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Industry Insiders: How to Improve the Startup Scene in the UAE?

Speaking at the Sharjah FDI Forum in Dubai, Samer Choucair, the Vice President of CE-Ventures, the in-house incubator of Crescent Enterprises, talked about the future of the startups in changing the shape of the UAE economy.

According to him, decreasing the startup costs and re-considering the due diligence process would give a strong push to the UAE’s small and medium-sized enterprises. In addition to that, facilitating the debt and bankruptcy legislation would also have a positive effect on the whole sector.

The venture capitalists in the West, mainly in the USA, he said, are conducting half the due diligence, the local investors do. It applies even to the biggest venture capitalists in the region, not only the smaller ones. According to the industry insider, the administrative burden on the starting companies in the UAE is too heavy and the associated costs are often not affordable for many.

Choucair also added that many governmental and non-governmental institutions have been working hard on these issues, including some educational centers. Although the UAE government has been trying to increase the SMEs contribution to the GDP, the sector has still been facing challenges when it comes to regulation and funding. Investing in startups is still unfamiliar to many people who prefer the brick-and-mortar type of investments as they offer relatively secure returns and the risk is moderate. On the other hand, the banks often find it too risky to lend money to a starting business. More education on early-stage investment is one of the key solutions Choucair offered during his speech.

Choucair also touched upon the topic of failure and the different perception of it. In the West, failure is often encouraged and seen as part of the success in a long-run. In comparison, in the UAE that is still different, and failure is still a cultural taboo. On top of that, the bankruptcy and debt laws make it even more difficult.

Najla Al Midfa, the general manager at Sharjah Entrepreneurship Centre (Sheraa), agreed with her colleague. She also added that the big companies needed to intervene in the sector and allocate capital to high-risk investments.

CE-Ventures has built a strong presence in the UAE creating its own startups. Choucair described it as sector-agnostic and always open for new ideas. According to him, the biggest opportunities for startups in the region lie in the healthcare and transport sector.

 

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