Creating a dynamic and resourceful environment for SMEs and entrepreneurs in the GCC is a vital component in maintaing competition and helping to create jobs in tough economic climates.
Wanted: new faces and new ideas for entrepreneurship
Some 70 per cent of technology jobs are created by small to medium-sized enterprises (SMEs) across developed economies, according to Academia Research findings.
In the GCC however, technology SMEs make up less than 20 per cent of the tech job market, and even fewer of those are driven by local entrepreneurship, a significant gap that undermines the region's ability to drive innovation in the industry.
Creating a dynamic and resourceful environment for SMEs and entrepreneurs therefore becomes a vital component in maintaining competition and helping to create jobs in tough economic climates. Investment in science, technology, engineering and mathematic (Stem) educational programmes is a vital component to help bridge the gap as well as an active ecosystem of investors and incubators to help SMEs to succeed.
"The first step to any technology company is the human capital that forms its base. Without strong Stem education, technology companies simply will not have the resources needed to thrive and most entrepreneurs may not know where to start," says Hanan Harhara, the head of human capital at the Advanced Technology Investment Company (Atic).
"The UAE has made real steps forward in Stem education, from early education through to graduate and postgraduate levels. At Attic, we have seen remarkable talent come through the UAE's university system, which I believe provides a promising base for the nation's future development," says Ms Harhara.
Shaping educated youth into entrepreneurs able to catalyse economic development requires a second step, often referred to as incubators. These entities provide support ranging from funding to targeted resources to continuing education and guidance. Local entities building a footprint in this area include the Khalifa Fund, Masdar Institute, Silicon Oasis Founders, ICT Fund, In5 and Qualcomm.
"We see that, in the UAE specifically and in the region overall, entrepreneurs need a lot of support and guidance to tackle new areas and new fields. We all see good ideas almost on a daily basis, but most of the time they unfortunately don't get built or don't succeed," says Ziad Matar, the head of Middle East and Central Asia at Qualcomm.
While the educational environment has been improving, the investment and incubation landscape has been slower to respond.
"Even though Dubai is a rich place, other places are more adventurous. Jordan and Egypt are investing more in technology," says Baher Al Hakim, the product chief of Wally and founder of Napkin, a lab based in Dubai that prototypes ideas, builds and ships products and turns the best concepts into start-ups.
Wally, a finance management app, has achieved 30,000 downloads on the iTunes store since its launch in February and has 21,000 active accounts. It has now attracted 18 investors of which two are based in Silicon Valley.
"It is very difficult as a start-up because investors here don't realise the potential of technology for start-ups and they don't have realistic expectations," says Saeid Hejazi, a co-founder of Wally. "We've been doing this for five, six years. When we started you could count on one hand the investors in the whole region. From then until today, a lot has changed ... [but] you don't have investors with enough experience to see the potential of tech companies."
Qualcomm and others are working to change and improve this landscape. The company has trained more than 1,000 developers across the Mena region and Central Asia through its fast-track initiative. Those that show particular promise are then selected for further guidance, helping them refine their product and business strategy to create a unique offering.
After a three-month period, Qualcomm will back the product launch across the region, working with more than 300 regional mobile operators to help maximise the potential for success.
"Mobile is the largest technology platform in the history of mankind, but the keyword of this technology is 'platform'," says Mr Matar. "What ultimately makes the technology a success is the ecosystem of systems, apps and content that can be built on top of the platform. This ecosystem is absolutely dependent on the drive and creativity of entrepreneurs."
The company does not actually invest capital in or expect return from the entities it supports.
"We firmly believe that the more content there is running on these devices, the more people will ultimately use them," says Mr Matar. "This is not about making revenue directly from these companies, but about building revenues from mobile devises over the long term."
Also facilitating the success of start-ups, Silicon Oasis Founders, a wholly owned entity of Dubai Silicon Oasis Authority and the Government of Dubai, focuses on existing Dubai-based technology ventures that seek co-investments or short-time incubation of three to 12 months. Silicon Oasis Founders targets companies that represent sustainability and the potential to generate a turnover of at least Dh20 million and provides linkages to venture capital, industry guidance and additional incubation entities.
Providing more specific support to Emiratis, the Khalifa Fund offers numerous educational training programmes including Khuta and Intilaqaah. The Khuta programme provides local trainees with the basic needs to understand entrepreneurial concepts, and the Intilaqaah programme offers the necessary skills to prepare market studies, competitive analysis and marketing and financial strategies.
The Khalifa Fund's incubator programme, backed by the Abu Dhabi Government, supports entrepreneurs and SMEs through various support services and financing programmes, including Kutwa, which provides financial support up to Dh250,000 to support small businesses, Bedaya, which provides up to Dh3 million for new SMEs, and Zeyada, which gives up to Dh5m for expansion and development.
While a broad base now exists, these incubation entities are still very much in their early stages. As this base continues to grow, the onus lies equally with everyone — from graduates to seasoned professionals to take the entrepreneurial leap. Only then can the region bridge the 50 per cent gap needed for a vibrant technology ecosystem.