Entrepreneurship licenses offer unique advantages not available through traditional licensing routes, designed to foster innovation and support startups. Entrepreneurs with this license benefit from reduced licensing fees, special residency privileges, and access to one of the best work environments globally. With this license, you can operate in Saudi Arabia without additional steps.
This article will cover key points such as eligibility criteria, unique benefits, expected timeline, documentation requirements, and more.
What is an Entrepreneurship License?
Referred to as the “golden ticket” for the Saudi entrepreneurial community, it is a special type of foreign investment license for talented entrepreneurs looking to start their business in Saudi Arabia.
Launched in 2017, this license quickly became popular among innovative entrepreneurs aiming to establish their headquarters in Saudi Arabia. Last year alone, approximately 350 licenses were granted to leading tech companies, with numbers expected to grow in the coming years.
Unique Benefits of the Entrepreneurship License
Some standout benefits make this license highly attractive for promising tech startups:
- No Existing Company Required
Unlike traditional licenses, which are only granted to existing companies looking to expand, the entrepreneurship license allows foreign investors to start a new company in Saudi Arabia. This means no requirements for audit reports or positive cash flow preferences. Essentially, you can open a company under your name.
- Exemption from Ministry of Investment Fees
With this license, you are exempt from the Ministry of Investment’s licensing fees of SAR 60,000 for the first three years, reducing costs to about SAR 2,000 annually. Fees then decrease to SAR 12,000 for the fourth and fifth years, with standard fees applying from the sixth year onwards. This structure significantly reduces early-stage costs for your company.
- Special Residency Benefits
- License holders receive exclusive residency benefits not available to other foreign investors. By raising SAR 400,000 from accredited partners, they qualify for a five-year entrepreneurial residency. Additionally, securing USD 4 million in funding and employing ten staff for one year makes them eligible for lifelong entrepreneurial support, ensuring a permanent presence in Saudi Arabia.
Who is Eligible for this License?
The license aims to attract top tech talents to Saudi Arabia, evident in its eligibility requirements. Traditional IT companies like software firms or small businesses are usually not eligible; it is granted to innovative tech companies developing pioneering products and services. Occasionally, venture capital firms may also receive this license exceptionally.
To qualify, startups must be backed by a venture capital firm, a group of angel investors, an incubator, or an accelerator program.
How to Prove Eligibility?
To prove eligibility, the startup must submit a support letter or project endorsement, a type of recommendation letter to the Ministry of Investment from the supporting entity.
Why Submit a Support Letter?
Simplifying processes is the main reason for requiring a support letter. The government collaborates with licensed entities to verify the credibility of each startup, accepting their recommendations as proof of the company’s innovation.
Who Can Issue a Support Letter?
While there is no official list from the government, venture capital funds, business incubators, angel investor groups, and accelerators typically issue support letters. We have compiled a list of popular support letter providers on our website.
How to Obtain a Support Letter?
Venture capital and angel investor groups usually provide support letters only if they invest in your startup. In contrast, incubators and accelerators offer support letters to startups registered in their programs.
Obtaining a support letter from a well-known entity strongly indicates that your application will be accepted.
Expected Timeline and Required Documents
The process to obtain an entrepreneurship license takes about a week, including application submission, payment, and review if necessary.
Required documents include:
- Support letter
- Owner(s) passports
- Holding company registration (if applicable)
- Letter of intent with future business commitments, including employee hiring quotas, fundraising targets, and approximate revenue projections.
Note: For assistance in securing or preparing any of the above documents, please contact Tawarruq.
Saudi Expansion Series
This article is part of our series on Saudi expansion, aimed at educating international entrepreneurs and business owners about the foreign investment system in Saudi Arabia to ensure success and growth. This article was written by Tawarruq, a tech investment community funding top regional startups and providing entrepreneurial services.
Translated by Tarjama translation engine
