Dubai: Internet entrepreneurs who know a lot about technology but little about media and marketing need all the help they can get before launching a new start-up web enterprise, experts say.

And even after following all of the rules and clocking 20-hour days to get a new web-based start-up off the ground, there is no guarantee the enterprise will survive in the mercurial virtual business climate of the web.

Scores of fledgling internet business types swamped a free Speed up Your Startup workshop earlier this week hosted by the ArabNet Roadshow and Dubai Internet City to learn the ropes from a panel of experts.

Aware that not everyone can afford the time or money to travel to the group's ArabNet Digital Summit 2011 show in March in Beirut, ArabNet Roadshow officials have taken the start-up message to eight cities in the Middle East since October with a mission to "train and inspire young entrepreneurs across the region."

ArabNet Roadshow said the workshop is about helping startup hopefuls to "evaluate their ideas and build a business case, understand their legal options and the fundraising process, learn about growing their business and get a perspective on the hot trends in the web sector."

Panel speaker Rabih Blair, Co-founder of Tandem, a Dubai based consulting and fundraising firm, told the workshop there is a typical cycle for entrepreneurs that always starts with the idea.

Critical steps

"It's important to identify the strengths and weaknesses of the idea itself," Blair said, noting there are critical steps to success to building a business case such as identifying the service, the market, competitors, building a team, revenue streams and cost structure.

Using a business startup example to illustrate the steps, Blair said that a new book exchange website aimed at students would first identify the benefits users get from using the product, in this case, cheaper used books versus pricier new ones.

Research would show that 10 per cent of the UAE's population could mean there are 600,000 post-secondary students as potential customers to help build revenue streams to help the book website operation.

"With an internet startup, the reality is that you won't see advertising revenues for a while until you build up a base," Blair said, suggesting alternative revenue streams need to shore up the new business.

To keep costs down, Blair advised that startup owners do as much as possible in-house and tap into less expensive publicity tools such as social media marketing on Facebook and Google to help keep the bottomline in the black.

Sally Soubra, a lawyer with Laitham and Watkins, told the workshop there are three types of companies that can be formed in the UAE as a legal entity, each having their advantages.

The most common company used in the UAE is the Limited Liability Company, or LLC in which an investor must find a local sponsor who owns 51 per cent of the LLC. Share capital is Dh300,000 in Dubai and half that in Abu Dhabi.

A second type is a freezone entity in which "you can have 100 per cent ownership" but "unfortunately in a freezone you have to lease space… that's a cost," Soubra said. A FZ company minimum share capital with DIC is Dh50,000.

Startup entrepreneurs can also register for what's called a Cayman Island exempt company which is also tax free, she said, and costs $2,600.

Seed stage

Saqrib Rashid, Senior Vice-President with Abraaj Group, said his firm started in 2000 with a $115 million fund which has grown a decade later to $6 billion by investing in companies that are past the seed stage and are ready to take the next step.

In 2004, Abraaj Capital helped finance Arab internet web portal Maktoob which offered in the 1990s the first Arab email service. Abraaj purchased 40 per cent of the company for $5 million.

"We know it had more than just Jordan potential, it had regional potential," Rashid said. "We had never done investment in internet space before."

Abraaj helped bring in Tiger, a US hedge fund, and Maktoob was eventually sold to Yahoo for tens of millions of dollars.

Rashid said Abraaj is always on the hunt for other promising tech hopefuls, reiterating it's not seed companies they want to explore but "companies that have demonstrated some traction."

Gideon Simeloff, head of Ibtikar, twofour54, said his company searches to "invest specifically in media" with a view to building a sustainable media industry in Abu Dhabi.

The firm provides growth capital in the seed capital stage as well as to help with content and creative projects.

"We're looking for promising companies to turn them into regional leaders," Simeloff said. "The web is a hot sector for us."

That said, Simeloff said that of every 100 proposals the firm receives perhaps one idea eventually is strong enough to gain ground, mature and succeed.

"What we are looking for is a strong idea — it can be that simple," he said.

However, the idea must demonstrate a consumer need, must be monetisable and scaleable.

"It has to be able to be executable."

Future predictions

Jasem Ali, Regional Director of Digital Development, Omnicom Media Group, said the future of web startups is firmly moving to handhelds with predictions that by 2013, mobile devices will outpace PCs.

Estimates suggest there will be 10 billion wireless devices globally in two years.

"Two years back, we weren't checking our mobile phones to check football scores," noting that in the UAE, we "are living in one of the most densely populated countries for mobile penetration in the world.

Figures suggest there are 2.5 phones for every resident of the UAE.

Ease of access through mobility combined with the decreasing cost of electronically reaching out to the masses will only boost demand for more internet-based e-services in the years ahead," Ali said.

Growth in Middle East

The market is ripe for new web startups if the latest internet figures for the Middle East are any indication.

According to Internet World Stats, as of June 2010 the Middle East recorded user growth of 1,825 per cent in the last 10 years as compared to 432.1 per cent in the rest of the world.

Internet World Stats figures show there are 63.2 million internet users now in the Middle East of the total 212.3 million residents in the region.

Internet users in the region represent 3.3 per cent of the 1.9 billion people in the world now connected to the internet of a total world population of 6.8 billion people.