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Sun 24 Nov 2019 04:13 PM

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Funding remains the biggest challenge for Middle East start-ups, experts say

Experts at the Arabian Business Startup Forum said that firms should avoid failures to plan and be prepared for rejection

Funding remains the biggest challenge for Middle East start-ups, experts say

Other common mistakes she finds include not knowing whether they need to register IP, as well as wanting to incorporate the “cheapest structure”, rather than the most effective structure.


A lack of funding remains one of the biggest – if not the single most significant – obstacles to starting a business in the region, according to experts speaking at the Arabian Business Startup Forum in Dubai.

Speaking at a panel entitled ‘Launchpad: Journey from idea to market', Sam Quawasmi, the co-founder of equity crowdfunding platform Eureeca, said many business struggle with the funding necessary to keep a business running from it inception through to potential mergers and acquisitions (M&A) phase or an initial public offering.

“Basically, banks are not lending to start-ups. You’ve got higher chances of winning the lottery,” he said. “Therefore, most don’t make it to M&A activity of an IPO.”

The few examples of successful M&As, he added, are largely spin-offs of larger companies.

“But [generally] from idea to starting up to sustaining the business and getting M&A activity and IPOs…. it’s hard for start-ups to raise the cash to build up the business,” he added.

Mistakes

Speaking on the panel, Bianca Gracias, the co-founder and general counsel of Suits & Advisors, said that there “plenty” of mistakes that start-ups make.

“The first is that they come to me for advice and they don’t have a plan,” she said. “I ask what their business plan is, how is the business is going to scale and how its going to grow, and they have no clue. They have a great idea, but they don’t know.”

Other common mistakes she finds include not knowing whether they need to register IP, as well as wanting to incorporate the “cheapest structure”, rather than the most effective structure.

Gregor Amon, the co-founder of Hotel Data Cloud, said that he’d advise start-ups to properly prepare for rejection as they work to launch a business.

“Money will come, the funding will come, and the product is going to be awesome, but you need to be prepared for rejection. You’ll here ‘no’ 100 times before you hear ‘yes’. There’s going a lot of people who will find a million reasons why something is wrong, so you need to be the positive one.”