another feature within existing products. She added that the most valuable companies will be those with proprietary data, control over core business workflows, or distribution channels whose value increases as AI adoption expands. Building a Sustainable Competitive Advantage On improving startup economics, Dokhan explained that lowering customer acquisition costs is not simply a matter of reducing marketing spending. Instead, it requires building systems that make customer acquisition more efficient as a company grows. She said AI and automation help improve customer targeting and qualification, streamline onboarding, and strengthen customer retention, increasing conversion rates instead of relying on higher marketing expenditures. Dokhan stressed that technology alone no longer provides a sustainable competitive advantage as AI tools become more widely available. Instead, differentiation increasingly depends on proprietary customer data and insights, strong brand trust, and robust distribution channels. She added that the strongest companies are not those focused solely on reducing customer acquisition costs, but those that successfully balance customer lifetime value against acquisition costs. Every customer interaction should generate data that helps improve products, enhance the user experience, and reduce future acquisition costs, creating a competitive advantage that is difficult for rivals to replicate. Scaling Efficiently On scalability, Dokhan said venture capital investors are looking for companies that can expand their customer base and enter new markets while growing revenue faster than operating expenses. In other words, business expansion should not be matched by a proportional increase in costs. She added that investors seek founders who build scalable operating systems rather than businesses whose growth depends primarily on hiring more employees. She also stressed the importance of reviewing repetitive functions in customer service, compliance, and reporting with the goal of automating them from the earliest stages. Achieving this, she said, requires early investment in scalable technology infrastructure, including robust data architecture, API-driven design, and modern cloud-based systems. This enables companies to serve thousands of additional customers without a corresponding increase in staffing or operational infrastructure, ultimately improving profit margins as the business grows. Operational Resilience and Risk Management On cybersecurity, Dokhan said cyber risks are no longer merely an issue for IT departments but have become a key factor in company valuations and their ability to attract investment. A security breach or prolonged system outage can affect revenue, customer confidence, regulatory compliance, and access to future funding. She added that growing reliance on data and artificial intelligence is also increasing the economic cost of security vulnerabilities, making cybersecurity an integral part of business strategy rather than simply a technical requirement. Dokhan said investors expect founders to approach cybersecurity with the same discipline they apply to financial controls. This includes establishing clear governance frameworks, conducting regular security reviews, developing disaster recovery plans, implementing access controls and data protection measures, providing ongoing employee training, and continuously monitoring systems. She concluded that operational resilience has become a competitive advantage in its own right. Customers, large enterprises, and investors are placing greater importance on a company's ability to detect, contain, and recover quickly from security incidents, strengthening trust and reinforcing long-term enterprise value.
