Kippreport gets the scoop from Neelesh Bhatnagar, CEO of Emax, and Nadeem Khanzadah, head of omnichannel retail at Jumbo GroupSeptember 2, 2015 5:24
What Middle Eastern start-ups can learn from Silicon Valley
Building relationships with potential investors is very important before approaching them for funding, according to entrepreneur Nima Adelkhani
February 26, 2014 10:13 by Sidra Tariq
Last week, Nima Adelkhani, founder of Progress in Technology Middle East (PITME) Labs – which provides regional start-ups access to acceleration and resources in Silicon Valley – shared best practises from the start-up ecosystem in the Bay Area at the start-up event Middle Eastern Mistakes: What I’ve Learned in Silicon Valley; to shed light on some of the mistakes prevalent in the Middle East region’s entrepreneurial environment.
Instead of asking for funding upfront, entrepreneurs should keep potential investors updated about the product’s development over the course of a few months and leverage their network to build further connections. It’s only when the relationship has solidified that the question of funding should come about, says Adelkhani. Forming a proper relationship with a potential investor can take between three to six months and, in some cases, nine months, he adds.
Adelkhani encouraged start-ups to have advisors or mentors on their boards, as this will not only translate into useful guidance for the business, but also help entrepreneurs make a better impression on other potential investors: “In order for you to get to that point of raising money, you need to have people with credibility, relationships, traction and experience to have a vested interest in you – meaning that they have put their name and reputation on the line by allowing you to officially call them an advisor, angel or partner.”
He adds that these kinds of relationships can be slightly difficult to develop in the Middle East region, so start-ups should be careful about which investors they take on board. For instance, some regional investors tend to ask for “a board seat for a $100,000 investment. Anybody who says that doesn’t understand what a start-up is and what it means to be an advisor or a board member, because there are people [in Silicon Valley] who invest $20 million to $100m and still don’t get a board seat. You don’t want that person.”
Having accelerated regional start-ups through the PITME programme, Adelkhani says he noticed that some entrepreneurs in the Middle East region are still not at pace with technological advancements: “Teams here are at 1.7 and [in Silicon Valley] we are now at Web 3.0. Web 3.0 is about user interface (UI), user experience design (UX), shared economies, blending business models and different practises into one, and packaging it really well. Here, people are still talking about banner ads and really outdated [systems].”
Another problem among start-ups is that they try to juggle multiple revenue models, he adds. When an investor asks an entrepreneur how many revenue models his/her start-up has, “the second you don’t say ‘one,’ you lose credibility. That is because it is extremely hard to do one thing right and when you are doing four different things, you are not focused,” he explains. “Don’t try to do too much. Do one thing really well and then build on that. Once you have something mastered, then you can add a second one.”
Working for success
According to Adelkhani, start-up owners need to prepare themselves for long hours and a full commitment if they want to succeed. One of the reasons some Silicon Valley entrepreneurs are successful is because “they dreamed really big, then worked 22 hours a day and executed it,” he says. “You can’t change the world or build a hyper-growth start-up [working] eight hours a day. It is not humanly possible.”
Building a business is a ten-year commitment, he added. “It used to be five years, but now it is ten. If you’re not [fully committed] and willing to give 15 to 19 hours a day, for ten years, you are officially wasting your time.”