Awarding innovative businesses

Give a man a fish and he will eat for a day, goes the old saying. Teach him to fish and it will feed him for the rest of his life. Abu Dhabi is a welfare state in that the local population is given fish all the time in the form of utilities, education and health care. True capitalism, however, requires incentives rather than handouts — a fact that is not lost on the emirate. In the UAE capital, budding fishermen, especially those with talent, are provided a boat, a fishing pole and lessons on maximising their catch. This is of course an analogy and refers to talented entrepreneurs.

The emirate’s strategic plan for 2030 is geared toward preparing the country for an oil-independent future. Economic diversification is on the agenda, which is part of a more crucial aim — the support of small- and medium-sized enterprises (SMEs). The plan makes specific and repeated reference to this segment.

The math is simple on the importance of the small business sector. Large firms cannot grow as much, as quickly. Plus there is a limit to how big they can get within one country or region. Economic growth, therefore, almost entirely depends on the little (and medium-sized) guy.

The UAE currently ranks 42nd in the world for ease of starting a business, according to the World Bank and International Finance Corporation’s Doing Business 2012 report — up three places from last year. In the Mena region, however, it is a clear front runner.

Central to the cause is the Khalifa Fund, launched in 2007 with a Dh2 billion capital to provide “financial and professional assistance to local entrepreneurs.” In recent years, the Khalifa Fund’s four programmes directly funded about 367 projects with a finance value of Dh600 million, Dr Ahmad Khalil Al Mutawa, the CEO of Khalifa Fund, said in a recent media statement.

The fund currently stands at half a billion dirhams, since it has already invested in a host of businesses. The year 2011 saw the approval of 78 new projects, which received a total of Dh151 million in investment. About 23 per cent of the funds have so far been allocated to food services; 32 per cent to the services industry; 30 per cent to the industrial sector; 6 per cent to construction; 7 per cent to retail; and 3 per cent to tourism  (refer to pie chart on the left for details). Of the finances disbursed in the emirate last year, 66 per cent was distributed in Abu Dhabi, 25 per cent in Al Ain and 7 per cent in Al Gharbia.

Early this year, the fund announced the establishment of a new initiative to further boost entrepreneurship. “We developed a micro-business programme, which will focus on providing the financial support for the emirates to establish their small business in order to increase their income and to improve their lifestyle, and those micro-business projects will be our main target, not the large ones,” Hussain Jasim Al Nowais, Chairman of Khalifa Fund for Enterprise Development, said recently. In 2012, the fund has put the focus on out-of-the-box projects, he added. “I urge entrepreneurs to come up with new innovative business ideas that serve the local economy in order to invest in different essential sectors,”
he said.

One company that has been supported by the Khalifa Fund for Enterprise Development is Slices, an alternative, healthy eatery based in Abu Dhabi (with a second outlet on the way) that serves café-style food with organic ingredients. Menu items include a selection of  coffee, breakfast options, juices, salads and sandwiches. Such a venture is attractive to investors. The product is high quality and the branding, striking. Better yet, the business addresses the problem of rising obesity and diabetes in the Emirates.

Faisal Al Hammadi, Founding Partner, Slices, is thankful he has been able to benefit from the fund’s efforts, but points out that there are still enormous growth opportunities. “Success does take hard work, dedication and creativity, but the sense of pride you gain from establishing and driving your own business is unsurpassed,” he says.

For those entrepreneurs who do not qualify for investment from the fund, there are other sources of support. Peer-to-peer investing has been prevalent. Online networks matching entrepreneurs and angel investors have been growing. One such website is middleeastinvestmentnetwork.com. Budding businessmen post details of their project online to be viewed by thousands of independent investors. The website facilitates a due diligence process to protect both parties.

Start-ups are now synonymous with the tech renaissance. We associate the very word entrepreneur with Larry Page, Sergey Brin and Mark Zuckerberg. In fact, many a conventional business now relies on a web model to support core activities. Start-ups are no longer simply new businesses, but describe a prevailing culture
of innovation. This evolution in commerce has heavily influenced the latest free zone to be established by Abu Dhabi. TwoFour54 (a play on the emirate’s geographical coordinates), is a creative hub with web and media as its central theme. Training academies for tech and creative skills, support services, as well as a venture capital fund are all integrated into a comprehensive platform for young companies and ideas.
 
The free zone goes further than simply propping up businesses. Its mission is to nurture creative content, hence it has become the go-to foster home for film-makers and artists in the region. The strategy is in line with Abu Dhabi’s aim to become a cultural capital in this part of the world.

When it was launched, Tony Orsten, the CEO of TwoFour54, explained the goal of the organisation. “The Abu Dhabi 2030 Vision seeks to establish the emirate as a regional centre for culture with a ‘global capital city at its hub.’ An extremely important part of achieving this vision lies in creating a thriving international media industry which, to be successful, needs to be local at the same time.” TwoFour54 partners with some of the world’s leading institutions including CNN, BBC, Random House and others. Additionally, it provides freelance licences to those in relevant practices.

The UAE has also jumped on board the growing trend of start-up TV shows such as Dragons Den and Shark Tank. Du is set to air the first season of The Entrepreneur this year: entrepreneurs pitch their ideas in front of a panel of wealthy, established businessmen and the winner gets Dh1 million. The competition is open to all UAE residents above the age of 18, and is geared toward start-ups as well as existing small businesses.

Hala Badri, Executive Vice-President, Brand and Communications at Du, said at the unveiling of the show, “We are convinced that there are many good ideas out there, which need to be heard and promoted. The UAE is brimming with fantastic entrepreneurial talent, which just needs a platform to flourish. The Entrepreneur aims to empower and support the new breed of UAE entrepreneurs that build new enterprises, which are innovative, sustainable and, most importantly, contribute meaningfully toward the social development of communities.”

Local talent aside, Abu Dhabi is attracting innovative firms from around the world because of the opportunities being created by its ambitious development plans. Chances are that if your venture contributes something to the UAE’s progress, backing can be found.