Talking to Ray Dargham, one of the iconic names in the region associated with successful entrepreneurship, gives you a rather unique sense of how far one can go with the right vision in mind. Ray begins by telling us about his first venture into business. He was in college, struggling to find a job when he decided to hold a workshop at the American University in Beirut. This was to later grow into a much larger scale event with over 6,000 attendees and multiple sub-conferences in a variety of fields – STEP Start, STEP Digital, STEP X and STEP Money.
“It is a good thing,” he says, smiling, “because this year the conference is being held at the American University in Dubai proving great exposure to students [looking to start their own business.]”
Ray is an entrepreneur in the real sense of the word and today he aims to provide a platform for like-minded entrepreneurs to grow their business, secure funding, network and connect with investors. Now in its 6th year, STEP has been creating huge impact for start-ups in the region by raising the profile of the Middle East as an emerging entrepreneurial market globally, but also by facilitating the exchange of vital information, best practices and experience into how to start and maintain a successful business.
“A lot of start-ups have launched at STEP and fund raised after STEP; they have either met investors or improved their relations with investors because of the conference. There are many factors that go into the success or failure of fund raising and we always like to play a big part of the success.”
Beacon for investors
Back in 2012 the conference’s first edition attracted around 100 people and since then has been tripling in size. This year over 250 start-ups exhibited at the event, with many more present comprising mentors, venture capitals, private equity investors, law firms, and many more.
“The majority of participants are in the tech sector and within tech there is many different sub industries whether it is digital media or IoT, artificial intelligence, cryptocurrency or block chain. A lot of the companies that we see today are models that succeeded in the US or other markets, and that are localized and brought here – and a lot of them are really quite successful,” Ray said.
He added: “If you take a model that works in the US and you adopt it, it does not mean that you are not innovating, you innovate locally – there are many ways to innovate through creative ideas; innovation is not just about being the first to come up with a concept.”
The youth holds the power
The Arab representation at the conference is significant, reflecting a growing push to foster a truly entrepreneurial cultural, especially among the youth. In the UAE, the Mohammed Bin Rashid Fund for SMEs was created to finance innovative pilot projects for Emiratis, with over AED 3 billion ($810 million) dedicated for technology start-ups.
The young generation is considered to be the driving force behind this entrepreneurial wave sweeping across the region. According to a recent survey1, more than 64% of working-age respondents in MENA would rather start their own business than be employed, with 70% of respondents already making first steps to establish their own firm in the last 5 years. In the ranking of MENA countries in the Global Entrepreneurial Index 2016, UAE – ranked 19 – tops the list, followed by Qatar (24), Saudi Arabia (36), Lebanon (50), Morocco (78) and Egypt (89).
Lee McMahon is Co-Founder and Principal at Support Legal, a law firm that specializes in providing support and legal advice to start-ups in the region. The company, a start-up itself, was founded out of the need to provide cost effective support to local newly established SMEs. According to Lee, the pace of start-up growth is picking up fast, with start-ups now becoming a much larger sector of the market.
“There are many entrepreneurs coming out of Egypt, Lebanon, Saudi Arabia and the UAE. We are starting to get a lot of interest out of Africa as well.”
The region’s rising star
Saudi Arabia is another emerging market that is expected to grow exponentially, says Lee, particularly given the large portion of youth in the country, who are rapidly fueling this growth. In 2017, Saudi Arabia announced new entrepreneurship licenses aimed at encouraging growth in the small and medium-sized enterprise (SME) sector. For the first time, the new licenses will allow overseas entrepreneurs to establish a business in Saudi Arabia.
According to Wamda Research Lab (WRL), significant opportunities exist for start-ups and SMEs in the healthcare and renewable energy in the country, with the government pledging to spend $109 billion on solar energy infrastructure over the next 20 years. Start-ups can also capitalize on opportunities within digital healthcare services, as the Big Data market is expected to grow to around $1.9 billion in 2018.
Foreign investors’ interest in the Middle East is as strong as ever with numerous success stories like Souq.com, Dubizzle, Careem, Namshi and many others, attracting multi-billion dollar investments. With the announcement of Expo 2020, the tech scene in the UAE in particular has seen an enormous growth, and is expected to continue to expand moving forward. According to the UAE Ministry of Finance, start-ups and SMEs in the UAE represent 95% of all firms, accounting for 86% of total workforce and contributing around 60% to non-oil GDP2.
Bright future ahead
But as Ray observes, there is still a lot of work to be done to grow the local market and encourage appetite from global investors. Aside from Dubai which continues to lead the ranking for best place for start-ups in MENA, he is of the opinion that the rest of the region still needs to catch up.
Compared to Europe and other parts of the world, restrictions in the free movement of people and goods are creating certain limitations for new businesses in the region. In addition, more needs to be done to cut down the cost of setting up a business and make it more efficient, he explains.
“The ecosystem within the region still has a long way to go to be more globally relevant. If you look at the market size compared to the US, the market here it is still not as big as I would like it to be.
“Saudi Arabia will hopefully be a speed train moving in the right direction. Things are changing fast – there is a lot of hope, especially from the youth, and if that picks up properly there is great potential for the region,” he concludes.
1The MENA Start-Up Ecosystem https://www.go-gulf.com/blog/mena-startup-ecosystem/
2 UAE Ministry of Finance https://intranet.core-me.com/research/pdf/start-up-environment-in-dubai-2016.pdf
