Noha Gad

Digital wallets have become central to the way consumers conduct payments and manage their finances, offering convenience and seamless digital transactions. Their widespread adoption in retail, banking, and peer-to-peer transfers has made them a preferred alternative to cash and physical cards. 

These wallets handle increasing volumes of sensitive financial data; thus, robust security measures cannot be overstated. Traditional password protections alone are no longer sufficient to combat sophisticated cyber threats and fraud schemes targeting these platforms.  

Emerging security technologies, such as multi-factor authentication (MFA), decentralized identity (DID) solutions, artificial intelligence (AI), machine learning (ML), and tokenization, are addressing these demands by introducing multi-layered protection methods.

Multi-factor authentication (MFA)

The MFA technology significantly enhances digital wallet security by requiring users to verify their identity through multiple independent factors before granting access. Common MFA methods in digital wallets include one-time passwords (OTPs) sent via SMS or email, biometric verification through fingerprint or facial scans, and hardware tokens that generate secure codes. This layered approach makes unauthorized access much more difficult for attackers.

Another type of factor used is certificate-based authentication, which relies on a digital certificate, also called a soft token, to identify a user, machine, or device before granting access. Most enterprise solutions already support certificate-based authentication, and many wallets, such as those by Google Pay and Apple Pay, deploy this in coordination with traditional methods such as a username and password/PIN. 

Although the integration of the MFA reduces fraud rates and unauthorized account access, challenges remain in ensuring universal adoption and maintaining user convenience without compromising security. As cyber threats become increasingly sophisticated, MFA represents a foundational barrier that protects users’ financial assets and sensitive information from theft and compromise. Its continued evolution and adoption will remain critical to maintaining trust in digital payment ecosystems.

Decentralized identity (DID) solutions

A decentralized Identifier (DID) is a unique identifier that can be issued by a decentralized platform and acts as proof of ownership of a digital identity. DID solutions use cryptography and distributed systems, often blockchain technology, to give individuals total control over their digital ID, which is seen as a more tamper-resistant and privacy-preserving method. 

Unlike traditional identity systems that rely on centralized authorities to issue and manage identities, decentralized identity empowers users to create, control, and manage their own digital identities without depending on any single entity. This shift reduces vulnerabilities inherent in centralized databases, which are prime targets for cyberattacks and data breaches. 

This modern approach enables individuals to have full ownership and control over their personal data, allowing them to decide what information to disclose, to whom, and for how long. For digital wallets, DID integration means users can authenticate themselves and verify transactions without exposing unnecessary personal or sensitive data, thereby reducing the attack surface and building user trust by preventing mass data leaks.

AI & ML in fraud detection

Artificial intelligence (AI) and machine learning (ML) play a pivotal role in advancing fraud detection capabilities within digital wallets as they analyze vast amounts of transactional data in real time and identify patterns and behaviors that deviate from normal usage. AI and ML algorithms can adapt to evolving fraud tactics, enabling proactive detection and prevention before fraudulent transactions are completed.

AI-driven systems harness advanced techniques such as anomaly detection, risk scoring, and predictive modeling to assess each transaction's legitimacy. This dynamic assessment improves the accuracy of fraud detection compared to static rule-based systems that may either miss complex fraud schemes or generate excessive false alarms.

Meanwhile, ML models in digital wallets leverage user behavior analytics, tracking factors like device usage, login patterns, and payment frequency to establish individualized risk profiles that distinguish genuine users from potential fraudsters more effectively, ultimately minimizing disruptions caused by unnecessary transaction denials. 

Integrating AL and ML technologies into digital wallets not only minimizes fraud losses but also promotes operational efficiency by automating risk management processes. These technologies are expected to offer more advanced defenses, including real-time threat hunting and adaptive authentication that dynamically adjusts security measures based on assessed risk levels.

Tokenization 

This technology is crucial for securing digital wallet transactions as it replaces sensitive payment information with unique, non-sensitive identifiers called tokens, which carry the necessary transaction data without exposing actual card numbers or bank details during payment processing. 

Unlike traditional encryption methods, tokenization stores actual account information in highly secure token vaults, isolated from merchants and payment processors.

Digital wallet providers have widely adopted tokenization to comply with stringent security standards such as the Payment Card Industry Data Security Standard (PCI DSS), enhancing consumer confidence and regulatory compliance. 

Along with protecting sensitive information, tokenization creates opportunities for innovative payment experiences, standing as a foundational security element that ensures transactions remain secure, seamless, and user-friendly.

Saudi Arabia has been significantly integrating emerging technologies to enhance the security of digital wallets, in line with Vision 2030’s goal of promoting a cashless society and digital economy. The Saudi Central Bank (SAMA) is a key contributor to this transformation, starting from regulating digital payment providers under comprehensive frameworks to creating an enabling environment for digital wallets to adopt advanced security technologies.

The Kingdom is actively incorporating AI and ML into the national fintech ecosystem to enhance transaction monitoring, fraud detection, and risk assessment, thereby increasing transparency and accountability while ensuring a secure cashless transaction environment.

Along with technology adoption, Saudi Arabia backs fintech innovation through significant investments supported by government entities and partnerships with regulatory bodies, aiming to stimulate the development and market reach of advanced digital wallet solutions incorporating MFA, AI, DIDs, and tokenization.

Finally, digital wallets continue to transform payments by merging convenience with cutting-edge security technologies to protect user data and ensure transaction integrity. These technologies provide a multi-layered defense framework that ensures digital wallets remain secure, seamless, and trustworthy in an increasingly digital financial environment. The integration of these multi-layered protections will definitely establish a strong foundation for sustainable digital finance growth, while prioritizing security innovation. 

Ghada Ismail

Artificial intelligence (AI) promises to reshape economies and societies in ways once unimaginable. For Saudi Arabia, it is also a tool to diversify its economy, boost productivity, and advance global competitiveness. Yet alongside opportunity comes risk, represented in bias, misinformation, privacy concerns, and job displacement. Building ethical AI is not optional; it is essential. The Kingdom is uniquely positioned to balance regulation, innovation, and responsibility as it pursues this AI-driven future.

A Rapidly Growing AI Ecosystem

Since its establishment by royal decree in 2019, the Saudi Data and Artificial Intelligence Authority (SDAIA) has been at the center of the Kingdom’s AI strategy. Its National Strategy for Data and AI (NSDAI), launched in 2020, set ambitious targets: ranking among the world’s top 15 AI nations by 2030, training 20,000 specialists, attracting SAR 75 billion in investment, supporting 300 startups, and driving scientific output.

Progress is already visible. SDAIA has forged partnerships with global players like Accenture to build national cloud infrastructure, IBM for energy and sustainability AI, and Google for earth observation and environmental protection. Saudi Arabia now ranks first worldwide for open data availability, hosting more than 11,000 datasets from nearly 300 entities. SDAIA’s environmental AI projects, such as the Smart Planet Program, predict vegetation changes with more than 90% accuracy, supporting sustainable planning.

The impact is tangible: over SAR 50 billion (~$13 billion) in cost savings across government operations, from the DEEM cloud platform to AI-assisted Hajj crowd management and the popular Tawakkalna app. AI is no longer abstract—it is woven into the daily lives of citizens and the functioning of the state.

Why Ethics Must Come First

With AI permeating sensitive domains like healthcare, mobility, and even Hajj safety, trust is the foundation of Saudi Arabia’s AI journey. Without safeguards, algorithms can entrench bias, erode privacy, or undermine fairness. Aligning AI with Vision 2030’s goals—social equity, inclusion, and quality public services—requires more than innovation. It requires ethics to be at the core of every deployment.

Governance and Guardrails

Saudi Arabia’s regulatory approach mixes centralized oversight with room for innovation. SDAIA, together with the National Data Management Office (NDMO), enforces data classification and ethical policies, balancing openness with security.

Beyond rules, SDAIA promotes dialogue through summits like DeepFest at LEAP 2025, where regulators, innovators, and academics engage on transparency, human-centric design, and responsible regulation. This positions the Kingdom not just as a user of AI but as a thought leader in its governance.

Innovation with a Cultural Core

Startups are embedding ethics into their products from the outset, supported by SDAIA’s regulatory sandboxes that allow real-world testing without stifling creativity.

One striking example is HUMAIN Chat, a chatbot powered by the locally built ALLaM-34B language model. Developed by a PIF-backed firm in collaboration with SDAIA, HUMAIN Chat is Arabic-first, supporting regional dialects while also functioning seamlessly in English. Unlike global tools, it integrates Islamic values and cultural heritage, ensuring its outputs resonate with local norms. Trained on proprietary Saudi datasets, it combines linguistic precision, cultural fidelity, and strong safety benchmarks—all hosted entirely within the Kingdom to guarantee data sovereignty.

From an ethical lens, HUMAIN and ALLaM represent an effort to define AI through local values, not imported defaults. By addressing bias, protecting user data, and embedding cultural authenticity, they show how responsible AI can reflect societal identity as much as technical standards.

To reinforce this ecosystem, SDAIA also certifies startups as ethical AI providers. Its accreditation framework awards annual “incentive tags”—from Conscious to Pioneer—that track a company’s maturity in embedding safeguards. These certifications turn abstract ethical principles into measurable progress, rewarding transparency and building public trust.

Responsibility Through People and Skills

Technology is only half the story; people complete it. Saudi universities are cultivating AI talent attuned to fairness and transparency. At King Saud University, Latifa Al-Abdulkarim, a rising leader in explainable AI and ethics, exemplifies this values-driven scholarship.

Meanwhile, SDAIA is widening access to AI careers. Its Elevate program, launched with Google Cloud, aims to train 25,000 women in AI over five years, with the first phase already reaching 1,000 women from 28 countries. Complementary programs at SDAIA Academy have certified nearly 2,000 more women in data and AI, embedding diversity and inclusivity into the Kingdom’s AI workforce.

Cultural and Religious Anchors

What sets Saudi Arabia apart is its decision to ground AI ethics not just in global norms, but also in Islamic values—justice, accountability, and transparency. This alignment enhances legitimacy and encourages societal acceptance, offering a model of ethics that could resonate across the Muslim world.

The Roadblocks Ahead

The momentum is strong, but challenges remain:

• Pace vs. oversight: Regulation must keep up with rapid innovation.
• Rules vs. enforcement: Without audits and accountability, standards risk being symbolic.
• Imported bias: Foreign algorithms, if unadapted, can embed cultural misalignment.
• Public trust: Ethical lapses in sensitive areas could erode confidence quickly.

Meeting these challenges will require continuous vigilance, independent auditing, and culturally sensitive design.

A Chance at Global Leadership

Saudi Arabia is not just participating in the global AI race; it is also shaping the conversation. Hosting platforms like GAIN and DeepFest, deploying culturally aligned AI models, and building regulatory infrastructure give the Kingdom a chance to lead by example. If it codifies regional standards and shares its framework internationally, Saudi Arabia could become the ethical AI hub of the Middle East, influencing emerging economies worldwide.

Conclusion: Ethics as an Accelerator

Far from slowing progress, ethical AI can accelerate it, ensuring that innovation unfolds responsibly, inclusively, and with social good at its heart. Saudi Arabia now has the foundations: governance, infrastructure, talent, and cultural legitimacy. The test will be sustaining enforcement, broadening public education, and adapting foreign technologies to local values. If successful, the Kingdom won’t simply join the AI elite; it could rather help define what responsible, values-driven AI looks like in the 21st century.

Ghada Ismail 

Open banking is emerging as a key force in reshaping financial services across the Middle East, moving beyond regulation to become an enabler of innovation. At the forefront of this shift is Spare, a Saudi-headquartered fintech, offering account-to-account payments that are faster, more secure, and more cost-efficient than traditional card networks.

With a mission to democratize access to financial infrastructure, Spare is building seamless rails for enterprises, SMEs, and fintechs, unlocking new use cases powered by instant settlements and real-time data. By working closely with regulators and businesses, the company is helping to address adoption challenges while setting the foundation for open banking to transform industries across the region.

In this interview, we explore how Spare is driving this change, what sets its model apart, and where open banking in the Middle East is headed next.

Can you walk us through Spare’s mission and how you’re redefining open banking payments in the GCC and MENA?

Spare’s mission is to democratise access to financial infrastructure to enable growth for innovative companies that want to build world-class products for their customers using a secure, seamless, and transparent connectivity that is compliant with regulatory guidelines. We’re redefining Open Banking by making payments more accessible for businesses of all sizes, giving them access to rails that are cheaper, more secure, and above all, faster. Open Banking payments will be a game changer, as they allow businesses to access liquidity far quicker than traditional legacy systems, enabling them to grow and operate more efficiently.

How does Spare differentiate itself from traditional payment gateways, and what value does your open banking model bring to fintech and enterprise customers?

At Spare, we connect directly to banks. When it comes to payments, we move money directly from account to account, avoiding intermediaries such as card networks, which means faster settlement and lower fees. For fintechs and enterprises, we unlock real-time payments, better margins, and new customer experiences with use cases such as easy-to-set-up recurring payments and refunds. This marks a significant improvement for many businesses, particularly SMEs. Lower transaction fees combined with instant settlement not only reduce costs but also enhance financial transparency and cash flow visibility.

How does Spare ensure regulatory compliance and data security in different markets, including Saudi Arabia?

At Spare, we work closely with regulators in each market and follow local licensing frameworks. On security, all customer data is encrypted, and we meet banking-grade standards for authentication and access. In Saudi Arabia, we comply with SAMA regulations, and all our data centers are based in the kingdom. In addition, in the UAE, we received an In Principle Approval, allowing us to conduct Open Finance activities under CBUAE’s regulated framework.
 

Which fields—like SME payments, lending platforms, or BNPL—are responding most to your open banking tools in the region?

We see strong pull from SMEs who need cheaper, faster collections, and from BNPL and lending players who rely on instant account verification and payouts.  There is also significant interest from lenders and microfinance companies in the rich banking data and credit risk assessment tools we provide.
 

What have been some of the biggest friction points businesses face when adopting open banking payments, and how does Spare help overcome them?

 Many businesses are concerned about customer adoption and the complexity of bank integrations. We solve this with a simple API and a user flow that feels as easy as card checkout.  We also support our partners with creating simple bank integration journeys and with educational material and content that they can equip their teams to educate customers and build trust.  Moreover, we believe the first wave of Open Banking payments adoption will come from the B2B space. Open banking offers powerful capabilities that directly address B2B needs, such as invoice payments, bulk disbursements, and recurring transactions. As with any new payment scheme introduced to consumers, widespread adoption will take time, but the foundation being built today will unlock significant efficiencies for businesses tomorrow.

What’s your roadmap for geographic expansion?
We’re focused on deepening our footprint in the region first - we’re headquartered in KSA, licensed in Bahrain, and recently received our IPA in the UAE. We’re also working on Kuwait and Oman, as they have recently released their open banking frameworks.
 

As open banking matures in the Middle East, what additional services or products is Spare exploring next?

Open banking in the region is still at its starting stages, so there’s much more to come. We’re looking at value-added services on top of payments: smarter payouts, recurring billing, data-driven credit, and insights that help with underwriting and personalized offers. Open finance is also on the horizon, and that’s an exciting next step.
 

What do you believe is the biggest misconception about open banking in the MENA region, and how is Spare helping shift that perception?

A big misconception is that open banking is only for banks and fintechs. In reality, it can transform many industries. E-commerce, healthcare, and real estate can all benefit from instant access to financial data and customer insights. At Spare, we show businesses that open banking is a foundation for innovation across the economy, not just financial services.

Noha Gad

In today’s world, the way people manage money and investments not only impacts financial returns but also has profound effects on the environment and society. Sustainable finance is an approach that recognizes this connection by integrating environmental, social, and governance (ESG) standards into financial decisions. 

The ESG standards offer a framework for evaluating how companies and investments perform in these critical areas: environmental responsibility, social impact, and governance transparency. They help investors understand the broader risks and opportunities that traditional financial metrics might miss.

Sustainable finance plays a pivotal role in advancing ESG principles by directing capital toward initiatives that promote long-term sustainability and responsible growth. This approach is crucial for addressing global challenges, notably climate change and social inequality.

Green finance, which is a key component of sustainable finance, focuses specifically on funding environmentally beneficial projects, including investments in renewable energy, energy efficiency, pollution control, water management, and biodiversity preservation. Instruments such as green bonds and sustainability-linked loans are common tools used to mobilize capital for these purposes.

Ultimately, sustainable and green finance aim to rebuild financial systems to serve society and the planet in a better way, directing investments into activities that align with sustainability goals and support the transition to a low-carbon, equitable economy.

How does sustainable and green finance support 3?

Integrating ESG criteria into investment and financing decisions ensures that the capital is allocated to projects and companies that demonstrate responsible practices aligned with ESG principles. This integration helps drive positive environmental outcomes, social inclusion, and transparent governance. For instance, green finance channels funds into renewable energy, energy efficiency, and ecosystem conservation projects that directly address the environmental goals of ESG.

Financial instruments like green bonds and ESG-linked loans were designed to link funding conditions to ESG performance, incentivizing companies to improve their sustainability practices.

Benefits of integrating sustainable finance with ESG standards

Integrating sustainable finance with ESG standards brings significant benefits to businesses, investors, and society. This includes: 

*Lower operational costs and improved efficiency.

*Enhanced risk management.

*High stock market performance.

*Strong employee engagement.

*Improved brand reputation.

*Compliance with regulations.

Although the integration of sustainable finance into ESG standards offers various advantages, it faces different challenges, notably:

• Changing regulatory landscape: Financial institutions face a rapidly shifting regulatory environment with new rules emerging globally. Navigating these evolving requirements demands agility and continuous adaptation.
• Risk of greenwashing: misleading sustainability claims, known as greenwashing, impose major challenges that affect transparency and lead to mislabeling of funds as sustainable without sufficient backing.
• Fragmented standards: The absence of globally accepted ESG and green finance standards creates confusion and complicates compliance.
• High compliance costs: Meeting enhanced ESG disclosure requirements can be expensive and resource-intensive, particularly for smaller firms.
• Data quality and transparency issues: Reliable and standardized ESG data remain rare. This makes it difficult for investors to assess sustainability credibly.

Sustainable and green finance are expected to witness significant growth in the future, triggered by evolving regulatory frameworks and innovation. The global sustainable finance market is projected to expand rapidly, with assets under management (AUM) anticipated to rise substantially in the next few years. This growth will be triggered by increasing investor demand for ESG-aligned products and the widespread awareness of the importance of integrating sustainability for long-term financial performance and risk management.

Innovative financial instruments, such as sustainability-linked loans, green bonds, climate-linked derivatives, and voluntary carbon credits, are emerging to realize various sustainability goals. Technology is playing a transformative role, with advances in artificial intelligence and blockchain enhancing transparency, data accuracy, and efficiency in ESG reporting and sustainable asset issuance.

Overall, the sustainable finance ecosystem is expected to become more advanced and integrated, driving a global transition toward a resilient, low-carbon, and equitable economy. Strategic adaptation to these trends will be pivotal for investors, companies, and policymakers aiming to capitalize on opportunities while addressing pressing environmental and social challenges.

Kholoud Hussein 

New playbook

Venture capital in Saudi Arabia is being fundamentally rewired by artificial intelligence. What once was a search for disruptive apps and platforms is now a race to fund companies that can build and defend algorithmic moats. Investors are no longer content with “AI-enabled” features bolted onto legacy models; they are chasing startups whose entire business logic is inseparable from data and AI. This shift is already visible in the numbers: according to MAGNiTT, Saudi Arabia attracted $860 million in venture funding in the first half of 2025, a 116% year-on-year jump, with deal counts up 31%. For the first time, Saudi matched the UAE as the region’s top investment destination during a half-year period. That momentum stands out against a global backdrop of caution in venture capital, underscoring that Saudi’s bet on AI-first entrepreneurship is not a marginal play—it is becoming central to the Kingdom’s economic diversification strategy.

Government policy has been crucial in shaping this trajectory. At LEAP 2025, Riyadh announced $14.9 billion worth of AI-related investments, ranging from hyperscale data centers to startup support funds. As Minister of Communications and Information Technology Abdullah Al-Swaha remarked at the event, “Our goal is not just to adopt AI technologies, but to produce them, to export solutions from Saudi Arabia to the world.” He highlighted that the local digital workforce had grown from 150,000 in 2021 to 381,000 in 2024, reflecting how the Kingdom has quickly built a foundation of talent that AI startups can tap into. This expansion in skills gives confidence to investors that early-stage ventures can scale without relying entirely on imported expertise.

Data over markets

Artificial intelligence has altered the very metrics that Saudi venture capitalists use to evaluate opportunities. Instead of relying on traditional total addressable market (TAM) models, investors are now considering what some describe as the “trainable addressable market.” This perspective asks: given Saudi regulations, data residency rules, and ethical frameworks, how much usable data can a startup access, label, and train on? The size of that trainable set directly affects how far a company’s model can improve and thus how much value it can capture.

Business owners in fintech, healthtech, and logistics confirm this shift. A Riyadh-based founder in digital health explained, “When we speak with VCs now, they don’t just ask how many clinics or patients we could serve. They ask how many hours of labeled diagnostic data we own, what our annotation process looks like, and how quickly our model improves with new inputs.” This level of technical due diligence signals that capital allocators in the Kingdom are now fluent in the economics of training data and algorithmic scaling.

This reframing also affects the startup lifecycle. A company that secures proprietary datasets through government partnerships, industry consortia, or user acquisition strategies becomes disproportionately attractive to investors, even at the seed stage. In Saudi Arabia, where public-private partnerships are a policy priority, startups that align with government initiatives—whether in smart cities, healthcare digitization, or financial inclusion—often gain preferential access to unique data streams. That, in turn, enhances their valuation and ability to secure follow-on capital.

Infra edge

Saudi Arabia’s decision to invest directly in AI infrastructure is perhaps the most consequential development for both startups and venture investors. In May 2025, the Kingdom launched Humain, a national AI company backed by the Public Investment Fund, with a mandate to develop domestic compute, models, and data-center capacity. Media reports indicate that Nvidia has committed 18,000 Blackwell chips to the project, with the first 100-megawatt data centers in Riyadh and Dammam expected to come online in 2026.

This matters for startups because compute scarcity has been one of the greatest bottlenecks globally. Access to high-performance GPUs in markets like the U.S. and Europe is constrained and expensive, and Saudi entrepreneurs often struggle to secure capacity at reasonable costs. By hosting this infrastructure locally, the Kingdom is effectively subsidizing the next wave of AI startups. As one venture capitalist in Riyadh noted, “When a founder can train models inside the Kingdom, on Saudi data, at predictable costs, it fundamentally changes the investment case. You reduce execution risk, regulatory risk, and margin pressure at once.”

Regulators, too, view local compute as essential. Sensitive sectors such as finance and healthcare require data to remain within Saudi borders. Having world-class capacity available in Riyadh allows startups to deploy solutions for banks, hospitals, and ministries without running afoul of compliance rules. This alignment between infrastructure and regulation is why many VCs now speak of compute availability as a national “comparative advantage.”

Startups lead

Saudi startups are not waiting for the infrastructure to mature; they are already showing how AI-native strategies can produce growth. Mozn, headquartered in Riyadh, began as a fintech analytics firm but has evolved into a leader in AI-driven fraud prevention. At LEAP 2025, Mozn unveiled new modules for agentic AI in financial crime prevention, expanding its offerings beyond traditional AML into real-time fraud detection. Partnering with banks like D360, Mozn has become an example of how Saudi startups can build for regulated industries and then scale regionally.

Another standout is Quant, which applies AI to big data problems across sectors, including retail, real estate, and government services. By tailoring models to Arabic and regional contexts, Quant provides insights that global platforms often overlook. As one retail client explained, “Quant’s AI models understand local consumer behavior in a way no off-the-shelf product can. That’s why we can optimize inventory and pricing with confidence.”

Beyond these, companies like Unifonic, Lean Technologies, Foodics, and Sary are integrating AI deeper into their platforms. Whether in customer engagement, financial connectivity, restaurant demand forecasting, or procurement optimization, these startups are weaving machine learning into core workflows, turning AI into an essential rather than optional feature. For VCs, such integration signals resilience: when AI drives the core economics of a business, customer stickiness and margins improve.

Policy and trust

While Saudi Arabia is moving fast, officials emphasize the importance of responsible adoption. Abdullah bin Sharaf Al-Ghamdi, president of the Saudi Data and AI Authority (SDAIA), has often stated that AI is not merely a technology but a “societal transformation.” Speaking at global forums, he pointed to pilot programs in water management and emissions reduction where AI delivered measurable sustainability gains, stressing that these successes must go hand-in-hand with ethical safeguards.

SDAIA’s launch of the National AI Readiness Index reflects this balance. By benchmarking government agencies on their ability to adopt AI responsibly, the state creates predictable demand pipelines for startups. For venture capitalists, this offers greater visibility: they can track which ministries are ready to procure AI solutions, in what domains, and on what timelines. This reduces uncertainty in sales cycles, a key concern for investors underwriting enterprise-focused startups.

VC craft shifts

The practice of venture capital itself is adapting. Technical diligence now includes model governance, data provenance, evaluation metrics, and cost-per-inference calculations. As one Saudi GP put it, “It’s not enough for a founder to show traction in users or revenues. We want to see model cards, red-teaming schedules, and evidence that the AI pipeline is production-ready.”

Portfolio construction is also changing. Many Saudi investors are adopting a barbell strategy—allocating to infrastructure plays like MLOps and inference orchestration on one end, and regulated application-layer companies on the other. The middle ground—generic AI platforms with weak moats—is less attractive unless the distribution advantage is overwhelming.

Perhaps most interesting is the rise of operator-led angel syndicates. Former Careem executives, now veterans of scaling tech across the region, are active in early-stage AI rounds. Their practical knowledge of distribution, compliance, and procurement is proving invaluable for young founders. This layer of operator capital shortens go-to-market timelines and reassures institutional investors.

Fintech lens

Fintech provides a clear example of how AI is reshaping venture logic in Saudi Arabia. Fraud prevention, AML, and sanctions screening are high-stakes accuracy problems that demand both speed and compliance. Mozn’s agentic AI solutions, launched in 2025, show how Saudi startups can deliver measurable results. Banks report lower false positives and faster processing times, directly improving ROI. For VCs, this kind of quantifiable impact justifies larger checks at higher valuations.

Events like Money 20/20 Middle East in Riyadh amplify the effect by bringing together regulators, banks, and startups. Vendors showcasing AI compliance tools that are tailored for Arabic and Saudi hosting requirements gain an immediate edge in procurement cycles. For investors, this is evidence that the ecosystem has reached a level of maturity where global capital and local demand intersect.

Bottlenecks

Despite the optimism, challenges remain. Compute costs, talent shortages, and capital efficiency are recurring concerns. Yet Saudi Arabia is actively addressing all three. Humain’s compute buildout and Nvidia’s chip shipments promise to ease capacity constraints. On the talent side, the government has grown the digital workforce by more than 2.5 times in three years, reaching 381,000 professionals. Special visa schemes also attract senior ML engineers from abroad.

Capital, meanwhile, is increasingly strategic. Sovereign-linked vehicles and corporate venture arms from banks, telcos, and industrial groups are investing in AI startups, not just for returns but to acquire capabilities. This dual role as both customer and investor reduces risk for VCs and accelerates time-to-revenue for startups.

Founder edge

For founders, the message is clear: competitive advantage in Saudi AI will belong to those who own unique Arabic data, can ship production-grade models with regulatory compliance built in, and exploit domestic compute to reduce latency and costs. These are the traits that shift a startup from being “AI-enabled” to “AI-essential.” Investors recognize this and are rewarding such companies with premium valuations and substantial follow-on commitments.

Risk priced

Risks are not ignored. Model brittleness, evaluation challenges in Arabic dialects, and global talent shortages are real. But local infrastructure, policy transparency, and concentrated demand all reduce the severity of these risks. Compared to global peers, Saudi AI startups are less likely to be binary bets and more likely to become durable, ROI-driven businesses.

Next 24 months

Looking ahead, three themes dominate Saudi venture theses:

1. Arabic-first enterprise copilots in finance, logistics, and government workflows.
2. AI safety and trust tools, including monitoring, red-teaming, and security solutions.
3. AI and Industry 4.0 converge in Saudi industrial corridors, particularly as new data centers connect to edge infrastructure.

To conclude, Saudi Arabia’s venture market is not merely experimenting with AI; it is being rebuilt around it. With record-breaking VC inflows, policy-backed AI investments, and domestic compute capacity on the horizon, the Kingdom is setting the stage for compounding innovation. As Al-Ghamdi of SDAIA recently said, “AI is not just about technology—it is about shaping the future of our society and economy.” For investors, that future is already investable. For founders, the edge will belong to those who turn Saudi Arabia’s unique data, infrastructure, and policy alignment into globally relevant AI products.