The trouble with entrepreneurial fundraising is that it is an activity which most entrepreneurs will engage in only a few times and yet it has a massive impact on their startups. Unlike other, predominantly managerial, activities which are performed weekly if not daily, fundraising is relatively so infrequent that it is hard to build up a skill set and / or experience effectively.
Continue readingTag Archives: Entrepreneurship
Foreign Companies are Good for the Economy
I previously tweeted about an interview in which Mohammed Alabbar, Chairman of the e-commerce company noon “ called for new legislation that imposes 51% local ownership of e-commerce related businesses ranging from payment service firms to logistics companies, in order to protect the national economy from global giants such as Amazon.” I pointed out that the article only looked at one stakeholder, noon, and didn’t consider other stakeholders such as consumers. This led to a lively debate on the subject across the twittersphere and is worthy of a revisit.
Continue readingInnovation needs perspective not isolation
I was honoured to be invited to Bahrain this week to give a talk at an event organised by Bahrain Development Bank’s Rowad Programme, a comprehensive platform providing multiple layers of support to Bahrain’s entrepreneurs and start-ups.
Rowad’s breadth and depth are far greater than anything else that I have seen in the region, and addresses multiple facets of the challenges faced by entrepreneurs and startups. The programme comes as close to being a super-contained entrepreneurial ecosystem as I have seen. If you are an entrepreneur I urge you to seriously consider their offerings. If you are an investor you might consider looking at the entrepreneurs and start-ups that Rowad is supporting as when entrepreneurs have that breadth and depth of support then they should have a greater probability of success.
The Rowad Talk, moderated by the programme’s co-founder Areije Al Shaker, was a dynamic event that featured some good discussions with the audience. One point in particular, about the necessity for entrepreneurs to seek external feedback, deserves elaborating upon. Continue reading
Sharjah’s cost advantage a win for UAE startups
Entrepreneurs are facing pressure from multiple challenges with a major one continuing to be the cost structure of doing business in the UAE.
Sharjah appears to provide a solution.
This section of today’s column is co-written with Najla Al-Midfa, General Manager of Sheraa and one of the region’s thought leaders and active architects of entrepreneurship ecosystems in the UAE.
If you are a regular reader of my column you will know that I am a little bit exasperated at what I see as deep denial in the business community about current and future economic challenges. On a personal basis this has created a challenge for me in restructuring my family investment portfolio in response to those same economic challenges. This has led me to an interesting insight.
The part of the portfolio that I was looking at that led to this insight was the real estate sub-portfolio. The real estate sector does not have as much transparency in terms of price discovery as, say, the listed equity markets. An investor needs to be continuously in the market, working with real estate brokers, to truly know where the prices are for different types of real estate in different locations. The flight from high cost residential to middle and low cost residential is relatively well known and logically sound. It is a great defensive move and one that investors believe will protect their investments and their yield. What was surprising to me was finding out that prices for these types of residential properties was rising at quite a healthy rate in the Emirate of Ajman.
A little investigation made it clear why. We have all heard about people working in Dubai but living in Sharjah due to the latter’s more affordable cost structure. What anecdotal evidence suggested was that commercial prerogatives were following personal ones, ie some companies based in Dubai who need to manage their costs are moving part, if not all, of their work force to Sharjah. So some of those working in Sharjah simply decided to live in Ajman to free up even more of their income for savings or discretionary expenditure. Continue reading
Entrepreneurs don’t need the state to do their work
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.
Fintech's power is in the unbanked and unbankable
In today’s article Katharine Budd, the chief executive and co-founder of Now Money, a Dubai-based fintech start-up, joins me in explaining how fintech works.
To understand this new financial services phenomenon, it is best to start at the very beginning. A very good place to start.
Although you might now be able to operate your bank account from a website or mobile app, the systems that sit behind these online user interfaces have barely changed since they were implemented in the 1970s. The international payment transfer system Swift still runs on the telephone systems. This means that no matter how nice the front-end website your account is on, the transactions displayed are still run off legacy systems, which can lead to legacy issues such as delays in processing transactions and potentially losing the transaction in the system altogether.
So why don’t banks just scrap these legacy systems if they are not able to match modern-day systems? Not that simple. To try and keep up with changes in market demand, these systems have been repeatedly improved upon using incremental upgrades, usually by different IT teams, until they now represent a hodgepodge of sub-systems.
Investing in a system upgrade – which would be expensive, have a material risk of failure and need all other banks to adopt for interoperability purposes – doesn’t look so appealing. This disincentive ensures that customer frustrations continue.
Enter a new breed of start-ups that are innovating where banks are stagnating. The start-ups are cooperating with regulators and cybersecurity experts and developing new technology. These organisations have become know as “fintechs” and their purpose can range from offering customers alternative ways to bank, usually through mobile, to using advanced analytics to provide investment recommendations.
A whirlwind tour of Gulf corporate governance …
Corporate governance improves with the inclusion of women on company boards, as reported by the International Finance Corporation. So what happens to corporate governance when a woman is appointed to head a stock exchange? We will soon find out, as Saudi Arabia has just appointed Sarah Al Suhaimi to head its stock exchange. Ms Al Suhaimi comes well prepared for this job as the chief executive of NCB Capital, the investment banking and asset management arm of the largest bank in Saudi Arabia and the second largest bank in the Middle East. A few days later Samba, the fourth largest Saudi bank, appointed Rania Nashar as its first female chief executive. I look forward to what I expect to be a positive impact because of this gender diversity.
My Zawya Story, 2nd Edition
In 2012, Zawya, a UAE-based business media company, was sold to Thomson Reuters for a 20 times cash return by Saffar, a low-profile private equity company. I am the founding chief executive of Saffar and became chairman of Zawya after we acquired it, between 2001 and 2011. This is my story of how I bought a bankrupt, London-based company with five employees, moved it to the UAE, built it into a profitable company with more than 200 employees and then sold it to a global competitor, thus generating a 35 per cent annual rate of return over an 11-year period.
Venture capital as a substitute for oil in driving economic growth
Venture capital is critical to the future success of not only the UAE but also the GCC. To understand this we first need to understand the historic formula for our success – oil leads to financial capital, which leads to real estate development, which creates social and business communities that attract people. Repeat.
Even if oil prices had not collapsed, sooner or later the size of the economy would reach a level at which oil alone could not deliver growth. We have not reached a point of reckoning because oil prices halved, that only accelerated the inevitable.
The conventional argument is that SMEs are the engine for growth in any economy. Some might argue that the global conglomerates coupled with global trade are the engines for growth. Whatever idea you subscribe to, in the end one has to accept that whether you believe SMEs drive economic growth or whether it is large companies, the first step is starting that company. Put simply, without start-ups an economy cannot normally achieve sustainable growth.
Oil, Opec, Economic Reform and Venture Capital
Last week the Minister of Energy for the UAE was reported in an article as saying that it is too soon to extend the oil supply deal, and then shortly afterwards there was a report that Saudi Arabia’s minister of energy had said the deal could be extended after the first six months. I am known to be pessimistic about Opec cooperation, but given the close relationship enjoyed by Saudi and the Emirates, I thought about the perceived discord in communication and was led to an intriguing idea.
As described in an article in The National on Monday, Norway is facing challenges in diversifying away from oil. If Norway, with its more developed economy, is facing challenges then clearly diversification for a less developed oil-exporting country must be even more challenging. This would lead to the idea that differing challenges faced by each country could lead to different strategies and signalling of these strategies with regards to oil production.