Cairo: Saudi Arabia's thriving business landscape encourages regional and global companies to establish local presence in the growing market
Egyptian-born AI startup DXwand aims to take the next step by having a local team to reach customers closer to the company.
In an interview with Arab News, DXwand CEO Ahmed Mahmoud shared the company’s strategic insights into setting up a local office in Riyadh by mid-year.
“We have already started the process and have received the permit from MISA (Saudi Ministry of Investment). The exact location is still under discussion but it will be in Riyadh, the exciting capital of Saudi Arabia,” he said.
One step closer
Mahmoud stressed the importance of delivering value and impact quickly with rapid results and was keen to showcase the company’s differentiated position in technology and long-term ambitions in partnerships.
“We plan to achieve this goal with our local partners, both in technology and other industries, to ensure that we are successful,” he said. “We already have several partners in Saudi Arabia, and our plan is to increase this number by the end of 2024.”
DXwand's expansion strategy is aligned with Saudi Arabia's Vision 2030, which focuses on economic diversification and digital transformation.
“With a focus on impacting key areas in Saudi Arabia’s Vision 2030, particularly in the areas of economic diversification, quality of life, environmental sustainability, and culture and entertainment, we have set long-term goals and consistent initiatives to support and impact these areas,” Mahmoud said.
“DXwand’s expansions often involve local partners focused on industries or technology creators, which results in a greater contribution to each country’s economy, faster and deeper impact, and greater results with local talent and resources that understand local cultures and issues,” he further explains.
One such partner is Gulf-based expansion platform AstroLabs, which aims to leverage DXwand’s strong presence in the US, UAE and Egypt.
Mahmoud stressed the importance of working with official agencies to improve services in their sectors.
“The collaboration with the Saudi government is fundamental to achieving our expansion vision and we are in the process of identifying potential areas of cooperation and relevant government agencies,” he said.
This collaboration aims to support DXwand’s alignment with the country’s changing regulatory environment.
Our solutions are in line with the country’s goals to improve digital infrastructure, enhance government services and promote innovation.
Ahmed Mahmoud, CEO of DXwand
“AI regulation is a new area not only for Saudi Arabia but also globally. We believe that early engagement with regulators will benefit both parties to understand the risks and create proactive mitigation measures. We believe that AI companies should have a responsibility regardless of the regulation to build safe AI technology and ensure that it meets global privacy and security standards,” said Mahmoud.
“This will help us adapt to the regulatory demands in Saudi Arabia as we take risk mitigation seriously and create a safe experience for our community,” he added.
Mahmoud said the company has doubled its year-on-year growth since 2020 and he is committed to maintaining this growth while delivering two national impact projects per year.
He added that Saudi Arabia would be a key geographic location for the 2024 National Impact Initiative. “We believe that Saudi Arabia has all the ingredients to succeed, not just in a single national initiative, but in the best national initiative,” he said.
Mahmoud also revealed that the company has three new products in development that leverage creative AI technology, although details are still being kept under wraps.
“With the help of our co-creation partners, we have three new products in development that use the same creative AI technology. We cannot share more details about these products at this time, but we will announce them soon with our relevant partners,” he said.
Expansion into Saudi Arabia is important to DXwand’s strategy due to factors such as alignment with Vision 2030, market opportunities and government support, Mahmoud stressed.
He further explains how DXwand’s AI solutions align with Vision 2030’s ambitions for economic diversification and digital transformation.
“Our solutions are in line with the country’s goals of improving digital infrastructure, improving government services and fostering innovation,” he said.
He added that the significant investment in sectors such as healthcare, education, financial services and tourism presents a great opportunity for DXwand.
The government's support for the knowledge economy and technology investment also aligns with his company's objectives, Mahmoud said.
Initiatives to attract foreign investment and create a conducive business environment make Saudi Arabia a strategic location with access to other Middle Eastern markets and serve as a springboard for expansion in the region, Mahmoud explained.
Tech-savvy Saudis are a market open to AI-driven solutions. “This population is open to adopting new technologies, which creates an environment conducive to AI solutions,” he said.
Business Fundamentals
In terms of funding, DXwand has raised $6.7 million since its inception, with its most recent Series A round of $4 million closed in December 2023. This investment will spark the establishment of DXwand in Saudi Arabia, fostering strategic partnerships with local partners, academia, and strategic customers.
“We plan to use part of the fund to spark the first DXwand startup activity in Saudi Arabia and foster strategic partnerships to build an ecosystem that will deliver on DXwand’s growth ambitions, while also partnering with Saudi Arabia to drive impact and accelerate the implementation of Vision 2030 and its impact on the country,” Mahmoud said.
Addressing the challenges facing the industry in Saudi Arabia, Mahmoud discusses the buzz around creative AI and DXwand’s approach to finding niche solutions.
He noted that DXwand’s DXP platform was designed to address issues such as the high cost of large language models, the lack of managed accuracy metrics, and time-to-market delays.
“DXwand’s DXP platform delivers over 90 percent cost efficiency by leveraging the lower-end LLM offering, while increasing accuracy by over 30 percent using a single instrument that allows for measurable experiments and easily optimizes accuracy and cost with RAG (retrieval-augmented generation),” said Mahmoud.
DXwand operates on a subscription-based business model, selling the product on an annual or monthly subscription basis based on the size of the problem as demonstrated by conversation volume or number of users.
Mahmoud said DXwand is a profitable company with a strong financial model designed to ensure the economics of a profitable unit.
The inspiration for founding DXwand came from Mahmoud’s experience at Microsoft, where he saw the potential for AI ventures that focused on the cultural and linguistic needs of the region.
“This potential was untapped and it made me hesitant to take the risk and leave this trusted international Silicon Valley giant to start the DXwand journey,” he said.
DXwand’s key performance indicators include LLM cost optimization, accurate overtime, new registrations, new contracts, new partnerships, and time to market.
Mahmoud stresses importance of prudent growth management in Saudi Arabia to maintain reputation and customer experience
“For Saudi Arabia specifically, since we have just launched, I will focus on new partnerships, new customer onboarding and their experience in cost and accuracy optimization,” he said.
Mahmoud assesses the current market landscape in Saudi Arabia for AI and rapidly evolving technologies, with many opportunities and challenges.
He highlighted the Saudi government's leadership and investment in economic diversification, digital transformation, artificial intelligence and workforce development.
“With government leadership and investments in economic diversification, digital transformation, artificial intelligence and workforce development, we expect emerging markets with significant GDP and population growth opportunities,” he said.
In terms of industry forecasts, Mahmoud predicts adoption will decline due to economic factors and the cost of implementing creative AI, which will impact business cases. However, he sees this as an opportunity.
“We expect adoption to continue to decline, driven by economic factors and the cost of implementing innovative AI, as well as the impact on the business case involved. There is a great opportunity over the next year or two to overcome this challenge if you have a solution that can deliver this technology cost-effectively and scale quickly,” he explained.
