AI startup DXwand establishes local office in Riyadh

AI News


CAIRO: Saudi Arabia's expanding business environment has attracted regional and global companies to establish local presence in the fast-growing market.

DXwand, an Egyptian-born generative artificial intelligence startup, is leaving no stone unturned in its quest to get closer to customers with a local team.

In an interview with Arab News, DXwand CEO Ahmed Mahmoud shared the company's strategic view of setting up a local office in Riyadh by the middle of this year.

“We have already started the process and received the license from MISA (Ministry of Investment in Saudi Arabia). The exact location is still under discussion but it will be in Riyadh, the great capital of Saudi Arabia,” he said.

one step closer

Mahmood stressed the importance of delivering value and impact quickly with rapid wins, and is also keen to demonstrate the company's differentiated position in technology and long-term ambitions in partnerships.

He said: “This goal will be achieved by working with local partners in technology and other industries to ensure success. We already have several partners in Saudi Arabia and plan to increase the number by the end of 2024.”

DXwand’s expansion strategy is fully aligned with Saudi Arabia’s Vision 2030, which focuses on economic diversification and digital transformation.

Mahmoud said: “By focusing on impacting key areas of Saudi Arabia's 2030 Vision, particularly economic diversification, quality of life, environmental sustainability, and culture and entertainment, we have set long-term goals and corresponding efforts to support and influence these sectors.”

He further explained, “DXwand's expansion has always involved local partners who are industry focused or building technology, contributing more to each country's economy, delivering faster and deeper impact, and achieving great results with local talent and resources who have a strong understanding of the culture and local challenges.”

One of these partners includes Gulf business expansion platform AstroLabs, which aims to leverage DXwand's strong presence in the US, UAE and Egypt.

Mahmoud stressed the importance of working with public institutions to strengthen services in each sector.

“Collaboration with the Saudi Arabian government is a key foundation for realizing our expansion vision, and we are currently in the process of identifying key areas of cooperation and relevant government entities,” he said.

The collaboration is aimed at helping DXwand adapt to the country's evolving regulatory environment.

Our solutions are aligned with the country’s goals to strengthen digital infrastructure, improve government services and foster innovation.

Ahmed Mahmoud, CEO of DXwand

“AI regulation is an emerging area not only in Saudi Arabia but around the world. We believe that early engagement with regulators will benefit both parties in understanding the risks and putting in place proactive mitigation measures. We believe that AI companies, regardless of regulation, have a responsibility to build safe AI technology and ensure it complies with privacy and safety standards around the world,” Mahmoud said.

“This will help us adapt to all regulatory needs in Saudi Arabia as we actively mitigate risks and ensure a safe experience for our community,” he added.

Mahmood said the company has doubled its growth every year since 2020 and hopes to maintain this growth trajectory while running two national impact initiatives per year.

He added that Saudi Arabia would be a key location for one of these national impact initiatives in 2024. “We believe that Saudi Arabia has all the necessary success factors to not only realize but also deliver the best outcome for one of our national initiatives,” he said.

Mahmoud also revealed that the company is developing three new products that utilize its generative AI technology, although details have not yet been revealed.

“With the help of our joint development partners, we are developing three new products that leverage the same generative AI technology as ours. While we cannot provide details at this time, we will be announcing them together with our relevant partners soon,” he said.

Mahmoud stressed that expanding into Saudi Arabia is crucial to DXwand's strategy due to factors such as alignment with Vision 2030, market opportunity and government support.

He further explained how DXwand's AI solutions are aligned with Vision 2030's goals towards economic diversification and digital transformation.

“Our solutions are aligned with the country's goals of strengthening digital infrastructure, improving government services and fostering innovation,” he said.

He added that significant investment in sectors such as healthcare, education, financial services and tourism present significant profitable opportunities for DXwand.

Mahmoud said the government's support for the knowledge-based economy and technology investment was also in line with the company's objectives.

Mahmoud explained that Saudi Arabia’s efforts to attract foreign investment and create a favorable business environment have made it a strategic location offering access to other Middle Eastern markets and serving as a springboard for regional expansion.

Saudi Arabia's tech-savvy population provides a market ready for AI-driven solutions: “The population is open to adopting new technologies, creating a fertile environment for AI solutions,” he said.

Business Fundamentals

In terms of funding, DXwand has raised $6.7 million since its inception, with its latest $4 million Series A round scheduled to close in December 2023. The investment will jumpstart DXwand's establishment in Saudi Arabia and foster strategic partnerships with local partners, educational institutions and strategic customers.

Mahmoud said: “We plan to use a portion of the funding to jumpstart DXwand's initial set-up activities in Saudi Arabia and foster strategic partnerships to build an ecosystem that will realize DXwand's growth objectives, as well as partner with Saudi Arabia to influence and accelerate the execution of our 2030 Vision outcomes and achieve national impact.”

Addressing the industry challenges in Saudi Arabia, Mahmoud explained the hype surrounding generative AI and DXwand’s approach to finding niche solutions.

He said DXwand's platform, DXP, is designed to solve problems such as the high cost of large-scale language models, the lack of controlled accuracy measurements, and slow time to market.

“DXwand's platform, DXP, leverages low-end LLM products to achieve over 90 percent cost optimization while improving accuracy by over 30 percent with a single tool that makes it easy to measure through experiments and optimize accuracy and cost through RAG (search augmentation generation),” Mahmoud said.

DXwand operates on a subscription-based business model, selling its products on an annual or monthly subscription basis depending on the problem size expressed in conversation volume or number of users.

Mahmood said DXwand is a profitable company with a sound financial model and designed to ensure profitable unit economics.

The motivation for founding DXwand stemmed from Mahmoud's experience at Microsoft, where he saw the potential for an AI venture focused on the cultural and linguistic needs of the region.

“This potential was not being fulfil and I was tempted to take a leap of faith and quit a reputed international Silicon Valley giant to start my DXwand journey,” he said.

DXwand's key performance metrics include LLM cost optimization, overtime accuracy, new sign-ups, new contracts, new partners and time to market.

Mahmoud stressed the importance of carefully managing growth in Saudi Arabia to maintain reputation and customer experience.

“Specifically with Saudi Arabia, we are still new to the market so we will be focusing on new partnerships, signing up new clients and their experience in optimizing costs and accuracy,” he noted.

Mahmoud believes that the current AI and technology market environment in Saudi Arabia is rapidly evolving, with numerous opportunities and challenges.

He highlighted the Saudi Arabian government's leadership and investments in economic diversification, digital transformation, artificial intelligence and human resource development.

“With government leadership and investments in economic diversification, digital transformation, artificial intelligence and talent development, we see significant growth opportunities in these emerging markets with impressive GDPs and populations,” he said.

In terms of industry predictions, Mahmood expects economic factors and the operational costs of generative AI to reduce adoption and impact the business case. However, he sees this as an opportunity.

“We expect adoption to slow due to economic factors and the operational costs of generative AI and the business cases that are associated with it. If you have solutions that can deliver this technology cost-effectively and quickly scalable, the next year or two is a great opportunity to capitalize on this challenge,” he explained.



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