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STEP Conference 2016:  An Insider's View
Sci & Tech

STEP Conference 2016: An Insider's View

This year, for the third time, Step Conference 2016 was held in the Emirati city of Dubai.
As part of the conference, a panel discussion themed "Entrepreneurs Vs Venture Capital" was held, which is playing a larger role in the daily lives of startups across the Middle East.
For me, I have experienced both sides of the argument. As a person who has worked in startups, it was an interesting panel to watch. Hearing the different views of the two groups and its relation to creating a business in the Middle East was intriguing.
Issues Between Entrepreneurs, VCs
In recent years, Dubai has leapt up towards encouraging small- and medium-sized enterprises and startups. Many incubators have launched and many VCs and startups have started to look at this region more seriously.
Professor Paul Graham from Harvard University has stated that traditionally, you need three things to create a technology hub like Silicon Valley, namely universities, rich people (to establish your VCs) and nerds (the entrepreneur) .
In the past, we have seen a gap between entrepreneurs and VCs. But why is this?
At the conference, startups complained that they don’t get the funds they need easily and local VCs don’t play their traditional roles.
Usually, VCs help startups expand by raising funds and acquiring talent. These are the dominating issues faced by even the biggest startups in the region. They seem to be misinformed and think that local VCs are just "the rich people" out there to only provide funds with zero industry expertise.
In most cases, it is exactly the opposite. From my experience, many VCs have claimed that startups are not transparent enough. Many VCs do in fact have the industry expertise, hence the reason they are happy to invest. However, startups do not provide the data and reports required to VCs who wish to keep an eye on their investment.
On the other hand, in recent years, we haven’t seen any major innovative startups in the region or any that have been funded. Most of the startups seem to be copycat startups from states that did not localize successfully in the region, DigiKala et al.
This is evident when most of the startups in the region are cash deficient and VCs can’t exit their ventures in the short to medium term.
On top of this, they then try to stretch their business landscape to other countries. At the same time, the market is immature and unfortunately has crashed, because of oil prices over the past many months. But, this being said, Saudi Arabia and Iran have become the biggest markets in the region and many investors are looking towards them as their ultimate way to success.

  Iran Investment Panel
A panel in the conference discussed the pros and cons of investment and market entry to Iran that recently reentered the global economy when economic sanctions were lifted in January.
Iran and its explosive market growth potential have recaptured the attention of global investors.
The Islamic Republic, as one of the major players in the region, is looking to attract foreign investment as well as locally sourced cash. Even though we continue to hear about the many activities connected to the Iranian market, there is a lot of hesitation on how companies and startups can enter.  
The experience western companies have had in the past showed that investments in Iran has failed because, as mentioned above, most of them copy the success model from the West to bring to the East without looking into the details of infrastructures or cultural elements of the country.
 Bamilo or Mozando in Iran are one of those examples. They copied the model of eBay in Iran without paying attention to the logistics infrastructure and supply chain culture in Iran. That’s why they faced a massive challenge and found it difficult to succeed.  
Even though everyone on the panel agreed that talent acquisition is difficult, it’s not because of availability but because of their culture and professional ethics.  Running a business without local expertise would be challenging as well mostly due to the rules and regulations that are not yet clear to many foreigners.
Much of the investment going toward the top10 startups across the region has had to struggle to pool investment from several sources.
As someone who has been in both parts of the region as an entrepreneur and investor, we, as a group, have to bring more innovative ideas and localize it to Iran.  This could help solve a real problem that matters and which people face in this part of the world.
However, VCs and investors also have to have the wherewithal to invest in something that is unique and goes beyond a copycat business. 

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