Entrepreneurs don’t need to refine their pitches or have everything figured out when approaching investors, because great products are what matters most, said Laith Zraikat, venture partner at Kuwait-based Arzan VC, during a discussion we had while waiting for our ‘Lebanese Kaak’ sandwich outside of Step Conference’s Start stage. For him, a smart VC will be able to spot a great product, even if the pitch is bad. “I would rather invest in a bad pitch with a good product,” he added.
Inside the Start stage, where the room looked like a disco ball, different conversations were happening.
Being well-prepared, maintaining a good growth rate, a future vision, having a clear revenue model and a clear solution to the problem they are solving, were pieces of pitching advice given to entrepreneurs by Malik Shehab, founder of Golden Scent, a perfume ecommerce launched in Saudi Arabia in 2014.
Organized in four different stages, Start, Digital, Money and X, Step Conference gathered around 6,000 people and 250 startups exhibiting in Dubai Internet City.
The two-day conference focused on digital trends, money talks, startup journey, and culture among other topics. Given the variety of the discussed ideas, it was hard to catch one main theme, but here’s a glimpse of some of the most interesting insights shared by the startups and the speakers.
Size does matter, big time
The size of a startup highly matters when the founders are looking for an exit. The larger it is, the bigger the acquisitions are. However, founders might need to consider approaching international entities the bigger they get, according to Abdulaziz Al Loughani, managing partner at Faith Capital, an early-stage VC in the region. The VC is currently focused on seed stage investing, with a ticket size ranging between $500,000 and $1.5 million in not more than five to ten companies a year. “We are a team of 24 but we take a deep dive in all our portfolio,” said Al Loughani.
“As size gets up, the alternate route is to look at international strategic exits, through starting and maintaining dialogue, but not be too pushy, but be on their radar. As companies get larger, potential acquirer are likely to be global,” he added.
And for those thinking of going public (IPO), Al Loughani believes such stories usually come every four to five years, and that there’s one element that will increase the likelihood of going public. “Having an offline presence.” The more founders talk to local, regional and global potential buyers, the higher their chances of going public or even being acquired are.
Waleed Alballaa from STV ventures in Saudi Arabia believes that VCs and entrepreneurs must collaborate and discuss the pinpoints that are still making it hard for entrepreneurs to exit.
Big size companies are also able to attract global funding. One great example is digital experience building company Insider, cofounded by Hande Clingir. The company is now present in over 13 countries, including China, and helps marketers get real-time personalization technologies to boost their growth. It recently raised a Series B round of $11 million from Sequoia Capital, a global VC that has over 200 exits. “One of the reasons they invested in us is because they were global,” said Clingir.
There’s nothing called ‘too many culture talks’
Perhaps one of the most common word you hear when you talk about entrepreneurship in general is ‘culture’, be it fostering a startup culture within a team or within a corporate. And despite hearing that word at every entrepreneurship event, it doesn’t get old, because it’s what drives team members, founders, and corporate leaders to become innovative.
At Step, a number of corporations attended and were proud to reveal how they are giving back to startups. Microsoft, despite being a 43-year old company that was never hit by a crisis, as described by Sherif Tawfik, regional director - commercial partners, channel, and SMEs at Microsoft, needed a vision shift.
“We missed mobile, search, social,” he said then went on to explain how Satya Nadella, current CEO of Microsoft, did major changes to the company when he took the lead in 2014. “When Satya took on his role, he asked what would have happened to the world if we don’t exist. So we changed. Now we have logos like Microsoft love Linux and they contribute to our cloud consumption. The main thing was carrying the startup mentality and refreshing our mindset.”
The giant company also launched a $500 million fund to invest in startups. “He [Surya] encouraged us to hire off the university and to do a reverse mentoring program, where fresh graduates would mentor the dinosaurs.”
Crescent, a holding group that operates 25 diversified companies, is jumping on the innovation wagon. Through its corporate venture capital (CVC), the company is planning to invest $150 million over the next years, in IoT, sensors, data, and other technologies, according to principal investment Tushar Singhvi. The company is keen on investing in data startups as it believes that the latter will be able to help Crescent mine and analyze its giant pool of data.
“Culture is a big challenge. With a team launching innovative concepts, this changes the way people work across the organization,” he said.
The lower cost of innovation for startups is a major incentive for corporates, especially that they are pretty bad at innovating, according to Hans Christensen, director at Dubai Silicon Oasis Authority.
“They [corporates] realized that the speed of innovation for them is far too costly, putting hundreds of dollars and not getting anywhere. Amazon, Microsoft, Google, Apple, have come together to help Amazon develop Alexa faster, even though Amazon had enough brains working on it. This is because of risk. They are not willing to risk or fail. But startups can try, fail, and it will cost less than doing it in-house,” he said adding that 95 percent of corporates are not doing this yet. Instead, they are simply collaborating with accelerators and this is only one way to support startups.
This year’s event not only focused on startup and tech talks, but gave each topic its own stage and focus. Startups also got a chance to exhibit and showcase their work at the Start stage and the food and beverage wagons spotted outdoors were the cherry on top: from a Lebanese canteen for ‘kaak’ sandwiches, to fresh juices, your regular coffee fix, the attendees were always hungry for more.