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Saudi Arabian General Investment Authority (SAGIA), which is responsible for increasing investments and supporting businesses in the kingdom, has issued 558 licenses in the first half of 2019.
“SAGIA has already issued 558 licenses in the first half of 2019, that's a 85 percent increase compared to the same period last year,” an official tweet from the investment authority confirmed.
New licenses approved for foreign businesses in Saudi Arabia jumped by 70 percent in the first quarter compared to the same time last year, mainly due to an increase in applications for business licenses from Britain and China which went up by 86 percent and 71 percent respectively.
Saudi Arabia is looking at foreign investment to reduce its dependence on the oil. Though Foreign Direct Investment numbers of the kingdom are not available, the growth in foreign licenses reflects its efforts to remove restrictions on foreign investments.
Saudi Arabia improved its ranking in the World Bank's latest Doing Business report, climbing 30 places to 62nd, driven mostly by reforms aimed at building more economic diversification.
According to the World Bank, Saudi Arabia's reforms included establishing a one-stop shop for business registration, introducing a secured transactions law and an insolvency law, improving protections for minority investors, and measures to bring more women into the workforce.
source: zawya
Egypt is the fastest growing startup ecosystem in the Middle East and North Africa region, according to a report published in 2018 by Magnitt, bagging 22 percent of all deals last year, second only to the United Arab Emirates. The country has also seen a significant spike in the number of venture capital companies, international funds, incubators, and accelerators over the last couple of years, which, along with government initiatives, have made Egypt an attractive hub for startups in the region.
“Egypt is seeing a second wave of entrepreneurs and investors that are more mature and experienced. The population is also starting to embrace technology for everyday activities and we see that large but young tech firms are a great source of talent and inspiration,” Ziad Mokhtar, managing partner at Algebra Ventures was quoted by the Magnitt report as saying.
Following are 5 things to know about this up-and-coming young entrant in the global startup space:
Almost Unicorns
Egypt is still a relatively new startup hub, and while it does not have any unicorns to its name yet, several promising companies are on their way to the $1 billion club.
Swvl, an app that allows customers to book rides on buses and vans in their network, tops the list with a total of $80.5 million raised over four funding rounds so far, according to data aggregator Crunchbase.
Vezeeta, a healthtech platform which allows patients to book doctors on the app, with $23.5 million raised over five funding rounds so far, according to Crunchbase, is next in line. The company closed it latest funding from a series C round in December 2018.
Instabug, Yaoota, Basharsoft, and Halan are some others on the list.
Incubators on the Rise
Flat6Labs is the most prominent accelerator in Egypt, and was the only one in the country up until a few years ago. EdVentures, the corporate VC arm of Nahdet Misr, one of the leading publishing groups of Egypt, is one of the main players in the education startup sector. Sawari, Algebra and Endure Capital are other private VCs.
Falak is a government run accelerator that invests in early-stage startups, and was established to give the startup industry in the country a much needed shot in the arm.
Government Efforts to Scale the Industry
The Egyptian Ministry of Investment and International Cooperation has a number of different startup programs and networks that helps founders develop their entrepreneurial skills, and companies navigate regulations. The initiative by the ministry, called ‘Fekratek Sherkate’ administers these programs, including Falak.
Bedaya, founded by Egypt’s General Authority for Investment and Free Zones, is an incubator that offers funding as well as office space, networking opportunities and manufacturing zones to startups. The incubator’s ‘Bedaya Fund’ provides financing opportunities for startups in the food, agricultural, manufacturing, services, and information technology sectors.
TIEC, or Technology Innovation and Entrepreneurship Center is another government incubator that funds startups in the information and communication technology sector, as part of the government plan to develop the country’s communication infrastructure.
Tech Leads the Way
Technology is the hottest startup sector in Egypt, with the country poised to lead the way for tech innovation in the Middle East and Africa, a Business Insider report earlier this year said. However, issues with the country’s economy, which has been struggling in the wake of the Arab Spring crises, and the ouster of leader Hosni Mubarak, a generally weaker currency versus the U.S. dollar, and complex bureaucracy make it hard for startups to operate efficiently. Several companies have been forced to relocate to Germany, Dubai, China or the Cayman Islands inorder to take some of the pressure off.
Bootcamps and Events Make Connecting Easier
Events give startups an important opportunity to network, connect and learn from experts and investors around the world.
Egypt has several annual events that help put regional startups on the global map - RiseUp Summit - biggest in the country, Vested, and the Techne Summit, held in Alexandria, are some of the must-attend gatherings.
Techne Summit, in fact, returns for its fifth edition in Alexandria, Egypt, at the end of the week, with topics of discussion ranging from healthtech, e-commerce, and fintech, to retail, marketing and media technology, among others.
The event, slated for September 28 to September 30, will feature the launch of a network comprising angel investors from across the Mediterranean region, called ‘Mediterranean Business Angel Investment Network’, or Med Angels. Investors from France, Greece, Tunisia, Morocco, Egypt, Lebanon, Slovenia, Croatia, among others, are already a part of the network, which aims to “facilitate cross border investing among participating member networks,” as per its press release.
The Med Angels platform claims it will help connect more than 100 networks with nearly 10,000 angel investors, across 24 countries.
Featuring also for the first time will be a global startup competition, called ‘Startup World Cup’ - a competition for seed-stage startups, the winner of which will get a chance to win $1 million, and an entry into the final round in Silicon Valley.
Speakers at the event include Egypt’s Minister of Communications and Information Technology Amr Talaat, AUC Venture Lab’s director Ayman Ismail, Hadeer Shalaby, regional director of Careem Bus, and representatives from Citibank, Mastercard, AXA, Unilever, IBM, Praxis, Microsoft, and Central Bank of Egypt, among others.
On The Agenda
The 2019 event features several satellite events, or side events, such as air yoga, educational sessions on social media management, Cloud services management etc, at various locations in Alexandria
The main event is replete with workshops on product design, company incorporation procedures, legal issues relating to startup investing, fireside chats on technology and building hospitals of the future, pitching competitions for startups, and 1-to-1 meetings.
Event-goers will also be able to take part in several competitions based on specific themes, or sectors, such as healthcare, women in tech, and fintech companies tackling financial inclusion, payments and SME lending, to name a few.
Techne Summit kickstarted in Egypt in 2015, and, as of 2018, had hosted over 6,000 participants, 130 speakers, 230 startups, and 80 investors from more than 25 countries.
source: Entrepreneur
(English)
يقدم التقرير الصادر عن MAGNIT وشركة 500 Startups صورة عامة عن بيئة الاعمال للشركات الناشئة في الشرق الأوسط وشمال افريقيا عبر مجموعة من المحاور التي تتضمن دراسات إحصائية تهدف لمعرفة التحديات والفرص لرواد الاعمال في المنطقة، وقد تم جمع البيانات عبر استطلاع للرأي شمل أكثر من 100 مؤسس لشركات تتخذ من الشرق الأوسط وشمال افريقيا مقرا لها وهي شركات ممولة من الصندوق الإقليمي التابع لشركة 500 Startups. فيما يلي نقدم موجزا عن هذا التقرير عبر استعراض محاوره الرئيسية.
أولاً: البيانات الديموغرافية
تظهر البيانات الديمغرافية ان 54% من الشركات الناشئة التي شملها الاستطلاع تأسست خلال السنوات الثلاثة الماضية وان 9% فقط تم تأسيسها قبل عام 2014 الامر الذي يظهر النمو المتزايد للشركات الناشئة في منطقة الشرق الأوسط وشمال افريقيا خلال السنوات القليلة الماضية. كما اظهر التقرير ان نسبة الشركات التي تم تأسيها من قبل شخصان بلغت 51% مقابل 20% للشركات التي تم تأسيسها من قبل شخص واحد. من جهة أخرى غالبية الشركات الناشئة توظف ما بين 1-10 موظفين دائمين، فيما بلغت نسبة الشركات التي توظف 50 موظف وأكثر 7% فقط، ويعود السبب في الانخفاض النسبي لأعداد الموظفين، في ان معظم الشركات الناشئة ترتكز على الأنشطة الخدمية وتستخدم أدوات تقنية عالية تنتفي معها الحاجة لعدد كبير من الموظفين.
ثانياً: جمع الأموال
يعرض هذا المحور مجموعة من الأسئلة التي طرحت على المؤسسين حول الجولات التمويلية الأخيرة التي قاموا بها وذلك من حيث المدة التي استغرقتها وعدد الشركات التي قدمت لهم عروضاً في جولاتهم الأخيرة، وتفيد نتيجة الاستطلاع بان أكثر من 60% من الشركات الناشئة لم تستمر جولاتهم لأكثر من 6 أشهر تلقت خلالها 29% من الشركات ما بين 6 الى 10 عروض تمويلية.
كما يطرح معدو التقرير في هذا المحور أسئلة هامة حول المعايير المرتبطة بالبحث عن المستثمر المناسب والصعوبات التي يواجهونها خلال عملية البحث عن الأموال، فعلى سبيل المثال أجاب أصحاب الشركات عن اهم المعايير التي يجب اخذها بعين الاعتبار عند البحث عن المستثمر الرئيسي لشركاتهم الناشئة، وهو سؤال يهم جميع الباحثين عن التمويل لشركاتهم الناشئة، وقد وقعت اختياراتهم لاهم المعايير وفقا للترتيب التالي: 1-شبكة العلاقات 2- شروط الصفقة 3- التمويل طويل الأمد.
ثالثاً: ديناميات الاستثمار
يقدم هذا المحور من التقرير إجابات وافية عن رؤية رواد الاعمال المؤسسين للشركات الناشئة حول مستقبل أعمالهم وتوقعاتهم بتحققيهم مكاسب مرتفعة في المستقبل، إذ كانت إجابة 59% بأنهم واثقون بان قيمة شركاتهم ستصل الى 100 مليون دولار في المستقبل، كما توقع 46% انهم قادرين على الخروج من شركاتهم خلال فترة تتراوح ما بين 3 الى 5 سنوات، وهي توقعات إيجابية بطبيعة الأحوال، وتعطي مؤشراً عن قيمة الأرباح التقديرية التي يمكن ان يحصل عليها الأشخاص المقبلين على تأسيس شركاتهم الخاصة والمستثمرين في قطاع الشركات الناشئة.
رابعاً: تعيين الكفاءات
يجيب هذا المحور من التقرير عن الأسئلة المتعلقة بالصعوبات التي يتعرض لها رواد الاعمال خلال عملية البحث عن الكفاءات اللازمة لتوظيفها في شركاتهم الناشئة، حيث كانت الإجابة عن السؤال المتعلق بأصعب تحد يواجههم من حيث تعيين موظفين في الوقت الحالي، بأن قلة الكفاءات تعد من ابرز التحديات بالإضافة الى القيود المالية (الرواتب) فيما لم تشكل العوائق المتعلقة باللغة والقيود المتعلقة باللوائح والأنظمة عقبة كبيرة اما رواد الاعمال، وبالرغم من الصعوبات التي يواجهونها في إيجاد الكفاءات والمواهب المطلوبة فانهم يتطلعون، بالمتوسط، الى تعيين 16 موظف جديد في العام القادم.
خامساً: العمليات
في هذا المحور يتطرق التقرير الى الخطط التشغيلية التي ينوي المؤسسين تنفيذها في المستقبل، وفي هذا الشأن أكد 81% من المشاركين في الاستطلاع انهم مهتمون بالنمو أكثر من تحقيق الأرباح، وبالرغم من ذلك يعتقد أكثر من نصفهم بأنهم سوف يبدؤون بتحقيق الأرباح خلال ال 3 سنوات القادمة، فيما أشار 13% منهم الى انهم قد بدؤه بتحقيق الأرباح فعلاً.
سادساً: من هي الشركات الناشئة التابعة لصندوق ال 500 Startups
يقدم التقرير في محوره الاخير مجموعة من المعلومات المتعلقة بطبيعة قطاعات الاعمال التي تركز عليه الشركات الناشئة ومقارها الرئيسية وحجم الأموال التي تم جمعها وغيرها من المعلومات الهامة، اما عن السؤال حول المقر الرئيسي فحلت كل من دبي والقاهرة في المرتبتين الأولى والثانية بنسبة 27% و23% على توالي فيما جاءت الرياض بالمرتبة الثالثة بنسبة 11%، وعن اهم القطاعات التي تركز عليه الشركات الناشئة فهي بمجملها تنتمي الى قطاع الخدمات يتصدرها التجارة الالكترونية والخدمات الاستهلاكية والحلول التكنولوجية المالية.
This new record represents a growth of 135% compared to the same period last year, Sheikh Hamdan, Crown Prince of Dubai and Chairman of Dubai Executive Council, announced.
The Emirate of Dubai has witnessed exceptional growth during the first half of 2019, with foreign direct investments, FDIs, reaching a record-breaking AED46.6 billion, H.H. Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, Crown Prince of Dubai and Chairman of Dubai Executive Council, announced on Sunday( 29 october).
This new record represents a growth of 135 percent compared to the same period last year, His Highness added, noting that this FDI growth within the emirate is "a testament to global confidence in Dubai's economy." During the first half of 2019, Dubai has continued to progress in global rankings of the most attractive cities for FDI, ranking third in the world in attracting FDI, in terms of both capital flows and the number of greenfield projects.
"Dubai is among the top three global FDI locations thanks to the vision of His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President, Prime Minister and Ruler of Dubai, who created a global investment environment in Dubai that keeps pace with the aspirations of investors, entrepreneurs and technology shifts in the region and the world," Sheikh Hamdan bin Mohammed continued.. The FDI flows and rankings results were revealed by Dubai Investment Development Agency, DUBAI FDI, an agency of Dubai Economy, based on the Financial Times’ fDi Markets, a global online platform that monitors data on capital flows and greenfield FDI projects around the world and the ‘Dubai FDI Monitor’ data.
His Highness pointed out that Dubai has been particularly successful in attracting advanced technology and specialised talent in the first half of 2019.
"This is a proud achievement for Dubai. With the growth of talent and technology, Dubai will accelerate its drive to become the smartest and most sustainable city of the future.
" According to ‘Dubai FDI Monitor’ data, FDI projects with High and Medium Technology component reached 47 percent of total FDI projects in the first half of 2019, based on the Organisation for Economic Cooperation and Development, OECD, classification criteria.
Moreover, FDI projects with a high and medium technology component were at the forefront of creating new jobs with a 48 percent share of the 24,294 new jobs created by FDI projects in the first half of 2019.
Sheikh Hamdan noted that according to the Financial Times’ fDi Markets data, the emirate ranking ninth globally in job creation through FDI.
"This achievement will further strengthen Dubai’s position as one of the most attractive destinations for promising talent, thanks to our leadership’s initiatives to develop legislative frameworks that enhance the role of talent in building a knowledge and innovation economy in Dubai and the UAE," he concluded.
source: zawya
في آذار/ مارس من عام 2003 أطلقت سلطنة عُمان استراتيجية التحول الرقمي تحت عنوان " عُمان الرقمية" لتكون بذلك من أوائل الدول في منطقة الشرق الأوسط التي تطلق استراتيجية خاصة تهدف إلى إجراء عملية تحول رقمي شاملة في البلاد، وتستند استراتيجية عُمان الرقمية على ستة محاور رئيسية هي:
- تنمية قدرات المجتمع ومهارات الأفراد.
- الحكومة الإلكترونية والخدمات الذكية.
- منظومة متكاملة لصناعة تقنية المعلومات والاتصالات.
- الحوكمة وتطوير المعايير القياسية والسياسات.
- البنية الأساسية من الجيل الجديد.
- تعزيز الوعي المعرفي.
تهدف استراتيجية عُمان الرقمية من خلال محاورها المذكورة أعلاه للوصول إلى المجتمع الرقمي الذي يُمكن جميع المواطنين من الوصول إلى المعرفة والوسائل والأدوات التي تؤهلهم للتفاعل الرقمي والدخول إلى شبكة الانترنت واستخدام الخدمات الإلكترونية على نحو فعال و آمن كما تسعى الاستراتيجية الموضوعة لتوفير احتياجات قطاع تقنية المعلومات العماني عبر تزويده بالموارد والأدوات اللازمة لتحويل الأفكار والمبتكرات في مجال تقنية المعلومات إلى منتجات وخدمات تلبي احتياجات ومتطلبات الحكومة والسوق كما تشمل أهداف الاستراتيجية على إنشاء بنية أساسية متكاملة لتوفير الخدمات الحكومية الإلكترونية للمواطنين وقطاع الأعمال في السلطنة وبناء صناعات تعتمد على المعرفة وتوفير فرص عمل واسعة ومتنوعة للمواطنين.
ولغرض تحقيق الأهداف الطموحة التي أعلنتها السلطنة وبناء على الاستراتيجية المعتمدة أطلقت الحكومة العُمانية مجموعة كبيرة من المبادرات لعل أهمها ما يأتي:
- مراكز المجتمع المعرفية: توفر هذه المراكز الحواسيب وخدمة الانترنت ودورات تدريبية بهدف ردم الفجوة الرقمية وتوفير المعرفة لجميع المواطنين.
- برنامج ساس (أساس): وهو مشروع يهدف للمساهمة في تطوير صناعة تقنية المعلومات والاتصالات، وذلك عبر تقديم مجموعة كبيرة من الخدمات الاستشارية والتدريب والتأهيل والدعم الحكومي والمساعدة في تأمين التمويل للمشروعات الريادية الصغيرة والمتوسطة، وهو مشروع قائم بالشراكة بين القطاع العام والخاص.
- بوابة الدفع الإلكتروني: تهدف بوابة الدفع الإلكتروني تمكين المتعاملين مع القطاع العام والخاص من تسهيل عملية دفع الرسوم والضرائب إلكترونياً وبشكل آمن.
- مبادرة استثمر بسهولة: وهي واحدة من أبرز المبادرات التي أطلقتها الحكومة العُمانية والتي تهدف لتطوير بيئة الأعمال عبر تقديم مجموعة شاملة من الخدمات الإلكترونية لقطاع الأعمال والتي تبدأ من إنشاء شركة جديدة إلى الحصول على ترخيص الأنشطة وانتهاءً بتقديم التقارير المالية السنوية.
- التشريعات والقوانين: تعتبر عملية تهيئة البيئة القانونية حجر الزاوية لإحداث نقلة حقيقية في عملية التحول الرقمي، وهنا تبرز سلطنة عُمان كرائدة في هذا المجال حيث أصدرت عبر فترات متلاحقة حزمة من التشريعات والقوانين المتعلقة بالجرائم والتعاملات الإلكترونية والتي تكفل إجراء التعاملات الإلكترونية بشكل آمن الأمر الذي يوفر مستوى عالي من الثقة لدى الأفراد وقطاع الأعمال والوحدات الحكومية في إنجاز التعاملات إلكترونياً.
تظهر المبادرات والبرامج التي أطلقتها السلطنة والنجاحات التي تحققت من خلالها حسن سير عملية التحول الرقمي في السلطنة وصولاً إلى مجتمع عُمان الرقمي الذي تطمح إليه، وذلك في ظل تحسن ظروف البيئة الاستثمارية حيث تقدمة السلطنة 14 مركزا في تصنيف مؤشر البيئة التنافسية لعام 2018 لتحل في المركز 47 عالمياً، كما يساهم تحسن الوعي المعرفي في المجتمع العماني في نمو قطاع صناعة تقنية المعلومات حيث تلقى المبادرات والبرامج الحكومية رواجاً واسعاً في المجتمع العماني وذلك مع ارتفاع نسبة مستخدمي الانترنت التي وصلت الى اكثر من 80% من اجمالي عدد السكان كما وصلت نسبة العمانيين الذين يقومون بتعاملات إلكترونية الى حوالي 20% سنوياً.
لا تقتصر منافع التحول الرقمي في السلطنة على تنويع الاقتصاد العُماني بحيث يصبح أقل اعتماداً على الموارد الطبيعية بل تؤسس أيضاً لجعله محطة جاذبة للاستثمار في قطاع صناعة تقنية المعلومات والاتصالات الذي يشهد نمواً متسارعاً تزامناً مع التحولات التي تجريها كبرى الشركات العالمية على طريق التحول الرقمي.
Investing in startup companies is a very risky business, but can be very rewarding if and when the investments do pay off.
The rise of mobile technology and innovations, such as cloud computing, the sharing economy, and bitcoin, has helped to spur this latest round of tech entrepreneurship.
The majority of new companies or products simply do not make it, so the risk of losing one's entire investment is a real possibility.
The ones that do make it, however, can produce very high returns on investment.
Stages of Startups
Startup companies are those that are just in the idea phase.
They do not yet have a working product, customer base, or revenue stream. These new companies can fund themselves by using founder's savings, by obtaining bank loans, or by issuing equity shares.
Handing over seed money in return for an equity stake is what comes to mind for most people when thinking about what it means to invest in startups.
It is estimated that, worldwide, more than a million new companies are formed each year.
The first money obtained by these companies is usually that of founders, friends, and family (FF&F), known as seed money or seed capital.
These sums are generally small and allow an entrepreneur to prove that his or her idea has a good chance of succeeding.
During the seed phase, the first employees may be hired and prototypes developed to pitch the company's idea to potential customers or later investors.
The money invested will be used for activities like performing market research.
Once a new company moves into operations and starts collecting initial revenues, it has progressed from seed to bona fide startup. At this point, company founders may pitch their idea to angel investors.
An angel investor is usually a private individual with some accumulated wealth who specializes in investing in early stage companies. Angel investors are typically the first source of funding outside of FF&F money.
Angel investments are typically small in size, but angel investors also have much to gain because at this point the company's future prospects are the riskiest. Angel money is used to support initial marketing efforts and move prototypes into production.
At this point, if the company is starting to grow and show promise, it may seek venture capital (VC) funding.
Founders will have developed a solid business plan that dictates the business strategy and projections going forward. Although the company is not yet earning any net profits, it is gaining momentum and reinvesting any revenues back into the company for growth.
Venture capital can refer to an individual, private partnership, or pooled investment fund that seeks to invest and take an active role in promising new companies that have moved past the seed and angel stages. Venture capitalists often take on advisor roles and find a seat on the board of directors for the company. Venture capital may be sought in additional rounds as the company continues to burn through cash in order to achieve the exponential growth expected by VC investors.
Investing in Startups
Unless you happen to be a founder, family member, or close friend of a founder, chances are you will not be able to get in at the very beginning of an exciting new startup. And unless you happen to be a wealthy, accredited investor, you will likely not be able to participate as an angel investor. Today, private individuals can take part to some degree in the venture capital phase by investing in private equity funds that specialize in venture capital funding, allowing for indirect investment in startups.
Private equity funds invest in a large number of promising startups in order to diversify their risk exposure to any one company. According to recent research, the failure rate for a venture fund portfolio is 40%-50% in a given year, and 90% of all companies invested in will not make it beyond the ten year mark. The notion that only one in ten venture capital investments will succeed is now industry expectation. The 10% of companies that do make it big can return many thousands percent to investors.
Typical venture deals are structured over ten years until exit. The ideal exit strategy is for the company to go public via an initial public offering (IPO), which can generate the out-sized returns expected from taking on such risk. Other exit strategies that are less desirable include being acquired by another company, or remaining as a private, profitable venture.
A prime example is Google (GOOG), which launched as a startup in 1997 with $1 million in seed money from FF&F. In 1999, the company was growing rapidly and attracted $25 million in venture capital funding, with two VC firms acquiring around 10% each of the company. In August 2004, Google IPO'd, raising over $1.2 billion for the company and almost half a billion dollars for those original investors, a return of almost 1,700%.
Risk as well as Reward
These large return potentials are the result of an incredible amount of risk inherent in new companies.
Not only will 90% of VC investments fail, but there is a whole host of unique risk factors that must be addressed when considering a new investment in a startup.
The first step in conducting due-diligence for a startup is to critically evaluate the business plan and the model for generating profits and growth in the future.
The economics of the idea must translate into real world returns. Many new ideas are so cutting edge that they risk not gaining market adoption.
Strong competitors or major barriers to entry are also important considerations. Legal, regulatory, and compliance issues are also important to consider for brand new ideas, such as the regulatory hurdles now facing startups Airbnb and Uber.
Many angel and VC investors indicate that the personality and drive of the company founders is just as, or even more important than the business idea itself.
Founders must have the skill, knowledge, and passion to carry them through periods of growing pains and discouragement.
They also have to be open to advice and constructive feedback from inside and outside of the firm.
They must be agile and nimble enough to pivot the company's direction given unexpected economic events or technological changes.
Other questions that must be asked are, if the company is successful, will there be timing risk? Will the financial markets be friendly to an IPO in five or ten years down the road? Is the company going to have grown enough to successfully IPO and provide a solid return on investment?
The Bottom Line
Investing in startups is not for the faint of heart. FF&F money can easily be lost with little to show for it.
Investing in venture capital funds diversifies some of the risk but also forces investors to face the harsh reality that 90% of companies funded will not make it to IPO.
For those that do go public, the returns can be in the thousands of percent, making early investors very wealthy indeed.
source: investopedia
Some economists identify entrepreneurship as a factor of production because it can increase the productive efficiency of a firm.
Many different definitions of entrepreneurs and entrepreneurship exist, and most place entrepreneurs in the same critical category as more consistently identified factors of production.
For example, some economists define an entrepreneur as someone who utilizes the other factors – land, labor, and capital – for profit. Other definitions consider entrepreneurship in a more abstract way – entrepreneurs identify new opportunities among the other factors without necessarily controlling them.
Since disruptive innovations are the result of human insight, it is not entirely clear that entrepreneurship should be considered a separate factor of production from labor.
Economists disagree about whether entrepreneurs are different from laborers, are a subset of laborers or whether they can be both simultaneously.
Risk and the Entrepreneur
One of the least developed aspects of mainstream microeconomics is the theory of the entrepreneur. The 18th-century economist Richard Cantillon called entrepreneurs a "special, risk-bearing group of people." Since that time, risk-bearing has been an important characteristic of the economic entrepreneur.
Later economists such as Jean-Baptiste Say and Frank Knight believed market risk was the crucial element of the entrepreneur. It wasn't until the middle of the 20th century when Joseph Schumpeter and Israel Kirzner independently developed comprehensive applications of risk-bearing in a productive framework.
Schumpeter noted that the other factors of production required a coordinating mechanism to be economically useful. He also believed that profits and interest only exist in a dynamic setting where there is economic development. According to Schumpeter, development takes place when creative individuals come up with new combinations of the factors of production. Schumpeter argued that entrepreneurs created dynamism and growth.
Value and Returns
Some economists define the factors of production as those inputs that generate value and receive returns. Labor generates value and receives wages as payment for work.
Capital receives interest as payment for its use.
Land receives rents as payment for its use. It is the entrepreneur, according to this theory, that receives profit.
This theory clearly differentiates between the laborer and the entrepreneur based on the type of return.
There are some important challenges to this view. For example, do entrepreneurs receive profit commensurate with their marginal revenue product? Is there a definable market for entrepreneurship that corresponds to its returns, and corresponds with an upward-sloping supply curve?
Entrepreneurs and Asset Ownership
These issues beg another question: Does an entrepreneur necessarily need access to economic assets? Some economists say no – it's ideas that matter. This is sometimes known as the pure entrepreneur. Per this theory, entrepreneurial acts are non-marginal and purely intellectual.
Others disagree, since only an owner of assets can expose them to risk. This view assumes that entrepreneurship is embodied in the creation and operation of a firm and the deployment of the other factors.
Austrian economist Peter Klein says that if entrepreneurship is treated as a process or attribute – not an employment category – it cannot be treated as a factor of production. Normal factors of production can be depreciated during times of economic struggle. This doesn't apply to attributes, however.
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source:investopedia
investopedia
Raising capital is one of the biggest challenges any startup can face, but fortunately, entrepreneurs have more than one option for getting the funding they need.
Seeking out angel investors has its advantages, but crowdfunding is redefining how fledgling companies get off the ground.
Both have their pros and cons, and it's important to understand how they can impact your startup's long-term outlook before diving in.
Funding a Startup With Angel Investors
The typical angel investor is a high-net-worth individual who has an interest in helping new companies expand.
These accredited investors provide startups with seed money in exchange for an equity stake in the company.
The idea here is that once the company becomes profitable, the angel investor can sell their shares for a profit.
Angel investors can operate independently or as part of a larger investment group, sometimes known as a syndicate. In terms of how much money angel investors can bring to the table, it's not unusual for a typical investment to range from $25,000 to $100,000.
In some instances, angel investors may be willing to part with even larger sums to assist a startup.
- Angel funding is not a loan. Taking out a small business loan is another way to fund a startup, but it creates a legal obligation to repay what's borrowed. Angel investors, on the other hand, don't expect the money to be repaid. Instead, they're banking on the company increasing in value over time.
- Angel investors can provide more than just money. Angel investors are often established business owners themselves and they have years of experience working with startups. In addition to providing the financial backing you need to get your venture up and running, angel investors will often share their expertise, which can be invaluable to the business's long-term success.
- Angel investors are risk-takers. An unfortunate truth is that the vast majority of startups will fail to become sustainable and from an investor perspective, they're extremely risky.
- Without a solid track record, obtaining a bank loan or getting funding through a venture capitalist can be all but impossible. Angel investors, on the other hand, understand the implied risks, and they're willing to put their own money on the line to support a startup's growth.
- There may be more pressure to succeed. While the desire to help new businesses succeed plays a part in angel investors' decisions, it's not the only motivator at work. They also want to see their investment pay off in a tangible way. That can turn up the heat on startups to churn out a solid rate of return.
- Angel investors aren't hands-off. As mentioned earlier, angel investors receive a certain amount of equity in exchange for providing funding to a startup. Not only are you handing over a set percentage of the business's future profits but you're also sacrificing a certain amount of control concerning decision-making. That can be problematic if conflicts arise surrounding the angel investor's role in business operations.
Using Crowdfunding to Raise Capital
- Funding doesn't have to be equity-based. While startups can use equity to attract investors through a crowdfunding platform, it's not always necessary to give up any ownership control in the company to raise capital. Some platforms allow you to to use a rewards-based approach to generate funding. For example, if your startup centers on creating a specific product, you may make that product available to your investors before rolling it out the general public.
- Attracting investors may be easier. Bringing angel investors on board can be a time-consuming process because it typically involves pitching your startup's concept multiple times. Crowdfunding platforms, on the other hand, streamline the process by allowing startups to post their pitch in one spot where it can be viewed by a broad range of investors.
- Crowdfunding can increase visibility. Marketing can eat up a large part of any startup's budget but using a crowdfunding platform to raise funds is a low-cost way to spread the word. When a crowdfunding campaign is funded relatively quickly, it sends the message that the startup is one to watch. That can increase the brand's visibility and help to attract additional investors for subsequent funding rounds.
Fundraising is not unlimited. While $1 million may seem like a substantial amount of money, it may not go very far for some startups. Companies that require more funding may have to turn to angel investors or loans to fill the gap once they've exhausted the crowdfunding cap.
- Fees can be expensive. Crowdfunding platforms are focused on connecting investors with startups, but they're also in business to make money. Startups who use these platforms can expect to pay anywhere from 5% to 10% in fees to raise the money they need, which can detract from the amount of capital they have available.
The Bottom Line
Angel investing is a good option for startups to raise large amounts of capital without being constrained by the requirements that go along with taking out a loan. The main disadvantage, however, is the fact that it requires trading off a certain amount of ownership in the company. While rewards-based crowdfunding offers a work-around to that dilemma, the fees can quickly add up. Weighing the loss of equity against cost can make it easier for startups to decide which option is best.
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source: investopedia
Saudi Arabia is a land of immense opportunities in many spheres, and this is also true when it comes to entrepreneurship.
According to the 2019 Global Entrepreneurship Monitor report, around 76.3% of the adult population in Saudi Arabia has perceived good opportunities to start a business– with the percentage ranking second highest out of 49 countries analyzed.
The ambitious yet achievable long-term blueprint of the Saudi Vision 2030 is based on three key pillars: a vibrant society, a thriving economy, and an ambitious nation.
The second pillar in particular –a thriving economy, coupled with rewarding opportunities– aims to stimulate the economy and diversify revenues, which also underscores SMEs as “important agents of economic growth that create jobs, support innovation, and boost exports.” In fact, the Saudi Vision 2030 pledges to raise the contribution of SMEs to Saudi Arabia’s GDP from 20% to 35% by 2030.
It takes an ecosystem
Capitalizing on such a tremendous opportunity and realizing the aforementioned Saudi Vision 2030 mandates demands invigorating a robust entrepreneurship ecosystem.
For this to happen, there needs to be enabling policies, appropriate funding vehicles, a stimulating culture, a range of support mechanisms (including infrastructure and accelerators), a pool of human capital with entrepreneurial drive, and venture-friendly markets.
Such an ecosystem encompasses an array of stakeholder groups that include universities, corporations, risk capitals, and entrepreneurs.
The stakeholders’ chief role is to cultivate the aforementioned ecosystem requirements in order that enable the creation and growth of startups and SMEs.
As part of Saudi Vision 2030, the government is forging the necessary commitments to further fuel entrepreneurship and the SME sector.
Translating such commitments into action has put entrepreneurship in Saudi Arabia on steroids, as it has been supercharged and fuel-injected by a range of attractive initiatives and hug funding boosts.
The Saudi government has injected SAR72 billion (US$19.2 billion) stimulus package to boost the private sector, an enormous part of which was allocated to different programs and initiatives supporting the SME sector, such as government fees reimbursement, a government VC Fund, indirect financing to SMEs, and export financing. Furthermore, the Public Investment Fund (PIF) created an investment fund, with a capital of SAR4 billion ($1.1 billion) that will attract private sector participation through investments in venture capital and private equity funds.
The government has also launched the Meras program, which provides all the government and private sector services an entrepreneur needs to set up a business in one day.
In addition, the government established The General Authority for SMEs, otherwise known as Monsha’at, with a number of pledges that include removing obstacles, facilitating access to funding, supporting SMEs in marketing and exporting products and services, and enabling national entities to collaborate with relevant stakeholders. All of these reflect the Saudi government’s considered efforts to make positive changes across the entrepreneurial ecosystem.
Inspired by Saudi Vision 2030, a multitude of entities, from the private, public and third sectors, have forged ahead to design and implement a spate of initiatives and programs to accelerate the growth of Saudi Arabia’s entrepreneurship ecosystem.
Human capital is strategic to the growth of the local entrepreneurship ecosystem To nurture the necessary talent needed in Saudi Arabia, the MiSK Foundation has been playing a pivotal role.
A very recent example is the MiSK Innovation 500 Startups program, which brought Silicon Valley growth techniques to support MENA-based companies to scale up and fundraise. Also, in partnership with the Ministry of Education, Ministry of Communications and IT, as well as Saudi Telecom Company, MiSK Innovation attracted more than one million people to participate in Saudi Codes, an educational initiative which teachesbasic coding skills. In addition, a multitude of sectorfocused hackathons attracted thousands of developers.
One stand-out example was the Hajj Hackathon organized by the Saudi Federation of Cybersecurity, Programming, and Drones, which broke the Guinness World Record for the most participants with around 3000 developers from 100 countries.
Funding SMEs and initiatives is another crucial component for the development of the entrepreneurship ecosystem The Ministry of Communications and IT has recently signed a cooperation agreement with the Ministry of Labor and Social Development to allocate up to SAR1 billion fund to support initiatives across the tech sector, including tech startups.
The fund will be targeting investors, entrepreneurs, government entities, accelerators, and tech developers in Saudi Arabia.
The Saudi Venture Capital Company (SVC), which was recently launched, has made a financial commitment as a limited partner in more than 10 VC funds.
SVC is a government VC company that was established as part of the Private Sector Stimulus Plan (PSSP) to minimize the existing equity funding gap for startups. It has also co-invested in about 14 startups through a matching program.
To further advance this vital sector, the Saudi Association of Venture Capital and Private Equity was established to promote the industry’s contribution to the growing Saudi economy, helping to determine and improve best-in-class regulatory policies, as well as raising awareness and fostering collaborations between industry professionals.
The Saudi entrepreneurship ecosystem is nimble to adapt to emerging trends The Saudi Capital Market Authority (CMA) established the Financial Technology Experimental Permit (FinTech ExPermit) granting permission for equity crowdfunding platforms to operate.
In addition, the Saudi Arabian Monetary Agency (SAMA) designed a sandbox regulatory environment, and granted a number of banks and companies experimental licenses to provide various services in the field of digital payments.
It also launched Fintech Saudi, which brings together key stakeholders to foster a culture of innovation in the financial sector in Saudi Arabia. Furthermore, a bundle of support companies has sprouted up out of TAQNIA, a subsidiary owned by PIF, with the mission to create value from technology.
A few examples of such companies include Business Incubators and Accelerators Company (BIAC), Riyad TAQNIA Fund, and Research Products Development (RDP), a center for technology development and commercialization.
Diversity and inclusion augment developing local entrepreneurship ecosystems The Saudi General Investment Authority (SAGIA) has been playing an integral role in making local entrepreneurship more inclusive to the global entrepreneurship scene, as well as to the international business community wanting to access the diverse and lucrative Saudi market.
Since 2017, the authority has been granting international entrepreneurs an innovation license to pilot the expansion of their startups in Saudi using partner Saudi universities and business incubators. In addition, SAGIA has recently launched VENTURE, an initiative aimed at attracting global venture capital firms to the kingdom.
During the recent Financial Sector Conference, held in Riyadh earlier this year, 20 venture capital firms signed agreements as part of the initiative.
NGOs are an essential building block of the Saudi entrepreneurship ecosystem A prime example of this is Saudi Endeavor, which has been supporting a number of high-impact, high-growth local entrepreneurs in scaling up their companies, creating thousands of jobs and increasing their annual revenue by an average of 16%.
Measuring impact
With such a proliferation of initiatives, a couple of inextricably linked recommendations come to mind. First, key stakeholders should build a repository of the ongoing initiatives’ outcomes in order to keep track of and gauge the impact on the local entrepreneurship ecosystem.
Secondly, these initiatives have a cost burden which necessitates having shared ecosystem metrics to measure the returns that entrepreneurship generates locally.
One overall ecosystem metric is the National Entrepreneurship Context Index (NECI) that was introduced by the Global Entrepreneurship monitor this year.
NECI, which assesses the environment for entrepreneurship in an economy, is based on 12 framework conditions such as internal market dynamics, entrepreneurial finance, government policies, and entrepreneurial education, evaluated by local experts. Other ecosystem metrics could also be developed based on the indicators proposed by the Kauffman Foundation, such as density, fluidity, connectivity and diversity. Each of these indicators measures an entrepreneurship ecosystem in specific ways.
Ultimately, the local entrepreneurship ecosystem could leverage a rich pool of lessons learned to accelerate its evolution. It could thus further improve its conditions to increase the chances of success for entrepreneurs and SMEs. A word of caution though: published indices and rankings should not be perceived as the “guardrails” of entrepreneurship ecosystem development.
Rather, policy makers and other stakeholders should keep their fingers on the pulse of the ecosystem to assess the validity and contribution of their initiatives, and iterate accordingly.
The aforementioned efforts have gained lots of impetus at a national level, showing a fertile ground for a variety of entrepreneurship ecosystem stakeholders.
However, the real yardstick that will reveal how the entrepreneurship ecosystem is developing is embedded in the regions.
Hence, efforts at a national level should be also cascaded down to a regional level in order to harness the wide spectrum of comparative advantages that Saudi regions enjoy.
The Saudi Entrepreneurial Ecosystem Lab, or SEE LAB, was developed for this purpose. It is an integrated platform with the mission of contributing to the growth of every Saudi region’s entrepreneurship ecosystem through three key levers: enabling the interaction between the ecosystem stakeholders, engaging the entrepreneurial community in generating and implementing relevant initiatives, and educating the stakeholders about trends and issues in the respective region’s ecosystem for potential improvements. The initiative was piloted in 2018 and started to take root in the Almadinah and Ha’il regions.
To further reinforce the development of the entrepreneurship ecosystem in the regions, I have led the efforts to set up an arrangement with MIT Regional Entrepreneurship Acceleration Program.
This arrangement is structured around having different regions from Saudi Arabia engage in the program to design and implement specific interventions that will enhance the participating regions’ respective entrepreneurship ecosystem.
The Makkah and Madinah regions have already participated in previous cohorts of the program focusing on the comparative advantage of Hajj and Umrah, and Ha’il region will take part in the upcoming cohort starting later this year.
A boulevard of fulfilled dreams
It takes an ecosystem to get a fledgling startup off the ground. It is equally important to have an ecosystem to help SMEs grow and create the desired impact on the social and economic levels.
It is becoming more evident that Saudi Vision 2030 has fueled the efforts of many players in the Saudi entrepreneurial ecosystem– indicating the emergence of a healthy, stimulating ecosystem platform.
Aligned with Saudi Vision 2030’s entrepreneurship related objectives, fostering an entrepreneurship ecosystem has become imperative to enable the alignment of these stakeholders’ efforts towards a collective impact at both regional and national levels.
Such stakeholders must dovetail their efforts to nurture such entrepreneurial ecosystems, and thereby create a boulevard of fulfilled dreams.
source: entrepreneur
With a long commercial history ever since Trade caravans used it as a crossroad for over 3000 years, The Kingdom of Bahrain is familiar with trade concept and Small Business opportunities.
According to the World Bank’s report on the easiness of starting and doing business in Bahrain in 2019, the island kingdom came in the 62nd rank out of 190 indexed countries.
And ever since the Kingdom’s economy started expanding and depending on non-oil sectors more than ancient times, this diversification encouraged many investors to consider Bahrain as the investment hub in the region. Also, Bahrain was ranked as the fastest-growing economy in the GCC region in 2017.
All of which made the Kingdom more capable of creating various small business opportunities for investors from all over the world.
If you live in Bahrain, then here are the best 7 small business opportunities you should definitely consider starting in the Kingdom.
1. Construction Company
Known for being a resilient market, the real estate industry in Bahrain is growing each year, unlike it’s neighboring countries.
Ever since the Kingdom started counting on the non-oil sectors, and its economy has witnessed unmatched stability that kept the Kingdom going despite the oil slump.
Any investor interested in the market will make a fortune out of it.
The under-construction market in the Kingdom of Bahrain is an ever-growing market, which is why going for establishing a construction company will reap the rewards.
2. Restaurants
Food is the ultimate pleasure factor, which is why opening a restaurant in the Kingdom is a great business idea. The most recognized destinations of such investments are Block 338 in the district of Adliya, also known as the fine dining district of Bahrain.
With many nationalities living and working in the country, the culinary scene has expanded offering new flavors and introducing new cuisines.
Just make sure when going for the restaurant plan to introduce something that stands out from the rest whether the theme of the venue, it’s eclectic menu or toothsome eats.
3. Interior Designing Company
With many real estate developments being sold off-plan and many more upcoming projects in all real estate sectors, thinking of opening an interior designing company will pay off.
Whether you are going to work with major real estate developers or individuals, invading this field in the Kingdom will make you one of the wealthy investors.
4. Events Planning
Starting from a small birthday party to organizing a real estate exhibition, for instance, opening an event planning business in Bahrain is considered one of the winning business ideas.
With many international companies based in Bahrain in all fields, hosting an exhibition or a conference or even a small party is something that requires real planning and great expertise.
Which is why an event planning business in the Kingdom is considered one smart choice.
5. Cleaning Services
Many homeowners, hotels, restaurants, and companies are in desperate need of cleaning services.
Establishing a business that provides professional cleaning services in Bahrain will require a thorough search for qualified and well-trained individuals, however, it’s one business that is bound to get you more profit than you planned.
6. Financial Consultancy Company
One of the most thriving sectors in the Kingdom of Bahrain is its banking sector.
And whether you decided to start your own financial consultancy service agency or even better, you decided to start your own bank, starting financial consultancy business in the Kingdom of Bahrain these days – if you have the relevant experience- is definitely a profitable business idea.
7. Real Estate Brokerage Company
As we mentioned earlier, the real estate market in Bahrain has proved to be a stable market over the past couple of years despite the circumstances.
This is why, if you are thinking of working as a freelance real estate agent or starting your own real estate brokerage company, your business will be a successful one.
With many real estate projects currently in the process of construction and others are in the process of planning, Bahrain is considered an attraction when it comes to real estate investment.
source: weetas
