At a time when Gulf economies have been affected by declining oil prices, global and historic precedents illustrate the significance of entrepreneurship for economic development and diversification. The West has turned to an entrepreneurial economy from a managed economy, the BRICs (Brazil, Russia, India and China) have demonstrated their economic versatility by utilizing entrepreneurship as a means to promote business opportunities, and across developing countries, youth entrepreneurship is being promoted as the answer to the supply-demand challenge of employment with decent wages.
The UAE has a young economy defined by a developing entrepreneurship ecosystem. The task ahead is to build local capacity and business from the ground up. This is essential for successful and sustainable diversification of the economy. This is also antithetical to the previous rentier model the Emirates relied on to drive growth, a strategy that has been well suited to an oil-driven economy. In order to engineer the transformation of the oil-driven economy toward a knowledge-based and entrepreneurial economic model, three core components must be considered: getting corporates involved, investor participation, and community education.
1. Getting corporates involved
Traditional venture capital is no longer the only way to raise money for startups. As many as 68% of the top 100 companies from the Forbes Global 500 are engaging with startups, with the majority (61.7%) of the startup companies mentioned by The Wall Street Journal under The Billion Dollar Startups Club having raised significant funding from at least one corporate entity, not including investment firms and banks.
It is not only leading companies such as General Electric (GE), Oracle, and Google who have taken a proactive interest in startups; some of the traditional corporate players have explicit methods through which they may invest in startups on a large scale. Let’s take for example the emerging industries in the region: energy, aviation, logistics, finance and health. The UAE has a rich pipeline of influential corporate leaders who own these competencies.
They have unique access to market knowledge, a huge consumer base and domain understanding. However, the immense size of many of these businesses limits them from innovation. They are battleships that cannot change course on a dime. This is in direct contrast with the more agile and innovative tech startups, which can pivot and adapt at lightning speed; however, they cannot grow without domain expertise and insights or access to a large consumer base to test viability.
The startAD incubator at NYU Abu Dhabi has been built to create a platform for mutually beneficial exchange between such corporates and startups, allowing corporations to innovate effectively through startups, and encouraging startups to validate their business concepts through corporations.
By connecting entrepreneurs with leading UAE industry players, we offer the chance to engage with a network of mentors as well as opportunities for thorough business viability testing. UAE corporates will benefit in the long term, as startups help them address new business challenges and also contribute to an increasingly diverse entrepreneurial economy through job creation and technology development.
Source: Entrepreneur ME