WHEN ONE BOOM CLOSES, AN­OTHER OPENS

Qatar Today - - DEVELOPMENT -

Dany Farha, Chief Ex­ec­u­tive Of­fi­cer of BECO Cap­i­tal, ex­pects a re­gional boom in star­tups and ven­ture cap­i­tal, if oil prices linger at their cur­rent lev­els.

There is a strong pos­i­tive cor­re­la­tion be­tween a weak econ­omy and a boom­ing tech in­dus­try, ac­cord­ing to Dany Farha. The eco­nomic slow­down is what has al­lowed tech­nol­ogy com­pa­nies to boom glob­ally and the same is pro­jected to hap­pen re­gion­ally. “There is no bet­ter time to be a tech en­tre­pre­neur in the re­gion than now,” he says. “Dur­ing th­ese dif­fi­cult eco­nomic con­di­tions, there is a sil­ver lin­ing. It is when eco­nomic con­di­tions are chal­leng­ing that con­sumers and en­ter­prises look for the most ef­fi­cient and in­no­va­tive so­lu­tions, and th­ese are pro­vided by tech­nol­ogy com­pa­nies. We should con­tinue to in­no­vate at the early stage and help build amaz­ing busi­nesses in the later ones. Those con­trib­ute sub­stan­tially to in­come, out­put and em­ploy­ment. His­tory has proved that a weak econ­omy spurs entrepreneurship and in­no­va­tion. There is no bet­ter time to fund SMEs and en­trepreneurs than in a down­turn.”

He adds, “Higher un­em­ploy­ment in a slower econ­omy trig­gers a pos­i­tive cy­cle of young pi­o­neer­ing pro­fes­sion­als who cre­ate their own jobs by start­ing their own small ven­tures. It is the rea­son we have wit­nessed a rise in the num­ber of new en­trepreneurs in France and Spain, where both coun­tries are en­dur­ing the in­dus­tri­alised world's high­est un­em­ploy­ment rates.”

Farha ex­plains that, de­spite a dif­fi­cult sec­ond half of 2015, drawn down by slump­ing oil prices and bud­get deficits, the re­gion's tech entrepreneurship land­scape con­tin­ued to move up­wards. “The ecosys­tem is ex­pand­ing and has wit­nessed a rise of the dig­i­tal econ­omy and the emer­gence of po­ten­tial re­gional uni­corns,” he af­firms.

The GCC gov­ern­ments are try­ing to re­place oil-re­liant economies through eco­nomic diversification poli­cies in or­der to re­duce their oil de­pen­dence. The re­gion has seen a lower oil price im­pact as its suc­cess­ful decade-long diversification strate­gies are com­ing to fruition, more ef­fec­tively in some coun­tries than oth­ers. The non-oil pri­vate sec­tor con­tin­ues to show strong growth. This will fur­ther en­cour­age gov­ern­ments to sup­port the SME sec­tor, and thus the startup and entrepreneurship en­vi­ron­ment.

“A weaker econ­omy projects a new per­spec­tive in terms of diversification, as it fu­els a more en­tre­pre­neur­ial and in­no­va­tive ap­proach in a tough and com­pet­i­tive work en­vi­ron­ment. The need to raise the bar on qual­ity and ser­vice and to be­come more ef­fi­cient and ef­fec­tive tends to in­spire new ideas,” ex­plains Farha, ad­ding that “some of the big­gest leaps in tech­nol­ogy were made in the sec­ond half of the 1980s” when oil prices ranged from $25/ bbl to $45/ bbl in in­fla­tion-ad­justed terms.

“Re­gional tech star­tups will thrive over the next cou­ple of years, in an at­tempt to drive a much-needed higher pro­duc­tiv­ity and ef­fi­ciency across var­i­ous in­dus­tries. Take, for ex­am­ple, the last re­ces­sion when Airbnb, Uber and other global uni­corns were founded. Th­ese com­pa­nies mon­e­tised the needs of peo­ple in the post-cri­sis econ­omy. Many dis­rup­tive tech­nolo­gies were founded in the ‘New Econ­omy era of the late 90s'. With over 109 play­ers cur­rently in­vest­ing in the tech­nol­ogy startup sec­tor across its var­i­ous stages, north of $250 mil­lion were raised in the last 18 months by re­gional tech en­trepreneurs. More in­vest­ments in tech­nol­ogy and the dig­i­tal econ­omy, both at pri­vate sec­tor and gov­ern­ment lev­els have, and will, over the mid to long term, help boost the econ­omy. The growth has been ex­po­nen­tial and we ex­pect this trend to con­tinue in 2016. It is the right time for re­gional tech en­trepreneurs to step up and take ad­van­tage of the need to di­ver­sify the econ­omy and prove they are worth in­vest­ing in.”

DANY FARHA Chief Ex­ec­u­tive Of­fi­cer BECO Cap­i­tal

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