The UAE is at the centre of small to medium-sized enterprise (SME) activity in the region. The nation has constantly endeavoured to promote entrepreneurship and it shows, with brands such as Fetchr, Careem, GlamBox, Compareit4me, Mumzworld, Namshi, Koot and Cheeky Monkeys being just a few of the many promising start-ups founded in the UAE. Set up within the past five years, these businesses represent the entrepreneurial spirit that thrives in the country.
However, with the global economy still in the doldrums and projections for 2017 far from robust, how are these start-ups surviving in the region?
“The global economy is tough but that is the interesting part — when things get tough, when there is an economic downturn people start getting creative and come up with new ideas more out of necessity,” says Ahmed Abdul Wahab, Head of Turn8 Accelerator. His company focuses on developing start-ups that require minimum product innovation and are ready to go to market immediately. Turn8 injects investment, develops talent and provides mentorship and business development support for its start-ups.
The different entrepreneurship activities, such as the current Gitex start-up movement, SME Beyond Borders and the Khalifa Fund, are encouraging more people to take the plunge and set up their own business.
“Investors see a deal slow [investment opportunity] in this market,” says Abdul Wahab. “Are we there yet? Certainly not. We have a long way to becoming something like Silicon Valley but we are heading in the right direction.”
Breaking the mould
Some entrepreneurs are re-inventing platforms. British-born serial entrepreneur Saima Khan and husband Shazad Ali took the plunge into business by introducing UAE to the business of edutainment. They set up Cheeky Monkeys about three years ago and self-funded the venture.
Cheeky Monkeys’ business model is an edutainment play area and birthday celebration destination for children between ten months and eight years old. It offers an environment for children to play, learn and grow, free from electronics and video games.
Unlike other new businesses, Saima is no stranger to the start-up community. “I refer to myself as a serial entrepreneur because I have worked in a boutique investment firm and in advisory roles for high-net-worth individuals in the US and the UAE," she says. "With Cheeky Monkeys we had such a strong proposition that we decided to go the self-funding way. Within three years we saw such high demand for our business that we decided to sell 60 per cent of our business to Marka — the UAE’s first publicly traded retail operator focusing exclusively on fashion, hospitality and sports segments.” Today Cheeky Monkeys has five locations and ambitious plans to grow further.
Become your own boss
Luma Bourisly on the other hand has been a corporate person for most of her career, from managing the media relations for petroleum firm Eppco to leading the communications team at Du. Last year, she took the plunge into entrepreneurship by setting up her own business, Kooot, an online shopping and lifestyle destination for modern Middle Eastern women.
“The e-commerce industry has a huge growth rate,” says Bourisly. “Other markets are quite mature but this region has just started using this platform and we see great potential. Almost 60 per cent of the Middle East are young adults or youth who live on their phone and are comfortable with online shopping. I consciously stepped into this space to carve a niche for the modern Middle Eastern women who are largely ignored by global fashion brands.
“Starting the business has not been easy, partnerships on this side of the world are challenging. Take logistics for example; for an e-commerce business, they are critical partners but the industry is not mature. I am constantly bogged down by warehousing/fulfillment issues. Take the payment gateway — a cash-on-delivery model. Not too many players can fulfill this requirement — this impacts delivery and the bottom line.”
Building the right ecosystem
Creating an ecosystem for SMEs in the country and region is not an overnight task. The UAE government has been setting up free zones, funding local initiatives, organising conferences, events and rewarding ideas.
The 2016 SME Beyond Borders is one such event hosted by the country that brings together entrepreneurs, industry disruptors and investors from the region. The event aims to reinvent the way new entrepreneurs can get funding.
“This year, Etisalat’s Hello Business Pitch Please! platform will provide the opportunity for start-ups to present in front of an expert panel who will be assessing their business model through the strength of their pitch,” says John Lincoln, Senior Vice-President, Small and Medium Businesses at Etisalat. “Shortlisted winners will get the opportunity to pitch to an audience of 2,000 decision-makers on the main venue stage.
“This event brings together world-class speakers who have disrupted established business [or] commercial models or have taken the plunge and built on an idea to create a business.”
Attendees can meet peers, venture capitalists and angel investors. What better place to bounce your ideas and make them grow? SMEs contribute about 80-90 per cent of the country’s non-oil GDP, according to the Annual Economic Report. Etisalat’s SME unit focuses on growing the market by supporting businesses’ specific requirements, explains Lincoln.
Mohammad Ahmad Bin Abdul Aziz Al Shehi, Undersecretary at the UAE Ministry of Economy, emphasised the importance of adequate financing for SMEs in a recent interview with Gulf News. SMEs contribute an estimated 40-46 per cent of nominal GDP in Dubai, he revealed, and more than 60 per cent of the nation’s GDP.
Small and medium enterprises host the majority of employment opportunities in the country, providing 86 per cent of private sector employment. They are the backbone of the nation’s economy.
