Ghada Ismail
Not long ago, the relationship between large corporations and startups was relatively straightforward. Established companies invested in promising startups, partnered with them, or acquired them once they had proven their market value. Innovation largely happened outside the walls of major businesses.
Today, that dynamic is changing. Across Saudi Arabia, a growing number of conglomerates and family-owned business groups are taking a more active role in creating innovation by building startups themselves. Rather than waiting for entrepreneurs to identify opportunities, these companies are establishing dedicated teams tasked with spotting market gaps, developing new products, and launching entirely new ventures from within.
The shift reflects broader changes taking place across the Kingdom. As Vision 2030 drives economic diversification and digital transformation reshapes industries, Saudi companies are increasingly looking beyond their traditional business models. For many, the objective is no longer simply to adapt to change but to create the businesses that will drive future growth.
These internal startup units—often operating as venture studios, innovation hubs, or venture-building teams—are becoming an increasingly important part of how some of Saudi Arabia’s largest organizations approach innovation.
Why Conglomerates Are Looking Inward
For decades, diversification often meant expanding into new sectors through acquisitions, partnerships, or geographic growth. While these strategies remain important, they can be expensive, time-consuming, and dependent on opportunities that may not always exist.
At the same time, technological disruption is forcing companies to respond faster to changing markets. New business models can emerge rapidly, and startups have repeatedly demonstrated their ability to challenge established players with innovative products and services.
Many Saudi conglomerates have realized that waiting for the next disruptive company to appear may no longer be enough. Building ventures internally allows them to stay closer to emerging trends while creating businesses that align directly with long-term strategic priorities.
The Kingdom’s rapidly maturing startup ecosystem has also influenced this trend. Over the past decade, Saudi entrepreneurs have built successful companies across fintech, e-commerce, logistics, healthtech, and software. Their success has shown that innovative businesses can be created and scaled locally, encouraging larger corporations to adopt entrepreneurial thinking themselves.
What Is an Internal Startup Unit?
An internal startup unit goes beyond the role of a traditional innovation department.
While innovation teams often focus on improving existing products, services, or processes, startup units are typically tasked with creating entirely new businesses. Their role is to identify opportunities, validate market demand, develop products, and launch ventures that could eventually become standalone companies.
These teams often combine entrepreneurs, product managers, developers, strategists, and industry specialists. Many operate separately from core business units, giving them greater flexibility to experiment and move quickly without becoming trapped in corporate bureaucracy.
The goal is not innovation for its own sake, but the creation of sustainable businesses capable of generating new revenue streams and opening new markets for the parent organization.
The Venture-Building Influence
The rise of internal startup units is closely linked to the growing popularity of venture-building models globally.
Unlike venture capital firms that invest in startups founded by others, venture builders actively participate in creating companies from the ground up. They identify opportunities, assemble teams, develop products, and provide operational support throughout the startup journey.
The model has gained traction in Saudi Arabia through venture studios and startup factories that treat entrepreneurship as a structured, repeatable process rather than a matter of chance.
For conglomerates, the appeal is clear. Instead of investing in multiple external startups and hoping a few succeed, they can build businesses aligned with their own strategic priorities while leveraging assets they already possess.
Different Models Are Emerging
Saudi companies are experimenting with several approaches to venture building.
Some have established dedicated venture studios that operate almost independently, identifying opportunities and creating startups from scratch. Others have launched innovation labs focused on emerging technologies and experimentation, with successful projects sometimes evolving into standalone businesses.
A third approach involves commercializing internal capabilities. Technology solutions originally developed for internal use can become products serving external customers. Some companies are also pursuing joint ventures with entrepreneurs, international technology firms, or specialized operators to combine corporate resources with startup expertise.
Despite these differences, all of these models share the same objective: creating new growth engines beyond traditional business lines.
Saudi Companies Putting the Model into Practice
While Saudi Arabia's corporate venture-building ecosystem is still developing, several organizations have established structures that reflect different approaches to creating and scaling new ventures. Importantly, not all of these initiatives follow the same model. Some focus on building businesses internally, while others support external startups or expand through internal innovation.
One of the strongest examples of venture building in the Kingdom is Saudi Aramco. Through the Saudi Aramco Entrepreneurship Center, known as Wa'ed, the company has spent more than a decade supporting entrepreneurship and business creation. Complementing this effort are Wa'ed Ventures, Aramco's venture capital arm, and LAB7, its venture-building and product development platform. Together, these initiatives form part of a broader ecosystem designed to identify opportunities, develop technologies, support entrepreneurs, and help transform ideas into scalable businesses. While not a traditional startup studio in the Silicon Valley sense, Aramco has built one of the Kingdom's most structured pathways for venture creation and commercialization.
Beyond Aramco, other organizations are helping shape an emerging venture-building ecosystem. Dussur, established by Saudi Aramco, the Public Investment Fund (PIF), and SABIC, was created to develop strategic industrial businesses that advance Saudi Arabia's localization and industrialization ambitions. Unlike traditional investment vehicles, Dussur often works alongside partners to establish and grow new industrial ventures, making it one of the Kingdom's most prominent examples of institution-backed company building.
Another notable example is Sanabil Studio, a venture-building platform launched by Sanabil Investments. The studio works with entrepreneurs to identify market opportunities, validate ideas, assemble teams, and launch startups. Its model reflects the growing popularity of venture building in Saudi Arabia, where startup creation is increasingly being approached through structured processes rather than relying solely on individual founders.
Not all corporate innovation initiatives, however, focus on creating ventures internally. Some organizations have chosen to engage with the startup ecosystem through external support platforms. stc's InspireU program is a leading example. Since its launch, InspireU has provided startups with mentorship, funding, training, and access to industry networks, helping strengthen the Kingdom's entrepreneurial ecosystem while giving stc exposure to emerging technologies and business models.
Other companies demonstrate how internal innovation can create entirely new commercial opportunities without necessarily operating formal venture studios. Elm is one such example. Originally focused on digital government solutions, the company has steadily expanded its portfolio through the development of digital products and platforms serving both public- and private-sector customers. Its evolution illustrates how large organizations can leverage internal expertise, technology capabilities, and market knowledge to create new business lines and revenue streams.
The distinction is important. Building startups internally, supporting external entrepreneurs, and expanding through internal innovation are different approaches, but all reflect a broader shift in how Saudi organizations think about growth and innovation. While the Kingdom still has relatively few publicly documented corporate venture studios compared with more mature markets, an increasing number of organizations are experimenting with new ways to create businesses rather than simply invest in them. As competition intensifies and economic diversification accelerates, these models are likely to play an increasingly important role in shaping the next generation of Saudi companies.
Why the Model Makes Sense
One reason internal startup units are attracting attention is that they address several challenges commonly faced by traditional startups.
Access to funding is perhaps the most obvious advantage. Corporate-backed ventures typically begin with financial resources already in place, allowing teams to focus on product development and market validation rather than fundraising.
These ventures also benefit from established customer networks, supplier relationships, distribution channels, and industry connections that can accelerate growth significantly. Brand recognition provides another advantage. While independent startups often spend years building trust, ventures launched under respected corporate brands may gain credibility much faster.
Perhaps most importantly, they can draw upon decades of industry expertise. Large corporations possess deep knowledge of customer behavior, operational challenges, and market dynamics that can help new ventures avoid costly mistakes and identify opportunities more effectively.
Yet There Are Real Challenges
Despite these advantages, corporate venture building is far from a guaranteed success.
The biggest obstacle is often culture. Startups thrive on experimentation, rapid iteration, and calculated risk-taking, while large corporations are typically structured around governance, efficiency, and risk management. These priorities can sometimes clash.
A startup team may want to launch a product quickly, while corporate procedures require multiple layers of approval. Without the right balance, the speed and agility that make startups effective can easily be lost.
Talent acquisition presents another challenge. Experienced entrepreneurs and startup operators often prefer environments that offer autonomy and flexibility. Attracting and retaining such talent within a corporate structure requires thoughtful leadership, clear incentives, and sufficient independence.
Measuring success can also be difficult. New ventures rarely become profitable immediately, requiring organizations to evaluate progress based on learning, customer adoption, and market validation rather than short-term financial performance alone.
The Future Ahead
As Saudi Arabia continues its economic transformation, internal startup units are likely to play an increasingly prominent role within the private sector.
Sectors such as artificial intelligence, fintech, logistics, healthtech, climate technology, enterprise software, and industrial technology offer significant opportunities for corporate venture building. Future startup units may also collaborate more closely with universities, research institutions, entrepreneurs, and government-backed innovation programs, strengthening links between established corporations and the wider startup ecosystem.
What is clear is that the relationship between corporations and entrepreneurship is changing. Saudi conglomerates are no longer content with supporting innovation from the sidelines. Increasingly, they are becoming builders themselves, creating startups, launching new ventures, and shaping the next generation of businesses that could define the Kingdom’s economic future.
In many ways, this marks a new chapter for Saudi corporate innovation, one in which some of the country’s largest organizations are beginning to think and act more like startups themselves.