$100m investment fund aims to kick-start entrepreneurship in Qatar

Startup

Vapartners.ca

Amid a national push to encourage entrepreneurship across Qatar and diversify the economy, a government-backed agency plans to launch a US$100 million (QR364.15 million) investment fund to help startup companies prosper.

Enterprise Qatar (EQ), which supports small and medium-sized businesses in the country through several programs, is likely to make investments of between roughly QR500,000 and QR2 million ($137,306 to $549,224) once the fund becomes operational in June, said Khaled Sadeddin, the agency’s manager of incubation programs.

Compared to other countries in the Middle East and North Africa, Qatar businesses attracted virtually no venture capital in 2012.

Local entrepreneurs have said it is difficult to find Qatari lenders willing to make long-term investments, and business observers in the region have argued there is minimal appetite for risk among Middle East venture capitalists.

Speaking to Doha News on the sidelines of the Entrepreneurship in Economic Development forum this week, Sadeddin said EQ will become one of the first institutional equity investors in the country.

Advantages

He said most local businesses traditionally rely on bank loans to fund growth. In that scenario, the financier is primarily concerned with mitigating risk and receiving regular repayments.

In contrast, equity investors – who receive an ownership stake in a business in return for their money – have an incentive to see the company grow quickly in order to maximize their return. For small businesses, this would often translate into the investor playing an active role in the company as a mentor or board member.

Sadeddin said Qatar’s small business community currently lacks a culture of equity investing, something he hopes the new fund will change:

“(We) need to educate … entrepreneurs about the beauty of getting an equity investor who is smart and is going to help them propel their business, grow it faster and further and with less mistakes.”

In a related initiative, Sadeddin said EQ is developing a national network of angel investors, who are typically wealthy individuals that provide cash to startups in return for an ownership stake.

Investing as an informal group can lower risk and creates a deeper pool of business experts who can be matched with budding entrepreneurs.

Silatech currently has an angel network, but Sadeddin said it has a regional focus beyond Qatar.

Entrepreneurship culture

A recent survey conducted by Ooredoo found that youth in Qatar had some of the highest entrepreneurial ambitions among their GCC peers, but that regulatory requirements are stifling their enthusiasm.

It’s hard to launch a business without considerable capital. One must have QR200,000 (US$54,921) in their bank account to register a company, in addition to possessing a lease for Civil Defense-approved office space that runs for at least one year – a commitment that can run beyond QR100,000 ($27,460).

Expats face an extra burden of finding a Qatari sponsor to own 51 percent of the company.

The subject of regulatory hurdles was raised during a panel discussion on government and entrepreneurship yesterday. None of the panelists suggested an easing of these restrictions, instead promoting programs that help entrepreneurs navigate the system and obtain the necessary licences to start a business.

Listening to the session in the audience was Khalil Aitblal, the managing director of Tandeem Event Management. Originally from the Netherlands, Aitblal conceded he faced “bureaucratic challenges,” such as completing the steps to secure a residence permit, when he recently expanded the business to Qatar, but added that the barriers were surmountable.

“If you are an entrepreneur, you will face challenges,” he told Doha News. “That’s when it gets interesting.”

Starting up

Another theme of the conference dealt with encouraging young people people to consider entrepreneurship as a career, instead of pursuing positions with established companies.

Anecdotally, however, several Qatar University students said they didn’t see the two being mutually exclusive. Speaking to Doha News during a break, some said they planned on working for an existing company for several years to gain experience before launching their own company.

Wael Najjer, a second-year engineering student, said he hopes to land a job with Qatar Petroleum or a similar firm after he graduates. His long-term ambition, however, is to open a construction company in Qatar, expand internationally and eventually supervise the building of an iconic skyscraper.

He added that he hopes to launch his business prior to the 2022 World Cup to take advantage of the large investments being made in the country in the run-up to the tournament.

Similarly, May Keida – a business major graduating this semester – is hoping to work for global accounting firm KPMG once she completes her studies.

But she also has a dream of launching her own wedding planning business.

“I think about it and want to draft a plan … but need to gain some experience first.”

Increasing the number of women entrepreneurs was a theme contained in speech by Mohammed Bin Saleh Al-Sada, Qatar’s minister of energy and industry, to open the forum.

Wamda, a Jordan-based organization for entrepreneurs, held a workshop in Qatar last summer that looked at the challenges facing women in the workplace, such as sponsorship laws, family commitments and prejudices.

However, Al-Sada said Qatar is already ahead of its GCC peers with respect to the number of women planning on entering the business world.

“Qatari women work very hard to realize their potential and (should) realize they are an integral partner in the development of the state of Qatar,” he said.

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