Angel investors and venture capitalists across the MENA region have become more confident to invest in the local tech start-ups, experts stated at the Arabian Business StartUp Academy held last week.
Hosting a breakfast workshop at the JW Marriott Marquis, Business Bay, the Arabian Business StartUp Academy, organised in partnership with RAK Free Trade Zone and Mashreq Bank, looked to explore the type of support start-ups and SMEs can get from angel investors and venture capitalists.
The trio of speakers – Elissa Freiha and Chantalle Dumonceaux, co-founders of WOMENA, a Dubai-based women-only angel group, and Dr Philip Boigner, vice president of investments at Dubai Silicon Oasis Authority (DSOA) – agreed that local start-ups are experiencing more positive attitude of and increased support from various types of investors.
Speaking to more than 100 SMEs and start-up owners, Freiha said: “In this region there are still expectations of immediate returns.
“Various statistics about angel investing show that 50 to 70 percent of companies will fail while those that succeed need five to eight years.
“Nevertheless, the primary goal of angels is to support the economy. Their interest is in building the community.”
Aware of many of the misconceptions about angel investing, Freiha and Dumonceaux teamed up in November 2014 to facilitate informed and streamlined investing in the region through an organised and professionally-managed angel group.
Following a number of their monthly meetings during which local start-ups pitch to investors, WOMENA has successfully facilitated an investment for the two Dubai-based start-ups – Melltoo, and AlemHealth.
When asked whether local investors have started recognising the opportunities of technology-based investments, Dumonceaux said: “The fact is that the exits are starting so people are starting to get more confident in the region. It’s really good in helping the growth of angel investment here.
“And I think it’s very well suited to the region,” she added while talking to StartUp after the event. “Because investors in the region tend to look at investments deal by deal which makes them a little less interested in a fund and more interested in maybe the broker-dealer model.
“But, the broker dealer isn’t getting the best deal flow. So, there’s a nice line [in angel investing] since you’re getting a deal flow of a venture capitalist, but you are able to make autonomous investments.”
During a coffee break that followed, the attendees had a chance to network amongst each other and also to learn more about the latest products and services offered by RAK Free Trade Zone and Mashreq Bank.
“Just because investor has to exit, that doesn’t mean that you’ll have to exit your business. You might have earned enough to buy out your investor,” said the Academy’s second speaker, Dr Boigner, to assure the attendees that the belief that venture capitalists put too much pressure on entrepreneur was just a prejudice.
Since joining Dubai Silicon Oasis Authority in 2011 as the vice president of investments, Dr Boigner has been managing the complete cycle of direct investments of the Authority, in particular equity investments ranging from start-ups to sizable private equity transactions.
In an interactive presentation, Dr Boigner explained to the audience what venture capitalists were interested in, which include outstanding teams, sensible and scalable business plan, transparency, willingness to work with an investor, and exit potential in few years.
With the region potentially approaching to its first ‘unicorn’ [a term describing a venture capital investing start-ups valued at $1 million, at a later stage when little risks are involved to include the company’s logo in its portfolio], when asked by StartUp whether ‘logo-hunting’ might happen in the region, Dr Boigner said: “Sure, logo-hunting will happen.
“Souq.com is the one everybody talks about, when the big exit is going to be. But there are very few logos in the Middle East, very few recognised brands.
“Souq.com is known regionally, but not internationally. So logo-hunting will only get you so far when you have logos available.”
The StartUp Academy will take a break in June during The Holy Month of Ramadan. The next session is scheduled for Wednesday, 22 July, 2015.For all the latest business news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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