Besides the fact that it is THE luxury event of the yearMay 27, 2015 9:48
SMEs funding fiascos
Securing funding has long been a struggle for SMEs in the Emirates. While one investment company hopes to change just that, start ups should also look into other ‘unconventional’ means
October 26, 2011 5:06 by Eva Fernandes
Starting your own business is a particularly difficult challenge here in the Middle East, and part of the reason is the inability to secure funding.
Although, angel investors and venture capitalists are no strangers to the region, one man is taking a more hands-on approach to the industry. Asgar Shakoor Patel, the chairman of House of Patels, will be providing startups with equity capital to get the business off the ground. For now the funding will be provided by the House of Patels, but partnerships are something on the horizon for now.
Patel, for his part is concerned with increasing the options for SMEs here. As he says: “The average share of SME lending is consistently low across all GCC countries. (…) It reflects to a large extent the structure of oil-based economies — less diversified, dominated by very large enterprises, and characterised by appreciated exchange rates and small non-oil traded sectors. There is substantial scope and huge potential for financing of SMEs.”
Now when Kipp with the help of our good friends at YouGov asked the people of Saudi and the UAE, what they thought of the support expat entrepreneurs get from the government the response was rather telling. The majority of expat respondents in KSA and the UAE agreed with the statement “There is enough government support for locals but not for expatriates.”
Just how many agreed with that statement? Well here in the UAE, 73 percent of Westerners, 59 percent of Arab expats and 51 percent of Asians all felt that there was inadequate support for expat entrepreneurs.
These findings are particularly pertinent when one considers the words of Akram Khan, the senior vice president and group head of corporate banking for Ajman Bank, who told The National: “Bank financing will only come in after there is a track record… “[If] you have an Emirati [partner] who can provide collateral, then we can look at start-ups. But without collateral for expats, it’s a high risk.”
Now of course, with the likes of the House of Patel funding options, which appears to be without an Emirati bias, more and more SMEs may be able to secure funding.
But one man or one organisation can’t do it all. And perhaps, SMEs should look into the possibility of crowdfunding their ideas. Get complete strangers to buy into your idea and send even small amounts of contributions to get your idea going. Check out Indiegogo.com and Kickstarter.com for more info. You can also check out 11 other crowdfunding sites, mostly based in the US, for more choices here