The Entrepreneurship License offers unique advantages not available through traditional licensing routes. It is designed to foster innovation and support startups. Entrepreneurs who obtain this license benefit from reduced licensing fees, special residency rights, and access to one of the best business environments globally. Once you have this license, you can operate in Saudi Arabia without further steps.
This article will cover key points such as eligibility criteria, unique benefits, expected timeline, documentation requirements, and more.
What is the Entrepreneurship License?
Known as the “golden ticket for Saudi entrepreneurship,” this is a special type of foreign investment license granted to talented entrepreneurs aiming to launch their businesses in Saudi Arabia. Introduced in 2017, it quickly became a popular option for innovative entrepreneurs looking to establish their headquarters in the country. Last year alone, about 350 licenses were granted to leading tech companies, with more expected in the future.
Unique Benefits of the Entrepreneurship License
This license offers several attractive incentives for promising tech startups:
- No Existing Company Required: Unlike traditional licenses granted to existing companies, this license allows foreign investors to start a new company in Saudi Arabia without requirements like audit reports or positive cash flow.
- Exemption from Ministry of Investment Fees: Entrepreneurs benefit from a fee exemption for the first three years, reducing costs to around 2,000 SAR per year. Fees then increase to 12,000 SAR for the fourth and fifth years, and standard fees (62,000 SAR) apply from the sixth year onwards.
- Special Residency Benefits: License holders get exclusive residency benefits. By securing funding of 400,000 SAR from accredited partners, they are eligible for a five-year entrepreneurship residency. Funding of $4 million and employing ten staff for a year qualifies them for lifetime support, ensuring a permanent presence in Saudi Arabia.
Eligibility for the License
The license targets top tech talent, typically excluding traditional IT companies like software firms or small businesses. It is granted to innovative tech companies developing leading products and services. Occasionally, venture capital firms may also receive this license.
To qualify, startups must be backed by venture capital, angel investors, incubators, or accelerator programs.
Proving Eligibility
Startups must submit a support letter or project statement to the Ministry of Investment, proving backing from accredited sources.
Why Submit a Support Letter?
The support letter simplifies the process by allowing accredited entities to verify the startup’s credibility, as the government cannot review each company individually.
Who Can Issue Support Letters?
Venture capital funds, incubators, angel investor groups, and accelerators can usually issue support letters. A list of popular support letter providers is available on our website.
How to Obtain a Support Letter?
Venture capital firms and investor groups typically provide support letters only if they invest in your startup. Incubators and accelerators offer them to registered startups in their programs. Obtaining a letter from a known entity increases the likelihood of acceptance.
Expected Timeline and Required Documents
The process takes about a week, including application submission, payment, and review if necessary. Required documents include:
- Support letter
- Owner(s) passports
- Holding company registration (if any)
- Letter of intent detailing future business commitments, including hiring, investment, and revenue projections.
Note: For assistance with any documents, contact Tawreef.
Saudi Expansion Series
This article is part of our series on Saudi expansion, aimed at educating international entrepreneurs about Saudi Arabia’s foreign investment system for success and growth. Written by Tawreef, a tech investment community funding top regional startups and providing entrepreneurship services.
