Bahrain's funding options
“Bahrain is like a petri dish: it’s a pretty self-sufficient ecosystem with a lot of human capital,” says Hasan Haidar, CEO of Manama angel investment company Tenmou. With an infrastructure that is seen to be efficient, cheap running costs, and good regulation, the small island kingdom, Haidar believes, is a great jumping off point for a startup wanting to take on the GCC. But navigating the funding landscape in the tiny island kingdom can be tricky.
Efficient funding: public v. private
Options for funding are few in Bahrain. The Bahrain Development Bank (BDB) now works with Tamkeen, a semi-government body that offers entrepreneurs and startups a plethora of advisory services. Together they cover everything from business planning to human resources to legal services, to helping out with feasibility studies. Loans and/or subsidies range from 5,000 BHD (around $13,000) to over 30,000 BHD (nearly $80,000). On the other side of the spectrum, Tenmou, Bahrain’s first business angels syndicate, provides angel investment for startups, in addition to mentorship.
For the restaurant reservation mobile application Eat, a Middle Eastern version of OpenTable, the ride has so far been a breeze. When it came time to look for funding, “Three resources came to mind” when it came time to look for funding, says founder Nezar Kadhem: “family, friends, and fools, basically ‘love money’. But I decided not to go with those,” citing a fear of losing the money of a loved one who might not have known what they were getting into. Instead, he applied for angel investment from Tenmou.
Previously, the team had applied to be a part of a prototype scheme at the BDB, but they ended up spending money getting nowhere. “In fact we lost money. There are resources [available] but they’re not worth the time it takes for the entrepreneur to hunt them down,”he says, citing that most projects the bank invests in are socially orientated.
But with Tenmou, they received a pledge for $100,000 USD in December 2013, and the money was in the bank by February of this year. “It was so quick, we were so happy,” says Kadhem.
Now with a 30% market share in Bahrain, based solely on its reservation management system (the application for customers to reserve is still in its beta phase), eat is in the process of raising a second round of investment, $250,000 this time, and the team will be moving to Dubai in the first quarter of 2015.
On the public side of things, Tamkeen has been operating since 2006 with two main objectives: to train Bahrain’s entrepreneurs to develop human capital, and to subsidize wages. Speaking with Wamda, Tamkeen marketing officer Amal A. Talal Al-Sorani said that in a recent overhaul, “one of the biggest changes we’re making is that our Enterprise Support Program has been redesigned and re-launched to be able to better support startup businesses.” Al-Sorani went on to explain that this meant even businesses that were not yet commercially registered could still apply, though they would need to register their activity with a government entity.
“To know that there is financial support from Tamkeen and other organizations is a boost for startups like ours,” says Fifi Faiz Fakhroo, cofounder of the online beachwear boutique Maison du Maillot, although she and her team have instead opted for personal investment.
Some startups are playing both private and public funding entities to their advantage. Fish Transporter is an aptly named fish delivery startup that has made use of the publicly available support resources. The Fish Transporter team was part of Tenmou’s fourth batch, which took about seven months during 2013, says founder Mohammed Toraif. The team is still operating out of an office provided by Tenmou.
They’re now also starting to utilize Tamkeen’s resources, especially its marketing services. “You can get a 50% discount on marketing services by going through them,” he says. “We applied online and within three weeks we were getting to work with their partner Unisono.” Each Tamkeen startup gets a credit of 20,000 BHD (around $53,000) to use for marketing, equipment, legal services, etc., which Toraif says has been helpful in terms of liquidity.
Tamkeen also helped Fish Transporter get the tools necessary to transport the fish in the first place: purchasing the cooling machinery for their van was 50% cheaper with a Tamkeen discount.
Tamkeen’s resources are best suited to startups that have had a few years of experience, rather than those that are working to develop out of the idea stage.
Utrack.tv, a live streaming portal that covers everything from track racing to fashion shows around the Middle East and Europe, has benefited from Tamkeen services, but it had to waituntil the time was right. After receiving an initial funding round of 4,000 BHD (around $10,500) after winning a Startup Bahrain Weekend competition at the end of 2011, they are now at a point at which they are ready to work with Tamkeen. “Our only limitation is finance and Tamkeen is going to give us a real boost,” says Utrack.tv’s Ali Mahmood. “But processes with Tamkeen and the BDB can take a long time, and when you’re a startup time is of the essence.”
Bahrain Development Bank, which assures a 16-day turnaround on applications, say timing can be a grey area. “Provided the entrepreneur [or startup] provides the necessary documentation to get started,” says Areije Al-Shakar, Assistant Vice President of the Business Advisory Unit, the process can be expedited. “We work on a case by case basis and timings vary.” As Al-Shakar is keen to point out, they are a government-funded entity so “we do have to know where exactly money is going.”
While funding options may sometimes be fraught, there are some advantages associated with starting a business in Bahrain, one of which is its tiny size. Still working her full time job (her sister Leila works on Maison du Maillot full time), Fakhroo says that for their particular business, which relies on delivery and shipping, the size of Bahrain has worked in their favor: logistics compared to somewhere like London, where the two grew up, are a breeze.
Another bonus to being a startup in Bahrain is how easy it is to navigate the entrepreneurial scene, says Fakhroo. “There is a very supportive atmosphere; whenever I’ve had a question about something it is easy to speak with others.” Regularly attending Startup Mornings meetups, organized by Startup Bahrain, has expanded the network they have for seeking advice.
The BDB’s approach has improved over the years, Al-Shakar continues, alongside the professionalism and efficiency of the startup community itself, and it is consequently seeing more and more international recognition. For instance, earlier this year students Alaa Mohammed and Marwa Buhaila won an innovation award at the Microsoft Imagine Cup in Seattle for their product Nail Polish Mixer, with collaboration from their university and the BDB.
Mahmood tells Wamda that utrack.tv is doing well despite only now engaging with such support services. They’re streaming events from around the world with an average of 120,000 viewers for each event. Tenmou has also this year become an investor. “We have set an expansion plan for 2015,” says Mahmood, “to open two new branches in the UAE and KSA.”
In the future, Toraif believes that there needs to be a change in how startups are perceived in Bahrain. The resources that are currently available have been “useful,” says Toraif, “but there still needs to be an ecosystem that see us treated as startups. At the moment we’re seen as established companies and this isn’t helpful. I would like to see even more from the government and private sector.”