Saudi venture capital had a reset year. But fintech is still attracting most of the money. What actually makes a company worth backing? Joining me at Money 20/20 Riyadh is Mazin Alshanbari, General Partner at Sukna Ventures.
Thank you so much for having me.
Beyond the pitch deck and the headline numbers, what actually makes a company genuinely investable for you?
It really depends on the stage the company is at. Towards the earlier stages, it is all about the team. The picture is murky. It is not very clear. As you advance more, it becomes about the fundamentals — the size of the problem the founders are trying to solve, and what makes them positioned among the best potential leaders to actually solve it and derive economic benefit by doing that. You can look at whether they are first-time founders or have done something in the past. Have they known each other for a really long time? These are non-obvious things that a lot of people do not place great emphasis on. But to us they are really fundamental signs. Genuineness, credibility, and authenticity of the individual. This is a people's business. We invest in people, not companies.
Why does the founder's ability to tell a clear story matter so much at this stage?
The founder's ability to tell the story clearly is a huge one. It ensures they can raise capital. It ensures they can bring in talent to help them build the organisation. A lot of these companies start with very small, tight budgets. In order to attract really high-calibre talent, the talent needs to believe in the story. So the story side is enormous.
Once a company reaches Series A or B, what changes in how you assess it?
We are pre-seed and seed stage — we only follow on to Series A. But we have sat at the table with Series A investors for some of our portfolio companies, and these guys are all about the numbers. KPIs, hitting those KPIs, achieving levels of efficiency internally. The adaptability of the founders and their ability to face adversity and say — that is not working, let us shift. A lot of SaaS companies are now pivoting into AI-style businesses post Series A. In essence it is fundamentals, growth trajectories, size of the addressable market. The more the company grows, the closer it becomes to a private equity-style of underwriting.
Has the Gulf venture market become more disciplined, or is that just a reaction to a tougher funding environment?
It is not a tougher funding environment for a founder in Saudi today — the amount of dry powder is very healthy. But the AI revolution has changed the way founders build companies. I am looking at a company right now where their nearest competitor in the US took eight years and about $20 million of funding to put a prototype on the road. These guys with $400,000 in friends-and-family funding and about a year and a half were actually able to put a prototype live. The game is changing. Teams can be very efficient. Your investable dollars can go a lot further today. Founders are more disciplined, they have the tools to make them more efficient, and they are building world-class businesses with a lot less capital.
Thank you very much for joining us.
Thank you so much.
