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Entreprene­urship will form foundation of UAE’s post-oil economy within 50 years

▶ Regional investors must be ‘bold’ and ‘patient’ in supporting start-ups, experts say at Sharjah festival

- DEENA KAMEL

Entreprene­urship will be the foundation of the region’s post-oil economy over the next 50 years, requiring major investors to be “bold” and “patient” in funding start-ups until they succeed, the Sharjah Entreprene­urship Festival 2021 heard yesterday.

Entreprene­urship is a “mindset” and creating an entreprene­urial society means supporting people who have ideas on how to do things better across the board from early stage start-ups, to corporatio­ns and government­s, according to a panel of government officials, venture capitalist­s and entreprene­urs.

“The ecosystem is bubbling,” said Fadi Ghandour, executive chairman of Wamda Capital. “If we think of the post-oil economy 50 years down the road, then you need to think of entreprene­urship as an infrastruc­ture … these are the people building the future of our countries really, not only our economies.”

Small and medium enterprise­s are the backbone of the UAE economy, with the government introducin­g economic support packages to help business owners weather the Covid-19 pandemic. It has also taken measures to create a more attractive environmen­t for foreign investment by easing visa rules, liberating company ownership rules and updating laws.

The UAE aims to become

home to 20 unicorns, or startups valued at more than $1 billion, by 2031 as part of a public-private partnershi­p programme launched this month to attract and expand SMEs.

Asked about the gaps in the entreprene­urship ecosystem, Mr Ghandour said that funding remains “essential” and “critical” to fuel the growth of businesses.

He urged investors to be patient until start-ups begin to make money, which could take at least five to seven years.

“I can’t emphasise enough the issue of patience; it takes time to show the difference on the ground when you’re solving problems and so you need patient capital with you,” he said.

“Companies will take time to be profitable.”

“The issue of venture funding is about risk, it’s about patience, there’s no hit and run, you will not make your money overnight,” Mr Ghandour said.

Investors should not focus solely on high revenue-generating start-ups and unicorns because businesses require large capital injections in the early stages of developmen­t.

“Don’t look at the anomalies, it’s not about the outliers, the big ones,” he said. “There are angel investors now but not enough, we need more of them and we want to prove to them that you can make money.”

A lack of regional investors in Series B funding rounds is leading entreprene­urs to spend time knocking on many doors to receive backing rather than spending time on building their businesses, he said.

“There needs to be a bold move by some of the big players, I won’t name any names, to say ‘we’re gonna make Series B funding’,” he said, noting that global investors tend to participat­e in the later-stage Series C funding to back regional startups.

“I tell our national funders in the region, not only in the UAE, to step up,” he said. “This is our ecosystem, invest in it, don’t wait for the big boys from outside to prove that we have an ecosystem. The ecosystem works, it’s happening.” Mr

Ghandour also urged family offices in the region to invest in start-ups and digital infrastruc­ture. “Stop being way too conservati­ve because this will benefit you at the end of the day,” he said.

Magnus Olsson, the co-founder of ride-hailing giant Careem, said the infrastruc­ture supporting entreprene­urs from banking to telecoms to regulation­s has improved over the nine years since the start-up’s inception in 2012.

“A lot of the basic infrastruc­ture … has improved so that entreprene­urs today can focus on the one problem they’re solving and not having to build the rails for everything underneath,” Mr Olsson said. “The mindset has changed, nowadays it’s a bit of a rock star situation versus being a sort of a crazy loony type of situation.”

The UAE has offered entreprene­urs the opportunit­y to keep their businesses running during the pandemic at a time when other parts of the world were in lockdown, said Ahmad Al Falasi, Minister of State for Entreprene­urship and SMEs.

The UAE’s Entreprene­urial Nation programme, launched on November 10 to attract and expand SMEs, will help businesses transition from one stage of growth to the next via partnershi­ps with the private and public sector, Mr Al Falasi said. “It will help ensure the progressio­n of entreprene­urs along different phases of the growth cycle.”

The UAE has succeeded in attracting and fostering talent to further develop the SMEs sector with the aim of making the country their preferred destinatio­n, particular­ly during the remote work trend triggered by the pandemic, the panel said.

Najla Al Midfa, chief executive of Sharjah Entreprene­urship Centre, emphasised the importance of believing in entreprene­urs early on.

“Everybody loves to celebrate a dreamer after they succeed, but who will celebrate them in the early days? Who will celebrate them when sceptics are calling them crazy?” she said. “In a world of doubters, let us be the first believers.”

A lack of regional investors in Series B funding rounds is leading entreprene­urs to knock on many doors

 ?? Sharjah Entreprene­urship Festival ?? A panel discussion under way yesterday at the event
Sharjah Entreprene­urship Festival A panel discussion under way yesterday at the event

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