Abu Dhabi, UAEWednesday 24 October 2018

Start-ups hope to be pitch-perfect

A flood of new start-up funds has emerged in the Middle East, promising new hope for budding entrepreneurs. The National meets seven young companies courting regional investors.
Entrepreneurs from Steady Fare, a website in the United States promising to lock-in airfares for its users in return for a small fee, chat with some of the attendees during Demo Day. Jaime Puebla / The National
Entrepreneurs from Steady Fare, a website in the United States promising to lock-in airfares for its users in return for a small fee, chat with some of the attendees during Demo Day. Jaime Puebla / The National

A sense of anticipation hangs in the air as seven start-up businesses wait to pitch their ideas in front of a crowd of investors.

It's not quite Dragon's Den, the popular British television show in which entrepreneurs face interrogation from a panel of unsmiling venture capitalists.

But the participants of SeedStartup - an accelerator programme for young businesses based in Dubai - know they must put on a good show.

The entrepreneurs gathered last week at Dubai's Make Business Hub, a cafe and workspace that is itself something of a start-up success story.

Hailing from as far afield as the United States, Tanzania and Malaysia, the hopefuls made their pitches in a bid to attract the interest of investors present among the 60-strong audience.

"This is not, 'Pull out your chequebook right now.' This is about getting investors excited about what they are doing," says Rony El Nashar, the founder of SeedStartup.

This three-month programme helps fledgling businesses receive mentoring by executives from companies including Yahoo and Dubizzle. They also get seed capital of up to US$25,000 (Dh91,823). In return, SeedStartup takes a 10 per cent stake in the business.

"The goal of SeedStartup is to go from prototype to fundable business within three months," says Mr El Nashar.

The first business to pitch at SeedStartup's 'Demo Day' was Steady Fare, a website in the United States promising to lock-in airfares for its users in return for a small fee. With a video camera trained on them and dozens of onlookers, the three young entrepreneurs overcame their nerves to give a convincing, yet quirky pitch.

Rasello, which is based in Tanzania, was the next presentation. The service allows small businesses to analyse their customer profiles and communicate directly with them via SMS.

"It's not easy to get funding but, then again, the ecosystem in our market is not as developed as other parts of the world," says Natalino Mwenda, the founder of Rasello.

Mr Mwenda's company has already raised $200,000, and is looking for $300,000 in additional funding. It raised further investment after pitching at the SeedStartup event.

The Arab start-up was EXA, which is based in Bahrain and offers high-speed rendering, the process in which images and films are processed to make them look more true to life.

"Artists use it to bring their ideas into life," says Mohamed Anwar Sheikhaldeen, the co-founder of EXA. "It's a very intensive job. You have to do so many mathematical operations."

EXA uses cloud computing to speed up the rendering process. It has attracted grants from the Bahrain government and Mr Sheikhaldeen is now looking for both investment and mentoring.

The entrepreneurs behind EXA include Mr Sheikhaldeen, from Bahrain, and Zakaria Moustapha Benhamouche, from Algeria.

"We are designed and built here in the Arab world," he says. "It's exciting because you don't hear about technology in the Arab world. It's always being brought either from the Americas, or from China and east Asia. But technologies are being grown over here."

MediaGraph, which offers public relations services to small businesses and is based in the UK, was the last but not least to present a pitch.

Nicholas Holmes, the co-founder of MediaGraph, believes the SeedStartup programme had given his business valuable access to advisers and investors.

"We were accepted on to the programme with little more than an idea and three months later we've brought our product to life, with paying customers," he says.

MediaGraph has had initial commitments from investors and expects to close its round of funding "over the coming weeks". Initially focusing on technology-based small and medium-sized British businesses, the company plans to roll out the service in the UAE.

Evangelos Lianos, a senior executive at Etisalat, is one of the SeedStartup mentors. He has spent several hours a week with a couple of the start-ups, for which he does not charge, to help develop them into fully fledged businesses.

"All of them started with a simple idea," he says.

But it is not a purely altruistic exercise for Mr Lianos. He says the mentoring gives him deep insight into the businesses - and he now plans to personally invest in some of them, although he declines to specify which ones.

"You have the possibility, because you are deeply involved in their project, to know whether it's worth investing in," he says.

A lack of funding options is a common complaint among start-ups and small businesses in the Middle East. There has, however, been a rush of new funds in the local market.

At least five new funds - Beco Capital, Y+ Ventures, Smart Start, Envestors and Virtuvest - have said they are looking to invest tens of millions of dollars in the next few years.

New incubator programmes, charged with mentoring and financing young businesses, include SeedStartup, Silicon Oasis Founders and i360accelerator.

But, while there may be money in this market, many funds are still reluctant to invest in early-stage businesses.

"There are a lot of funds aroundbut the issue is how [willing] they are to invest," says Mr Lianos. "Some of them will simply try to keep their money and invest in more secure things."

Yet hope is on the horizon if the SeedStartup event is anything to go by.

Under the warm lights of the Make Business Hub, investors met with start-ups after the series of pitches and the SeedStartup founder feels confident deals will follow.

"The majority of the private equity and venture-capital funds in the UAE and the region were here," says Mr El Nashar.

"Two of the start-ups already had commitments. I think a lot will raise funds."