Shafeekh:-

Welcome to the podcast Ahmad.And I would like to know more about you. What's your background? Sohoby and allof these things.

Ahmad:-

Absolutely Muhammed, thank you so much for having me on your podcast. And it's amazing to see startup founders like you connecting with folks like me or more fully into technology consultancy and then having multiple guests on your podcast and, you know, sharing it with your audience. I hope we'll try to add as much value for your audience, Insha'Allah.

So, my name is Ahmad Mushtaq and born and raised here in Saudi. Living here for more than three decades. And I'ma senior technology consultant running a software development studio called Sohoby.It's from the Arabic word Sahab,Sahab means cloud.

Shafeekh:-

So, it is Sohoby

Ahmad:-

Sahoby. Yeah. Yeah.

Shafeekh:-

Okay.

Ahmad:-

So you need to know a bit of Arabic in order to pronounce. It's just like sahabhi. It's, you know, from the word sahab, which is, you know, cloud. So basically all the applications we develop are mostly in the cloud unless if it's an enterprise client and they want the application to be on premise. So that's another story. But yeah, most of the systems that we develop are using cloud technology.

And my role in this newly founded studio like relatively new we, we founded it like three years ago and my role is right now mostly into consultancy. So what we do is we receive queries from different businesses. They could be startups, they could be well mature enterprise clients and they are facing, let's say, some business challenges. It could be in one of their processes, it could be with technology deployment or it could be non-tech problem that we could solve using technology.

So my role is to provide them consultancy and see if we can use our resources and by resources, I mean, our programmers, developers, testers, designers to solve that particular problem, maybe by developing a new system or by using an existing system which is already there in the market. And yeah, that's basically our main bread and butter. But then recently I started a new vertical, which is a business consultancy or business setup consultancy in Saudi, and it just out of like I never planned it, it came naturally and the story goes like this.

So I, I was one of the first few non Saudis who received the entrepreneurship license in technology in Saudi. I was not aware of that and what I did as I just shared my, my journey and it was not very smooth in the start because, you know, there is a lot of information which was not available. I was just lucky to know the right people and I got my information from there.

So I made a video on YouTube and it went viral and the title of the video was How to Set Up a Business in Saudi as a foreigner legally because what used to be the case is that a lot of businesses in Saudi Muhammad, they used to have, if they want to do a business, okay, if you're a foreigner and you want to have a business, you want to run a business, you need a Saudi local partner and he will own the whole, he will own the whole business. It was not like UAE, in UAE, you will properly give him like let's say 51% each of your business. But here most of the businesses foreign-run businesses, they usually relied on local Saudis who would actually own the business on paper. But the foreigner would be running the business. He will be investing in money. He will do all the operations.

And he might give his Saudi friend a percentage or a fixed monthly fee, which is, by the way, illegal and the government ran many campaigns against it. So because the government has another proper way of establishing a business, but that way required a lot of capital like we're talking about 30 million Saudi Riyal in capital, if you would like to if you would like to open a business in Saudi.

But that was a thing of the past. Now, Masha Allah things have changed a lot. And they introduced something called the service license. And then after that they introduced something called the Entrepreneurship License. And I was the early adopters of that license. So I made a video on, on YouTube and it went viral.

And a lot of people approached me and they were there many, so many questions on, on the comments section and it, it like it, it started taking a lot of my time and I said, okay, why not start another vertical where I provide consultancy to to these folks who are really interested? Because I was surprised by the questions that a lot of people were asking, like, is it really possible?

Are you sure? Are you not joking? And, and like most of the people who were approaching me, they were in they had a mix of shock, surprise and happiness that, okay, there's hope and they can have their business legally established in Saudi. So yeah, that became the vertical and which by the way, I charge a lot for a consultation, but your audience, Masha Allah, is going to get it for free.

Shafeekh:-

So, my early impression with Saudi like, you know, there were a lot of talks like you know, even back then when I was in Kuwait when we met, you know, a lot of entrepreneurs or those who have built companies, they like to like go to Saudi, just, you know, you know, it's just a bigger market and all of these things.

But one of the things I just started noticing it very recently that one of my friends from Kuwait had been trying to raise funds and he has like, you know, spoken to many VCs and to a lot of people across the region and also in Europe. And he told me, like, you know, Saudi is really fast in terms of, you know, getting things done.

So I see that there will be future. So this was like very like, you know, maybe like one, one and a half years ago we had this conversation. So that's where, you know, I started observing what's happening in the ecosystem there. And a lot of things have changed. So what's really happening in Saudi? You know, like everybody is talking about Saudi, like especially in this region, you know, lot of things that are happening there, everybody has like strong positive response.

Ahmad:-

Yeah, you're absolutely right. Just to add a couple of more examples here, like I'm sure you heard about the LEAP event, which which had now yeah. Which has now become the world leader just to talk event. It was already yeah, it already broke a lot of world records and then we had the before that we had the Hajj hackathon which, which actually got the Guinness World Record of having, you know, the largest, the number of people under one roof for three days.

So, you know, that was before LEAP and many more like you see the project the Neom project you see the new Riyadh project. I forgot the name but and then their new license is being issued, blockchain licenses and licenses. And and now you you're seeing Google setting up their data centers in were in partnership with Aramco in the Miami area. You have Alibaba already here setting up their infrastructure and and of course the entrepreneurship license that we're going to talk about today, which gives you which gives any startup a discount and takes off all that initial administration fees that used to be there for traditional businesses.

So startups can easily set up in Saudi. So, but again when things are going fast it's growing pains so things can get fussy and because you know, when things are changing naturally speaking like we humans are not very we are adaptable, we do adapt to different environments. But the change is so much, so much that some people might get overloaded with all that change.

So but it's for the good is for the overall good for all the people and for the economy. So you might find a regulation that was there last year, but that regulation has been removed down to make things more easier, you know, so it's very important to get the up to date information and to to speak with the right people who were on the ground, who have the latest, you know, input from all the different places or ministries so you can get the latest information.

So, yeah, yeah, I agree with you. The things are changing very quickly. It's very fast. And let's talk about startups like just a decade ago, like less than a decade ago, actually, if you had a startup, it was so difficult to raise funds, but now you have a startup, you just get a booth, which you don't even have to pay for. Your incubator will pay for your booth and Masha Allah you'll see a line of investors wanting to invest in your business. And I have been observing the startup ecosystem from the very beginning in Saudi. This was not the case.

Shafeekh:-

I think you're a part of the startup grind.

Ahmad:-

And yeah, I was the co-director of Startup Grunge and the and I'm also the director of WordPress, a group, it's only WordPress group and Saudi based in Jeddah. So I'm also leading that. So then we had a Facebook developer circle, I was also a volunteer in that. My good friends are leading that group in Jeddah so yeah.

And you like I remember running these groups a couple of years ago and it was so difficult to bring in people. We had to do a lot of marketing, but now the things market themselves like now we just publish an event and from word of mouth we get like more than 100 attendees in a single event without spending a penny on any marketing.

So yeah, yeah. So you're absolutely right. Things are growing very fast.

Shafeekh:-

And in which case, if I'm a startup founder, if I just wanted to come and set up a company in Saudi, how does it work?

Ahmad:-

So if you're a startup founder and if you're let's say let's start from the process, what is the process now? It depends. If you're outside Saudi, then there is a different process. If you're inside Saudi or employed in a company, then it's a slightly different process. So your best bet would be to attend events from outside Saudi and then approach incubators because these incubators will ask you for your pitch deck, your startup pitch deck, and they have different programs, you have to enroll in one of the programs. So depending on what stage your startup is, you might enjoy yourself into an incubator or an accelerator. And of course, I don't want to explain what's the difference? Your audience is mature enough to know the difference, so you have to enroll in one of their programs.

And once you do, and once you qualify, you passed their different qualifying stages and there will be a time where they will ask you to incorporate in Saudi and most probably, they will take care of everything. But it really depends on the incubator, on how supportive they are. Sometimes, some incubators only provide you with a supporting letter which is required if you want to incorporate in Saudi and the rest of the things you have to do yourself.

That was the case with me, by the way. Like I was only provided with the supporting letter and I had to do a lot of things. But then after consulting a lot of startups, I have noticed that some founders are lucky and they go to an incubator program where the incubator does everything for them and all the founder has to do is they're focused on their business.

So anything from issuing the visa or incorporating the article of association, registering in the in the in the Ministry of Commerce or registering in the Ministry of Investment, everything is done by the incubator. Again, it depends. I don't want to, you know, say or sell. And then there are disappointments later. But it depends on the choice of your incubator.

But yes, the minimum requirement for any startup to incorporate in Saudi is I'm talking about entrepreneurial startups. The minimum requirement is that they should have a supporting letter from any incubator or accelerator because then the next step is they have to approach the Ministry of Investment, which provides foreigners or non Saudi’s the license to operate a business in Saudi.

So, but the only difference there is that I know with the Ministry of Investment, you don't have to show any investment, but Ministry of Investment does also cater to startups and they ask you for the supporting letter, which then qualifies you for a lot of discount. And talking about, you know, talking about discount, let's say if you went through a regular if you want to set up a regular business that's you're not a startup, you're not an entrepreneur, you want to set up a regular service business, let's say maybe design services, maybe consultation services, the annual renewal for the service license is 62,000 Saudi Riyals, okay, per year.

But if you qualify as an entrepreneur, that fees is reduced to only 2000 Saudi Riyals annually. And for your audience if they're most of them they're from UAE. Saudi and UAE have almost the same currency. So 2000 Saudi riyals or 2000 dirhams almost the same. So and you'll have this discount for the next five years.

Shafeekh:-

Okay.

Ahmad:-

Yeah, you get the you will get the we call this a MISA license or minister of Saudi Arabia license. They give you a special license, which is called the entrepreneurial license, with 100% ownership. By the way, this was not even possible in UAE up till recently. I think a couple of months ago, they introduced a similar license and this was after Saudi. Saudi had this for the last 4 to 5 years, like but not a lot of people knew about it.

So UAE only introduced this a couple of months ago, so yeah. So it gives you 100% ownership on your startup. You can you can have multiple partners as well if you want. And with this license, you can have as many service-related economic activities. There are a few economic activities that only Saudis can participate in, but most of the economic activities are available to non-Saudis.

And you are able to decide these activities in once you're getting your license and then there are further steps as well, let me know if you have any questions.

Shafeekh:-

So I was thinking about how how does it cost for setting up the company there and all of these things. And we have in UAE, we have the free zones. We have like mainland a lot of things like how, how does it work there in terms of like corporate laws and like setting up the zones and the cost.

Ahmad:-

But I'm not aware of any. So yeah, so we do have zones in terms of let's say if you're a man, if you're setting a manufacturing unit, then you will go with the industrial license. So that is separate than setting up a startup or getting the entrepreneurial license. I'll focus purely on the because of the shortage of time and and also to make it more relevant to your audience.

So we we have the entrepreneurial license, which is a single license. And it covers most of the activities, economic activities. Unless if you if you are setting up an industry and a manufacturing unit, then you get the industry license. It has their own benefits. They give some discounts in terms of labor and how many visas you can issue.

Uh, but for every other service business or lots of service based startup, it's the entrepreneurial license that you have to go with and it allows you to operate anywhere in Saudi. It's a single license, allows you to operate anywhere in Saudi. Uh, it's not specific to only zones except industrial zones. So industrial zones, as I mentioned earlier, that separate licenses, industrial license.

And then we have the trading license, which is for traditional businesses that would like to import and sell, that is for like big enterprises or big businesses not catered towards entrepreneurs or service related businesses. So again, he has to make it short and simple. We only have a single license, entrepreneurial license, which is a discounted version of the service license and allows you to do any economic activity anywhere in Saudi with 100% ownership.

So you have the 100% ownership. If you decide to have a Saudi partner, it's your choice. But you don't have to own.

Shafeekh:-

And how does it like how does it cost to set up? I think you talked about the renewal licenses. Yeah, it costs to set it up from the start

Ahmad:-

Top of my head, let's say if you are getting the entrepreneurial license, so you already have the discount on the license itself. So it's a 2000 drill on the license. And then you have to get the Ministry of Commerce, which is, I think I remember 1200 or 1500 for the registration. It's a round about that one. And then you have to get other subscription which like for the for issuing visas, it's like looking for Ministry of Labor.

So like these are smaller, smaller subscription like the Postal Service and etc. If you're starting up, I don't think it should cost you more than 20,000 initially, including your own visa. So and everything. So and then there there is some, some information which a lot of people might miss. So there's taxation as well. So as a foreign entity, there is 20% taxation on on your entity.

So any profits, so any profit you make and every year it's subject to 20% tax.

Shafeekh:-

Okay, but.

Ahmad:-

Yeah, it's a flat 20% tax on theprofits.

Shafeekh:-

Okay.

Ahmad:-

So let's say if you're making zero profits, then you pay zero tax. Well, okay, so this is this is on non and on Saudi businesses here and within Saudi Arabia. And the other fees annually that you might incur, incur as a start up is the external auditing fees. So the external auditors are private firms that will audit your statements because when you file for tax, they the government won't accept your documents.

They want you to go to an external auditor and that external auditor will charge you the market fees. Again, I don't want to ruin the market for external auditors, but I pay my auditor 10,000 real flat fee. But. All right. And then he and it's because our statements are very simplified. I'm already using a very professional accounting system.

And and he has to do last work on auditing and everything is straightforward. Auditors might charge you more if you're, let's say, if your books are not straightforward. They're complicated. So of course they will increase their service charges. But for me, if you want this number, I can share this number as well.

Shafeekh:-

So oh yeah, that would be good. And yeah, like there are some VAT complaints. It's also because one of the things in my mind is that before I don't know, you've heard about the story, there was a company in the UAE and that's my logistics. They went to Saudi and they got a huge, huge fine and that was one of the cause for them to shut it down, the whole operation, because they were already struggling with unit economics, huge bond trade, the huge funding.

And then they entered Saudi. They work like slammed with huge fines and they have disrupted the whole business because it was like you're not able to they were not able to pay that much off. So what are the complaints tax like other than corporate tax break? I think this reality and all the sort of.

Ahmad:-

It to be very honest, I don't know about the story. Maybe you can share it after after the podcast. So it's of interesting. I don't I'm not I haven't heard this about about this one maybe because it were maybe you know about this because it was based in UAE and they moved to Saudi. So I haven't heard about it now.

But again, you know, we live we like I think we're old enough to understand that there are things there are reasons that are that are that we read on social media and their actual reasons. And they might differ a lot, you know, so is like, like if my friend is doing a very good job and my mom says, why can't you be like him?

And I'll come up with all the excuses like he, you know, he does, he does. He really does alcohol and this and that's why, you know, he's he has a relaxed mind and he can do all that stuff. So, so but what I'm doing is I'm putting of all the blame on the other person, I'm not accepting the fact that I need to.

I have to do things differently. So I'm not sure about this story exactly. So if you could provide me the details later. Yeah, but yes. Talking about this, I would highly recommend if you couldn't afford if you can afford, you could you should go. You should hire a Jaro, which is a government relation officer. A good role would make sure that you're you are following, you're not going against any compliance and and if budget is something not on your side, this is already provided by the by good incubators.

So good incubators have to have their job officer which is a shared service among start ups do away in that service they also have a lawyer not all incubators, but most of them have it. So they have a lawyer, so you could utilize his services. They also have, like I am providing these services to different incubators because as I said, my, our main bread and butter is technology services.

So we do help in terms of technology consultancy as well to these different incubators. Their startups come to us and they they the incubators compensates for them, but it's a shared service. So you and a startup does not need a dedicated resource at this stage. Maybe later, once they're become, you know, they have the funding and they've grown and who knows, maybe once they become a unicorn.

So of course they can have multiple zero. It's not one.

Shafeekh:-

Yes, yes. And there is like, I think, more normality and of course, things like.

Ahmad:-

The I think the VAT in UAE is 5%. I remember, if I'm not mistaken, here in Saudi, the video is 15%. But again, this is but this is paid by by the customer. Customer. And you as a business, you're you have to just reported and give it to the government.

Shafeekh:-

The threshold is 375,000, something like that.

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Ahmad:-

Remember, I remember annually. It's around. Yeah, it's 375 something annually and or maybe less. I'm not sure but you can volunteer voluntarily also submit for VAT registration because for let's say if you're approaching, if you're a B2B service provider and you're approaching big enterprises, having a VAT certificate signal to the other party that, okay, you, your annual sales are more than 375,000.

So that's a small step I would like to Syria. Otherwise when you're bidding for let's say large projects and you don't have a birth certificate that are going to, they might not take you seriously that okay, this is a small bidder. So their sales are less than three 75,000 annually. So yeah, that's my I hope your if you're setting up in Saudi that might be useful.

Shafeekh:-

If and also for for some of the startups like you know, if we wanted to expand from UAE or from Kuwait or, you know, copter to Saudi, what are the some of the top accelerators there that they can apply for?

Ahmad:-

Well, there's a website called the Saudi SCADA DOT assay. I if I'm not mistaken, if you Google Saudi incubators, it will come on the top. Okay. And it has a list of it has a list of all most like all up to date incubators and accelerators. Okay. Now it's an official body which and all these accelerators and incubators have to be a member of this organization.

But if you ask me from my experience of MySQL, Launchpad is a very good incubator. They also have an accelerator program. Actually, they only have an accelerator program. They don't have an incubation. Then we have the Kaboom, which is from King Abdullah University of Science and Technology. Very competitive, the like. It's very difficult to get get into them.

But if you do, they give you funding as well. Like I remember they give you initially $20,000 without any strings attached. And then you have a chance to to pitch at the demo day and you have a chance to win at number $250,000 thing number. Yes. Yes. And again, without any with any and without giving any equity. So and then, of course, I connected with.

Shafeekh:-

This one last time they just met him yesterday. He told me he raised $2 million so far from angel investors. So the one of this essentially part of this program.

Ahmad:-

Excellent. Excellent. So we are I'm glad that we're on the same page when it comes to our favorite.

Shafeekh:-

Couple of our computer incubators. They came across our knowledge beam ventures and like a couple of them.

Ahmad:-

Yeah, yeah. Big ventures. They're my classmates, both co-founders. And they're new right now. But yes, they're all so nice. They're based in Riyadh. And then we have another of my classmate advertorial that she's running for, like which is an incubator accelerator, the co-working space, which is also nice. And believe me, they're out there a lot like right now.

There are so many right now.

Shafeekh:-

Like Techstars, all of them based in Saudi.

Ahmad:-

Yes. 500 is again a very good option. US, another one from UAE, which also has a base now in Saudi Astral Labs. You probably know a lot about them.

Shafeekh:-

Yeah, yeah, yeah.

Ahmad:-

So Astral Labs is also in Saudi. So but yes, the ones that I mentioned, I believe that more stronger influence them more stronger network because see, if you're joining an incubator, you have to see the benefits, not just the funding part, but the benefits as well in terms of networking, in terms of other support services, such as legal services, government relations services, these services.

So for example, one of my friends who got incubated by cost through the Taqaddum program, I was amazed because he's had a hard time getting my visa and all that government stuff done, and I had to hire another agent because my incubator was not very supportive enough. But his incubator, they arranged for everything like the problems that I faced were not faced by him at all because the incubator was creative with coming up with different solutions.

Shafeekh:-

Okay. Yeah, that's interesting. Awesome. I think we are running out of time. Just wrap it up. Thank you for your podcast today and I think it will help. A lot of startups will want to definitely expand to UAE. And, you know, we will definitely recommend anybody who wants to set up a company in Saudi. Please get in touch with Ahmad, as he mentioned, and be able to get good offers.

Ahmad:-

Yeah, absolutely. So I will just quickly wrap it up because we're running out of time just to help. And finally, our values. So let's ensure a startup and you're a service provider and you want to approach private companies in Saudi. You don't have to incorporate in Saudi. You could if you're incorporated in UAE, then of course you can directly do business with Saudi by coming here on a visit or a business visa.

But the benefit you will get for incorporating in Saudi is that you can you can bid on government clients because the government does not directly work with anyone outside Saudi. This is one. Secondly, if you're a startup, of course it helps you if you're incorporated, it helps you raising funds. Thirdly, very quickly, I'll go through the steps of the ministry of you have to go through an incubator, ministry of Investment License, then you apply for incorporation, then you apply for the Ministry of Commerce.

You apply for the Ministry of Labor. Ministry of Labor has other portals such as Qiwa and Muqeem. And then you apply for your visa transfer or visa issuance and lastly, your insurance and your bank account. So these are the steps if you wanted to get more information, I have a channel dedicated for this. You should search how to setup a business in Saudi.

You will find me on YouTube oryou search for Ahmad Mushtaq YouTube. There's another Ahmad Mushtaq as a famouspoet in Pakistan. Don't go there, just search my channel. So yeah, that's it.Thank you so much. And I hope it proves beneficial.

Shafeekh:-

Thank you. Thank you very much.

Ahmad:-

Okay, Assalamualaikum

Shafeekh:-

Salam

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