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Fri 27 Feb 2009 04:00 AM

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Timing is everything for start-ups

Downturn shouldn't deter budding business people from launching tech ventures in Mideast, feels Derek Goodwin.

Derek Goodwin, head of the UK Trade & Investment's global entrepreneur programme, reveals why the economic crisis should not deter budding business people from launching technology ventures in the Middle East.

What is your role and how does your work relate to the Middle East?

I run the global entrepreneur programme which is a UK government-backed initiative focusing on building technology companies. We have entrepreneurs as our dealmakers and representatives in different markets, who find early-stage technology businesses hoping to become international companies.

We headquarter the businesses in the UK, with facilities, sales offices and R&D in other locations, and help them with route to market and raising money.

We came to Dubai about a year ago and attracted investment from Gulf investors looking to enhance their operations and competitiveness by reducing their energy costs. For example, one of those investors could be in construction, building cities and roads with a massive requirement for lighting.

We had a business that had developed an eco-lighting system that works in extreme heat and uses about 25 percent of the energy of regular lighting. We found eco-lighting technology was particularly attractive to one of the Gulf investors.

How developed is the Middle East's technology industry?

I wouldn't necessarily say it has a massive technology infrastructure, but we're hoping we can bring in world-class intellectual property and technology from other parts of the world, which is what the industry needs here.

People are looking to cut energy costs significantly because oil will run out one day. I was talking to a company recently that spends $1m a year on air conditioning. Well, we have a Korean scientist with an air conditioning operation and he spoke with the business, telling them he can significantly reduce their energy costs. Business is not a national thing anymore, it's global and you get partners from all over the world. We're trying to connect those dots.

With the global recession in full swing, is now a good time to launch a venture in this region?

Companies like Motorola and Hewlett Packard were established during previous recession periods. It's not a good time but when is? In some respects, if you can get up and running now you will perform that much better when things pick up again.

Entrepreneurs were on a high for a long time and now we are in a dip, but businesses will go on and banks will sort themselves out. Any company established now will be in a much better position further down the line.

It's not always money that makes a start-up company; it's getting somebody on board that can drive the strategy forward, looking at route to the market and forming links and partnerships. It's an over-used phrase but it really is all about networks. Wherever we go in the world we make it important to establish close links and relationships with organisations that can accelerate businesses by providing access to markets.

Can technology entrepreneurs grow their businesses in an undeveloped market like the Middle East?

One of our most successful markets is India and its infrastructure isn't the same as that in developed markets. I read somewhere recently that in the 15th century the world was ruled by India, China and the Middle East, so perhaps we are going back in time. We've done very well in India with some good networks and successes, including a company in Mumbai that was once just an idea on the table.

The company has developed a technique to make paints cleaner and more cost effective, and it has just won a $21.8m order. It was this guy with a PhD from Mumbai and we built the company around his intellectual property. Now it's a global business with markets in Europe and the US. In some respects, a less developed infrastructure offers more opportunity.

What types of companies have broken the Middle East market?

We have one company that has developed a non-invasive way of detecting diabetes, so you don't need to draw blood. It's a contraption where you put your arm in and a beam of light comes down which can detect the glucose levels in your blood.

With the Middle East's high incidence of diabetes, this device has received a lot of interest. We want to develop that company, so its next model will be the size of a mobile phone that you can shine on your arm. Another example is the lighting company and the paint firm, because the paint reflects the heat and so can reduce energy costs.

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