This article is a crosspost from Nuwait.
Although entrepreneurial ecosystems are not created overnight, Kuwait is on its way to creating one that is poised for growth.
The story of Kuwait’s economy, like many of its neighbors, has been dominated by oil. While dipping into reserves is a temporary solution to its fiscal challenges, many initiatives are underway to reinvigorate the private sector and transform the economy by 2035.
New Kuwait aims to attract 400 million Kuwaiti dinars to a variety of sectors, including petrochemicals, information technology, services, and renewable energy. Through vision 2035, Kuwait is expected to foster a climate that enables SMEs to participate in the nation’s economic development. The National Fund for Small and Medium Enterprise Development is one of the country's key vehicles tasked with enabling the private sector to drive growth.
Institutional entities, however, are not the only key players participating in accelerating private sector participation and entrepreneurship.
Private sector acceleration
After returning from Spain to Kuwait in 2012, Neda Aldihany was committed to doing something in the Kuwaiti startup scene.
The Brilliant Lab concept was built off the Wayra model in Europe, Telefonica’s startup accelerator. Wayra’s accelerator program offers entrepreneurs funding, mentorship, and access to a network of Telefonica talent and customers.
Similarly, Brilliant Lab, in partnership with Zain, offers entrepreneurs a range of services, from a startup bootcamp in Kuwait, acceleration services in San Francisco, to access to international events and conferences in entrepreneurship through their partnership with Mind the Bridge in San Francisco.
Since their beginning in 2013, Brilliant Lab has had five calls for applicants, attracting 700 applications, and accelerating around 70 startups. Bleems, an emerging one-stop-shop for flowers, confectioneries, and gifts in the GCC, is among one of Brilliant Lab’s success stories. Other successful startups affiliated with Brilliant Lab include Diwaniya Labs, and Dawrat.
Mefazec launched in November 2016 to offer entrepreneurs services including incubation, acceleration, a coworking space and hosts several events on a regular basis.
The Creative Startups accelerator in New Mexico was founded in 2007 to focus on the creative and innovative ventures. It has expanded its license of operations to Kuwait, under the name of Messilah Ventures, to take a special interest in accelerating food startups. The service is not officially launched yet. “It will focus on food, at least at first, reflecting that country’s reputation as a food capital,” said founder Rashid Sultan.
Some may argue that while these initiatives are great, they are not enough. Although incubators and accelerators are complementary to the ecosystem, they do not necessarily provide the needed mechanisms for high-impact entrepreneurs to activate the ecosystem and multiply their impact.
So what else does Kuwait need to create a self-sustaining ecosystem?
The need for corporate patronship and investment. Aldihany identifies two key gaps in the Kuwaiti entrepreneurship ecosystem: a need for greater corporate support and angel investments.
“There is a need to shift from corporate social responsibility (CSR) to corporate social investment (CSI).”
Corporations and startups must collaborate rather than compete, according to Aldihany.
This is because startups and corporations bring two distinct and equally integral skills to the table. Startups are great at testing successful proof of concepts, while larger corporations are better at scaling ideas, he added.
EU-GCC Connect is an example of a productive match-making initiative that aims to match European corporates with GCC startups to leverage their resources, market reach, and expertise.
The issue lies in executive management [at corporations] not being able to justify such investments, according to Aldihany. “Many of these companies are publicly traded [but] they cannot justify investing in startups to shareholders.”
The venture capital industry in the Middle East is expected to grow to $5 billion by 2019, according to Dany Farha, chief executive at Beco Capital. The MENA region is home to many active VCs, that have been investing in regional startups since 2012 and large corporations can assist and gain access to startups’ through early-stage funding and later-stage mergers and acquisitions.
Now is an opportune time for corporations to invest in startups with innovative technologies, in order to make disruption work for them, rather than against them.
“It only takes one success story to change attitudes,” Aldihany concluded.
Feature image via Brilliant Lab.