Last week I was honoured to participate in the Ministry of Economy’s seventh Annual Investment Meeting, a conference focused on foreign direct investment in growing markets, as well as the associated AIM Startup, held in Dubai. A large part of the conference – the talks and panels, as well as private conversation – revolved around entrepreneurship and venture capital. There were some recurring themes and I would like to share some of my thoughts on them.

An important caveat: the AIM conference was extremely positive and quite rewarding, my article simply seeks to find ways to extend the thinking.

One of the main points raised was what government can do to help entrepreneurs and the venture capital ecosystem in ­general. I find this question strange. To me an entrepreneur, by definition, looks to solve problems. Asking for the government to solve these problems seems incompatible with being an entrepreneur. Indeed, companies built locally and sold to international companies, such as Souq.com to Amazon or Zawya to Reuters, happened in large part because the local entrepreneurs found ways to build the business within the local environment that foreign players don’t understand. Do not misunderstand me, the government can certainly remove obstacles, such as monopolies and security cheques, that stand in the way of entrepreneurship. But to ask them for funding, incubators or other forms of support is to admit that one is not in fact an entrepreneur.

This brings us to the issue of what, exactly, is a venture capital ecosystem, why do we want it and how can we build it? There is plenty of discussion on how the Mena VC ecosystem is not complete or not doing its job and that this in turn makes it difficult for entrepreneurs to launch their start-ups let alone make them succeed. The implication is that someone is falling short in making all of this work.

The problem is an ecosystem made up of multiple stakeholders with no single group of stakeholders having responsibility for the ecosystem as a whole. An ecosystem only works if all stakeholders contribute in a meaningful manner and each of those stakeholders feels that they are being treated fairly.

For example, a common complaint is that investors, or venture capitalists, do not exist in sufficient amounts in the region. This conclusion is reached based on the experience of entrepreneurs finding difficulty in raising funds. But the logical conclusion to that experience is not the absence of VCs but a gap between what entrepreneurs are offering and what VCs want.

For example, as an entrepreneur, do you first try to find out what your investor is interested in, or do you just launch into your pitch? The entrepreneur is asking for money, which means that the entrepreneur should know far more about the VC than the other way around. Personally, I find that I end up with deep databases about entrepreneurs and they rarely know anything about me.

A second important point in the entrepreneur-VC gap is corporate governance. I hear complaints that investors don’t want to take risk. But what risk are we talking about? As an investor I am happy to take on far more business risk than most entrepreneurs. But I have no interest in taking on integrity risk on the founders. This is where corporate governance comes in. I will never invest in a company if the management does not have a clear record yet retains a majority of the equity. In such a case I would be at the mercy of unproven management with no recourse.

So how can we alter our thinking to help move things forward? Let’s start with that age-old question of valuing a start-up. A start-up has no value. Simple. The idea that a small group of people can come together with an unproven or unimplemented concept but still command any value simply because of a business plan and financials models is simply not logical. The most detailed business plan would cost me Dh50,000 and hiring a small number of people would cost me at most Dh50,000. The answer lies not in putting in a value today but creating a long-term incentive plan that gives the entrepreneurs more equity as they hit certain milestones. The idea is to make the entrepreneurs rich if things go as planned but to protect the VCs if things go badly. Win-win.

Space doesn’t permit me to go into the same detail on other issues, so let me give you a flavour. Due diligence on a start-up is meaningless, all you’re doing is the equivalent of job interviews with the management and a gut check on the concept. Don’t overthink it.

Build a real company. This takes 10 to 12 years. Maybe one day we will be like Silicon Valley whereby companies that lose hundreds of millions of dollars get valued at tens of billions of dollars but until that day, accept that you will have to work hard and build a real company.

Stay optimistic. There are lots of wonderful success stories. It can be done, but our way, not by trying to copy other markets.

This article was originally published in The National.