Aspiring entrepreneurs from the Middle East have a massive pool of funding available to them, but are yet to start capitalising on it, according to Omar Christidis, founder of the annual Arabnet Digital Summit.
“Across the region, there are tremendous number of opportunities for start-ups,” he said. “There is a range of mostly regional investors- from angel investors who are investing $50,000, $1 million or $2 million, to venture capital funds who are investing up to $250 million.”
Currently at least $500 million is available in the region to promote start-ups, he stated.
But while the resources are plenty, not much of is being invested at the moment, said Christidis. “How many start-ups are ready for that level of investment? Not that many. We have a gap in the early stage, a gap not only in investment, but also in hand holding and cultural aspects,” he said.
The Middle East has a communal culture, explained Christidis, so most children join family businesses or are pressured by parents to go into a traditional career like being a doctor, a lawyer, or an engineer.
“Also, unlike the US where children are encouraged to be entrepreneurial from when they are very young – either become a newspaper boy, set up a lemonade stand etc, in our region, kids are usually expected to stay at home with the family and have a good education,” he said.
“All of this makes it hard for entrepreneurs to go and start off their own businesses.”
The solution for that, according to Christidis, is the setting up of bodies like Oasis 500. An entrepreneurial projects and investment company based in Jordan, it provides early-stage capital to Arab startups and has also been given support by the King of Jordan.
The firm’s programme lends start-ups financial flexibility, and since the King has endorsed it, entrepreneurs can convince their families that they are part of a prestigious programme, he said.
Another challenge that regional start-ups face is choosing the right business.
Entrepreneurs, who are starting online ventures, need to look at businesses that can truly scale, said Christidis.
“It’s tough to make money on content-you have to build a lot of traffic before you can monetise. That can take a lot of time and investors want to see returns and entrepreneurs themselves don’t have that kind of money.
“But in e-commerce, you can start making money from day one. Because on every transaction, you make money and cover costs. And that kind of a transactional business is easier in our region and more likely to succeed,” said Christidis.
“If our region is going to get a really massive company, like a Google or an Apple, if we are hoping for a giant to come out of the Middle East, we have to have way more startups – a vast majority of which will sell.
“I consider it like a game of evolution. You have to have a lot of mutation before a really beneficial characteristic comes out of it. So for us to get there we need a lot more companies, a lot more startups. And then some will shine extremely bright,” he said.