Kholoud Hussein 

In the not-so-distant past, launching a billion-dollar startup required teams of engineers, layers of management, and years of grueling development cycles. But artificial intelligence is rewriting that playbook—and perhaps the entire logic of scale in tech entrepreneurship. Today, a single founder armed with advanced AI coding tools can realistically build and scale a company to unicorn status.

From Code to Company: What’s Changed?

AI-assisted development tools like GitHub Copilot, Replit Ghostwriter, and open-source models such as Code Llama and StarCoder have reduced the time and expertise needed to ship high-quality software. Tasks that once required entire departments—UI design, code debugging, documentation, even marketing content—can now be streamlined or automated using AI.

As a result, the cost of iteration has plummeted. A solo founder no longer needs a CTO, product manager, or even a full-stack engineer to test an idea, launch an MVP, or scale a product. The barrier to building has shifted from technical capability to imagination and execution.

Why It Matters for the Startup Ecosystem

This paradigm shift opens the door to a new kind of lean startup—hyper-efficient, AI-augmented, and capable of exponential growth without the traditional burn rate. Investors are taking note: seed rounds are increasingly funding one-person teams with bold visions and AI-native toolsets.

We're witnessing the early signs of what could be a profound restructuring of startup dynamics. The concept of "unicorns with skeleton crews" is no longer theoretical. AI not only democratizes access to tech development, but it also questions how many people are truly needed to build world-changing products.

Real-World Signals

In 2024, multiple startups reached multimillion-dollar valuations with teams of fewer than five people. One standout example is a solo founder in Europe who used open-source AI models and no-code platforms to build a SaaS company that now serves over 100,000 users, without a single hire.

Tech giants are also embracing this trend. Google and Meta are investing in AI agents and developer tools that could soon enable even more automation in software lifecycles, further pushing the limits of what a solo entrepreneur can achieve.

The Challenges Ahead

Of course, there are caveats. Scaling beyond product-market fit still requires human capital—customer service, sales, operations, and compliance. And with AI-generated code comes new risks: security vulnerabilities, ethical blind spots, and IP ambiguity.

But the trajectory is clear: AI is turning individuals into teams, and teams into outliers. What this means for employment in tech, organizational design, and investment strategies is yet to be fully understood, but the disruption is underway.

Finally, the one-person unicorn may not yet be mainstream, but it's fast becoming a symbol of what’s possible in the AI economy. As tools evolve and adoption accelerates, we’re entering an era where the limits of company building are no longer defined by headcount, but by vision, speed, and strategic use of artificial intelligence.

The billion-dollar startup of tomorrow might be built not by a hundred engineers, but by one founder and a constellation of AI copilots.

Kholoud Hussein 

In recent years, Saudi Arabia has witnessed a remarkable surge in its startup ecosystem, with several companies achieving the coveted "unicorn" status—valuations exceeding $1 billion. This growth was fueled by substantial venture capital investments, a supportive regulatory environment, and ambitious national initiatives like Vision 2030. However, as global economic conditions shift and investor sentiments wane, the once-thriving unicorn landscape in the Kingdom faces significant challenges, leaving many startups grappling with uncertainty.

The Rise of Saudi Unicorns

Saudi Arabia's journey into the unicorn club began with notable successes in the fintech and e-commerce sectors. Companies like STC Pay, Jahez, and Tabby emerged as pioneers, showcasing the potential of Saudi startups on the global stage.

• STC Pay: Launched as a digital wallet by Saudi Telecom Company, STC Pay achieved unicorn status in 2020 after Western Union acquired a 15% stake, valuing the company at over $1 billion.
• Jahez: A food delivery platform that went public in 2021, Jahez's IPO was oversubscribed, reflecting strong investor confidence and valuing the company at approximately $2.4 billion.
• Tabby: A fintech company offering buy-now-pay-later services, Tabby recently doubled its valuation to $3.3 billion following a successful $160 million Series E funding round. 

These success stories were emblematic of a broader trend, with Saudi Arabia's startup funding experiencing a compound annual growth rate (CAGR) of 49% between 2020 and 2024. 

The Decline in Startup Funding

Despite the early momentum, 2024 marked a turning point. Venture capital (VC) funding in Saudi Arabia witnessed a sharp decline, with total investments dropping 70% year-over-year to $700 million across 186 transactions.

This downturn was the steepest in the Middle East and North Africa (MENA) region, where overall VC funding decreased by 29% to just under $2 billion. 

Several factors contributed to this decline:

• Global Economic Uncertainty: Rising interest rates and inflation led to increased investor caution worldwide, affecting funding availability.
• Market Saturation: Certain sectors, particularly fintech and e-commerce, became crowded, making it challenging for new entrants to secure investments.
• Valuation Corrections: Overinflated valuations in previous years led to a market correction, with investors seeking more sustainable business models and clearer paths to profitability.

Impact on Startups

The funding contraction has had profound implications for Saudi startups:

• Delayed Expansion Plans: Many startups have postponed scaling operations or entering new markets due to limited capital.
• Operational Challenges: Reduced cash flow has forced companies to streamline operations, often leading to layoffs and cost-cutting measures.
• Investor Scrutiny: Investors are now exercising greater due diligence, prioritizing startups with proven revenue streams and sustainable growth models.

Ahmed Al-Fahad, CEO of a Riyadh-based tech startup, notes: "The investment landscape has become more challenging. We are focusing on achieving profitability and demonstrating tangible value to attract cautious investors."

Government Initiatives and Support

In response to these challenges, the Saudi government continues to bolster the startup ecosystem through various initiatives:

• Saudi Venture Capital Company (SVC): Established to stimulate venture investments, SVC has been instrumental in providing funding and support to startups. In 2024, SVC reported that the top five deals in Saudi Arabia accounted for 66% of total VC funding, indicating a concentration of investments in select high-performing startups. 
• Regulatory Reforms: Efforts to streamline business registration and licensing processes aim to reduce barriers for new startups.
• Financial Incentives: Tax exemptions and grants are being offered to attract both local and international entrepreneurs.

Yasir Al-Rumayyan, Governor of the Public Investment Fund (PIF), emphasizes the Kingdom's commitment: "Saudi Arabia is strategically positioned to become a global hub for innovation. Our investments in technology and infrastructure are designed to support startups and drive economic diversification."

A New Era for Saudi Startups

The transition from the unicorn boom to a more measured startup ecosystem should not be seen as a failure but rather a necessary evolution. The Kingdom is still home to ambitious entrepreneurs, cutting-edge innovations, and a growing digital economy, all of which are crucial in shaping the next wave of business success stories.

Noura Al-Mutairi, founder of a Jeddah-based healthtech startup, puts it: "This period is a test of resilience. It's pushing us to innovate smarter, operate leaner, and build foundations that can withstand economic fluctuations. Those who adapt will emerge stronger."

Saudi Arabia's startup sector is at a crossroads, but with the right strategy, government backing, and entrepreneurial spirit, the country has the potential to produce not just more unicorns, but sustainable, high-impact companies that will define the future of business in the region.

While the decline in funding presents challenges, it also offers an opportunity for introspection and recalibration within the Saudi startup ecosystem:

• Focus on Sustainability: Startups are encouraged to develop robust business models that prioritize long-term viability over rapid expansion.
• Diversification of Sectors: Beyond fintech and e-commerce, there is potential in sectors like healthcare technology, renewable energy, and artificial intelligence.
• Strengthening Local Investment: Cultivating a culture of local angel investors and venture capitalists can reduce dependence on international funding sources.

Finally, the fading unicorn boom in Saudi Arabia signals a transformative phase for the nation's startup landscape. While the challenges are palpable, they also pave the way for a more sustainable and diversified entrepreneurial environment. The era of inflated valuations and aggressive scaling is giving way to a more pragmatic approach, where profitability, resilience, and innovation take center stage.

Despite the decline in venture capital funding, Saudi Arabia remains one of the most promising startup ecosystems in the Middle East, driven by its pro-business policies, strong government backing, and ambitious digital transformation initiatives. The country's commitment to Vision 2030 ensures that entrepreneurs will continue to find opportunities to innovate and thrive in an evolving economic landscape.

As investors become more selective, startups must pivot their strategies toward long-term sustainability, prioritizing revenue generation over rapid expansion. Sectors such as healthtech, AI, renewable energy, and logistics present significant untapped potential for growth. Encouraging a culture of local investment through angel networks and venture capital firms will also help mitigate reliance on foreign funding.