From Acceleration to Sustainability: Interpreting Saudi Arabia’s Startup Ecosystem Through the OECD Scaling Framework
The OECD report “Which Start-ups Achieve Scale?” (07/08/26) provides a structured and empirically grounded framework for understanding why only a small subset of firms transition from early-stage growth to sustained, large-scale expansion. Its central finding is that scaling is not a linear continuation of startup formation, but a distinct phase governed by the interaction of multiple challenges—namely in innovation, finance, market access, talent, and ecosystem dynamics.
A key contribution of the report lies in its comparative analysis of the European Union and the United States. While both regions demonstrate comparable capabilities in generating innovative firms, the United States significantly outperforms in producing “rising superstars”—firms that achieve valuations exceeding USD 1 billion. This divergence is not explained by early-stage activity, but rather by structural differences that emerge at later stages of firm development, particularly in relation to late-stage capital availability and ecosystem depth.
An additional dimension, not addressed in the OECD analysis, relates to the relocation of startups and founders. Evidence from Dealroom (13/03/26) suggests that differences in capital market structures play a significant role. European ecosystems are characterised by comparatively conservative investment behaviour, particularly in late-stage financing, whereas the United States benefits from deeper pools of high-risk, growth-oriented capital. As a result, a number of high-potential European companies establish operational or financial presence in the United States to access these conditions. This is reflected in the distribution of outcomes: Europe accounts for approximately 24% of global unicorn founders, compared to 38% in the United States, yet represents only around 6% of unicorn companies (Dealroom, 02/02/26).
Within this analytical framework, Saudi Arabia’s startup ecosystem can be interpreted as being structurally closer in certain respects to the European model. The Kingdom has demonstrated strong performance in enabling startup formation and early-stage growth, supported by significant capital mobilisation and regulatory facilitation. As startups approach scale, however, challenges begin to emerge in areas consistent with those identified in other ecosystems, including the availability of experienced managerial and operational talent, the complexities of scaling beyond domestic markets, and the evolving nature of ecosystem connectivity.
In several dimensions identified by the OECD—particularly access to finance and institutional support—the Kingdom is already operating at levels comparable to, and in some cases exceeding, more mature ecosystems. This acceleration has been enabled through a coordinated, policy-driven approach. Public institutions and government-backed entities, including the Public Investment Fund (PIF), Saudi Venture Capital Company (SVC), and Monsha’at, have played a central role in de-risking investment, mobilising capital, and facilitating venture creation at scale. This phase of government-led acceleration can be understood as a deliberate stage of ecosystem construction, effectively compressing the timeline required for emergence.
The OECD framework, however, emphasises that scaling is cumulative in nature, requiring the progressive alignment of multiple factors over time. The transition from early-stage dynamism to sustained scaling capacity therefore implies a gradual shift towards increasingly market-driven dynamics. One structural consideration in this transition concerns the relationship between universities and the entrepreneurial ecosystem. While research capacity is developing rapidly, mechanisms for translating academic output into commercial ventures remain relatively limited. OECD findings suggest that scaling depends less on knowledge generation itself than on its effective commercialisation, highlighting the importance of strengthening this interface.
More broadly, the long-term sustainability of an entrepreneurial ecosystem depends on the emergence of self-reinforcing dynamics. In mature systems, successful founders reinvest capital, mentor new entrepreneurs, and re-engage as serial founders or investors, enabling the circulation of financial resources, knowledge, and networks. These ecosystem-level spillovers are central to sustaining scaling activity over time.
The ecosystem has been effectively activated, and its continued evolution will depend on the extent to which it transitions from externally driven acceleration to internally sustained, market-driven growth. Misk Foundation has recently addressed this observed challenge in their report Entrepreneurship Report (July 2026).
In this context, the development of a “flywheel” dynamic becomes particularly relevant. Such a mechanism—where founders evolve into mentors, serial entrepreneurs, and investors—represents a defining characteristic of mature entrepreneurial systems. It is through this continuous process of accumulation and reinvestment that ecosystems achieve resilience and long-term scalability.
The Kingdom of Saudi Arabia didn't wait for an ecosystem to emerge, it has demonstrated the capacity to build and accelerate a startup ecosystem at scale compressing decades of ecosystem formation.
The current phase is therefore defined not by acceleration alone, but by the development of the underlying mechanisms that enable sustained scaling over time. Interpreted through the OECD framework, this transition reflects a broader shift from ecosystem activation towards the gradual emergence of self-reinforcing system dynamics.
Taken together, these dynamics suggest that the next phase in the Saudi ecosystem is not defined by the absolute availability of capital, or lack of institutional regulatory support, but defined by the mechanisms through which capital, opportunities, and stakeholders are connected and mobilized within the ecosystem.
Written by Amal El Habziz - Founder & CEO The Synergy Network
