Dubai: It is one thing to shell out advice to start-ups and small businesses while working in a senior position at a leading global financial institution. But the degree of difficulty is magnified when you intend to do so as head of your own start-up and competing with the big boys in the rarefied world of management consultancies.
A year into the launch of his firm, Vikram Venkataraman says the transition to being self-employed has been worth the effort.
But it does beg the question as to why an SME owner would want to seek specialist advice. The conventional wisdom would be that the promoter would have a clear idea what he intends to do and how to go about doing it. So where would Venkataraman and his firm come in?
"The perception that SMEs do not see the need for and will not pay for advisory services is just that, a perception," said Venkataraman, director of Salvus Strategic Advisors, which has offices in Dubai and Mumbai. The firm was launched in tandem with Vishnu Deuskar, another veteran in the banking industry.
Market in the gap
"We started advising companies within a few months of start-up on a monthly retainer basis, and have been securing advisory mandates every few months on these lines. We price ourselves sensibly, and have found a market in the gap."
Their track records have certainly come in handy, with a combined experience of 55 years in the banking industry and 22 of these in the UAE, most with SME experience.
"We believe we are the only firm wherein SMEs have access to the experience of senior bankers with wide CEO level experience to provide them with not merely financial advisory but strategic, management and operational advisory services," said Venkataraman." We do what it takes to put them on a growth path."
That includes advice on the ideal organisational structure, what the funding and marketing strategies should be and even on the human resource processes.
"The other is fundraising. We prepare companies to raise financing, and more importantly, raise it for them," said Venkataraman. On the fundraising side, Salvus's mandate extends to ensuring a client gets the right type of credit. It also aids in matching clients to banks that are best suited to their needs and have the ability to stay the course with the company as it grows.
Salvus eschews start-ups and those businesses in the early phase of their operations. An ideal client would be someone with a business generating turnover of Dh25 million and more. "To us, Dh25 million is at the beginning of achieving scale, assuming it is a scaleable business," said Venkataraman. "We will not say no to a client, for example, who is at Dh20 million or so but sees potential to scale up to say Dh50 million in three years with some serious help."
The firm is putting together a dedicated team to handle the particular requirements of smaller businesses. What of the next step in its own evolution? Will new markets beckon?
Significant expansion
"The response to Salvus as a serious, specialist SME-focused advisory firm has been extremely encouraging," said Venkataraman. "We are currently hiring and will see a significant expansion in our team by year-end.
"We definitely see prospects in Abu Dhabi. Over the medium term we expect to increase our engagement with Abu Dhabi, Oman and Qatar. Apart from the UAE, Saudi Arabia and Qatar are lining up ambitious plans to develop the SME component in their economies.
If these go according to plan, the Salvus promoters can expect to clock in some serious air miles.
Reaching out
You have seen the advertisements, from government agencies to telecom operators and banks — local and global names alike. Regardless of who is putting them out, they are bound by the unifying theme of reaching out to SMEs.
Never before in the UAE's history is so much being said about SMEs by so many. It is no coincidence either. Everyone wants a share of the expanding SME pie and they want it now.
But moving beyond the messages, are SMEs actually receiving the promised funds and in the size they need to grow their business? Vikram Venkataraman of Salvus Strategic Advisors harbours no doubts.
"Banks are lending to SMEs; it's a specialised business in that in addition to the level of collateral, banks give importance to other factors like cash-flows, intellectual property, key-man risk, assessment of the entrepreneur, growth potential, etc," he said. "In other words, a holistic view of the credit needs to be taken. Only a few of the multinational banks focus on collateral based SME lending. The rest of the banks lend on the basis of the other factors.
"Actually a few of the banks have been open for business with SMEs right through the crisis. More banks are in the SME space now. "However, while getting more funds into the segment is positive, it needs to be available at the right price."
