Sharjah’s start-up platform scores hits

As many as 72% of Sheraa-mentored businesses are operational and that is quite a high

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Manoj Nair, Business Editor
3 MIN READ
Najla Al Midfa, CEO of Sheraa. The belief is that even in ‘Old Economy’ sectors, Sharjah and the wider northern emirates can still accommodate new businesses
Najla Al Midfa, CEO of Sheraa. The belief is that even in ‘Old Economy’ sectors, Sharjah and the wider northern emirates can still accommodate new businesses
Virendra Saklani/Gulf News

Dubai

A 72 per cent success rate? In the world of start-ups and putting funds into them, that’s quite an impressive number. The Sharjah Entrepreneurship Centre — or “Sheraa” as it is more popularly known — certainly thinks so.

“A Harvard Business School study has shown that only about 25 per cent of start-ups achieve long-term success,” said Najla Al Midfa, CEO of Sheraa. “So, we are quite excited by the fact that 72 per cent of our start-ups are still active — most of them are three years or younger.

$ 37.2 m
Amount raised by businesses mentored by Sheraa

“Our experiences have allowed us to develop a formula that ensures we focus on businesses that have the greatest potential to succeed. And on older founders who have the additional resources to carry their start-ups forward.”

Sheraa, which itself is only three years into its operations, supports start-ups through “equity-free grants” from a pool of $500,000 plus. The start-ups — numbering 72 — that it has been associated with have collectively raised $37.2 million from a wider pool of investors. Of these, 56 per cent of the funds came in after the start-ups tied up with Sheraa. These businesses have generated $24.4 million, 70 per cent of which came in after the Sheraa association.

56 %
Share of the $37.2m fundraisings that have come after Sheraa links

For the moment, Al Midfa does not foresee the entity taking on a more direct — i.e., pick up equity — approach with the start-ups it associates with. But Sheraa is considering launching a “seed fund”.

“We do recognise that continued access to capital is vital for a start-up’s growth,” the CEO said. “As part of our ongoing efforts to support our founders, we are exploring the option of establishing a seed fund.

“Additionally, our long-term strategy may include initiatives to encourage further investment in our start-ups via investor education programmes.”

Sharjah, interestingly, has been witness to a start-up boom in the past three years. Sure, some have launched businesses in the ever popular tech and digital media space, but there have been quite a few who have ventured into more traditional spaces such as F&B operations, logistics, etc. The belief is that even in such “Old Economy” sectors, Sharjah and the wider Northern Emirates can still accommodate new businesses and new ways of operating them.

The UAE’s start-up and the venture capital scene has been having a good run, with the recent Uber-Careem $3.1 billion deal providing an all-too-obvious boost to sentiments. And, of course, there was the Amazon takeover of Souq in early 2017, with a price tag of $600 million plus. But beyond these high-exposure deals, the venture capital and funding rounds have had a busy time of it.

In Sheraa’s case, Al Midfa says it’s too early to talk about stock market floats and mega deals for its start-ups. “An IPO may be in the pipeline for some of our start-ups … we hope,” the CEO said.

The Sheraa way of investing

Unlike incubators and accelerators, Sheraa’s exposure to start-ups takes the form of grants rather than picking up equity in them. There are plans to upgrade its operations with the launch of a seed fund.

Businesses that it has invested in include Mr. Draper, an online shopping platform for men, El Grocer, a grocery portal, and MintBasil, which taps into a growing consumer appetite for healthier options.

“There is quite a bit of overlap between incubators and accelerators, which can sometimes lead to confusion,” said Najla Al Midfa. “Incubators tend to be longer programs that focus on earlier stage start-ups, providing founders with critical business support such as mentorship, coaching, access to market, and a physical space to work from.

“Accelerators, on the other hand, operate with set timelines — generally three months — and cohort-based — and are usually tailored toward start-ups that are beyond idea stage, with at least a prototype of their product ready.

“Both incubators and accelerators can be sector-specific, but accelerators are more likely to be. Additionally, while most incubators do not provide direct investment, the majority of accelerators do — this is typically $50,000-$100,000 in exchange for a small equity stake of less than 10 per cent.”

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