JEDDAH: Saudi Arabia, UAE, and Bahrain are among a number of countries experiencing a fast growth in the startup environment. But with massive projects under way, and a limited number of venture capitalists who are willing to commit to and support these new ideas, young entrepreneurs are facing a succession of hurdles the TopCEO 2018 forum has been told.
“With the transformation the Kingdom is looking for, entrepreneurship is the basis of it,” said Anand Vengurlekar, Global Brand and Innovation Consultant during a discussion on Wednesday about startups at the Bay La Sun Hotel in King Abdullah Economic City (KAEC) in Jeddah
And Ambareen Musa, founder and CEO of UAE-based comparison website, Souqalmal.com, said entrepreneurs were facing serious networking barriers.
“When I speak to Venture Capitalists (VCs) in London, and ask ‘why aren't you bringing money into the region?’ They say they haven't seen anything interesting,” Musa explained, adding: “I can tell you that there are a lot of very good startups and entrepreneurs in the region.”
But she said it was likely they were not visible enough within the market.
“Most of the VCs I meet have the idea that there are not enough starups in the region for them to invest in… But on the other side, when you speak to an entrepreneur they say there's not enough money.”
The challenge, she said, was figuring how to close the gap between the two.
But it is not just a communication breakdown that was hindering budding entrepreneurs from succeeding – according to Lawrence Morgan, CEO of Nest - which supports entrepreneurs.
Morgan said young entrepreneurs needed to find experts in the field they were pursuing.
“Accessing the right mentors I think is the key. Access to the right people who have relevant experience that can actually guide entrepreneurs on their journey,” Morgan added.
But it is not just entrepreneurs needing advice on how to create a business, investors are also faced with a challenge – one of persuading the startups to take their money instead that of their competitors’.
Amr Goussous, a partner at the consultant firm, Strategy& (Middle East), said: “You’re the investor, but they ask you what you could bring to the table.”
In return, he said, entrepreneurs would handover equity.
“Look at this entrepreneur as the ultimate customer, he will create better revenue” said Goussous, adding: “It’s important to let entrepreneurs do what they do best - take risks.”
Of course, no one goes into business just for the fun of it – they all want to be paid, and according to Musa, this is where entrepreneurs are faced with another very real hurdle.
She said in the Gulf region people were faced with a significantly longer wait to get paid – as much as 120 days, compared to Europe where the waiting time is closer to 16.
It takes patience, Musa said: “It does effect working capital.”