Grand incubation experiment

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THE GRAND INCUBATION EXPERIMENT

Is Qatar’s nascent incubation scene delivering what local entrepreneurs need? Do they live up to their promises?

Qatar Today speaks to incubators and entrepreneurs, going behind the scenes of this fledgling experiment, to find out what’s working, what’s not and why?

BY AYSWARYA MURTHY

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t’s an exciting time to be studying Qatar’s emerging entrepreneurial scene. The rules of the game haven’t been established yet. Young entrepreneurs, almost all of them firsttime businesspeople, are plunging into the unknown, trying to hit on that winning formula in a market that’s dynamic at best and unpredictable at worst. It won’t be an exaggeration to state that incubation means more to potential entrepreneurs here than anywhere else. But in Qatar, even this supposedly cushy path to business realisation is littered with broken promises and fumbled, if well-meaning, attempts at support. Like Juha Peralampi, manager of the Business Incubator which is part of the Center for Entrepreneurship, College of Business and Economics, Qatar University, says: “The entrepreneurial landscape in Qatar, as in many other countries, is still being created; mindsets are being reshaped; rules and regulations are being taken down and formed. So there are bound to be mistakes and miscommunication in this ever-changing scenario.”

Mission: motivation Entrepreneurs are a volatile lot. For them to stay truly committed to their business and give it their all, their passion metre needs to be constantly reading high. If your stint at an incubator leaves you with your spirit sapped, then all the logistics and funds that are being heaped on you are for naught. And this needs to be a serious consideration in Qatar where entrepreneurship is seldom born out of necessity and there is always an easier alternative. While Razan Suliman’s “beautiful experiment” with ictQATAR’s Digital Incubation Centre (DIC) started like a heady dream, she rues that by the end of it she, like a few others who were incubated with her, felt defeated and distinctly lacking in passion for her project, Bylens. “I was selected for incubation in June but was given an office only in November. By then the fire had kind of died out,” she admits.

But more than anyone else, she blames herself for not being able to make the most out of her incubation. “I was lucky to be

incubated. But the timing was all wrong. If I do it all over again now, knowing what I know, I’d do it so much differently.”

Her primary regret is taking on too much.

“I already had a day job and I didn’t want to hire anyone because I wanted to build this business by myself.” And she did – handling everything from commercial registration to building the website and creating a corporate identity to managing stock and accounts to meeting clients. But at what cost? “I am doing well enough but I could have been doing so much better,” she muses. In fact, if she had hired someone, she could have applied for funding (“I had not wanted funding because I was still bent on ‘doing everything by myself’,” she says, firing a pretend gun into her temple), poured some of it into marketing and advertising and even guaranteed the salaries of a couple of great professional photographers for six months. “I wish someone at the DIC had shook me out of it and told me I was being too ambitious. That I would run out of money if I kept spending what I was earning and that I was too young and inexperienced to know what I might end up needing the money for.”

AHMED ABDULWAHAB Consultant, QBIC

We are a startup ourselves and we wanted to speak to our potential customers about their anticipations, the support mechanisms that were needed and the factors that hindered them.

A good portion of the startups might fail at the activation phase; only the truly robust and innovative ones will move on to the next stage.

The matter of money Funding is the universal bane of entrepreneurs everywhere. Investors, especially in this region, are wary of the commitment and competence levels of new businesspeople, while these young men and women in turn want the luxury of experimenting, making mistakes and learning through them. Incubators, to some extent, provide the middle ground. But, quite contrary to what traditional wisdom would suggest, funding is not the only motivation behind entrepreneurs seeking incubation, Ahmed Abdulwahab, previously Head of Incubation and current consultant at QBIC says. One of the entrepreneurs under him espouses the same philosophy. “Money doesn’t solve everything,” says Ehab Nagip, who is working on a social platform for startups to exchange services for free. “Mentorship counts and so does the workplace.” But a workplace is not just a desk and a laptop. “When you are working QATAR TODAY > SEPTEMBER 2014 > 63

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RAZAN SULIMAN Co-Founder, Bylenz

I was lucky to be incubated. But the timing was all wrong. If I do it all over again now, knowing what I know, I’d do it so much differently.

I wish someone at the DIC had shook me and told me I was being too ambitious.

VICTOR KIRIAKOS Senior Manager of Strategic Projects, Afkar by Intigral

The startup scene in the region is more collaborative then competitive at this stage Ease of monetisation is the biggest challenge for digital startups in the region.

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in an environment where everybody is out to challenge themselves and go after their dreams, it is a great motivation,” he says.

DIC has come a long way since it started out as a simple managed workspace in 2011. “Within three months of launching we started providing basic services like legal and accounting, 9-10 months later came value-added services like business coaching, mentoring, helping with networking, and in July last year we started our seed fund programme,” says Ahmed Laiali, the Head of Incubation, DIC, ictQATAR. While DIC expects no equity in return for this cash fund, which is as amazing as it is rare, the dispersal has often been erratic, with companies waiting for months for their first round of funding. Predictably, this often affects business development in the worst possible ways. DIC expects at least 50% of the partners to be working full time at the centre to qualify for funding. This is reasonable. But a few incubatees who had hired employees in the hope of these funds coming through were left out in the cold when they didn’t come in on time or didn’t materialise at all. Ali Mussayab, whose Purple Cedar is being incubated at DIC for a little over a year now, is no stranger to this.

His animation company is resource-intensive; he needs powerful computers and people with very specific talents to operate them. “We were incubated in February last year but our funding came through only in June, 2013. We had to order our equipment from the States and with one thing or the other, we were only able to set up our office in August and find full-time employees

by December,” he says. By then, they were already several months behind schedule.

“Technical difficulties added to this and we weren’t able to complete some of our major milestones last year. And in February, without any prior notice, the centre suspended our funding till we showed results.” It was a major blow for Mussayab. “I live with my parents and can survive without these funds, but what about my employees?” he asks. Laiali’s only comment when asked about these problems was that they were “working on it to have it more streamlined”.

An oasis in the desert It would be churlish not to recognise the extent of DIC’s contribution to tech entrepreneurship in Qatar. And it can’t be denied that they are doing what they can to jumpstart the external ecosystem. “We are all learning together – us, the entrepreneurs and the new incubators,” Laiali says.

The incubators’ maturity level grows as the

entrepreneurs’ mature. “It’s not a one-way street. Sometimes we have to scale up to effect change and other times we listen to the requests from entrepreneurs and try to serve them better,” he says.

Mussayab says that there’s a marked improvement in services with every new batch of incubatees. In the new programme, not only can entrepreneurs apply for funding from the earliest stages, but they will also be put through some of the fundamental workshops before they have to hand over their business plans. “This way they know what they are dealing with and are already trained before they formally launch the business. We had to sit through these over the course of a year during which our business was live,” he says.

Some of the recent inductees we spoke to were positive about their experience.

Among the advantages of their stint at DIC that were listed were the access to regional app analytics market research for free, the availability of expensive software, the elevated status they enjoyed among clients when compared to other startups with no incubator support, a world-class work environment, and respected trainers.

Of the seven companies that have completed their incubation programme, Laiali says by industry standards four of them were successful in terms of launching their products and, out of these four, two did well in engaging with customers. But there are those who didn’t make it. “There are some businesses for which the ecosystem is not ready yet. A typical example of this is the e-commerce sector. Qatar still doesn’t have the virtual infrastructure like payment gateways. Additionally we don’t have resource capacity to shorten the cycle to build e-commerce portals and websites.

It’s a trial and error process which is expensive.” But then why incubate them in the first place? For the bigger picture, he says.

“E-commerce is an area of interest for both DIC and ictQATAR. We have to start somewhere. Maybe the infrastructure will not develop till there is a critical mass of companies requesting for this. Hopefully we can create this critical mass,” he says.

As a government entity, DIC has the power to take these kinds of bold decisions. As a government entity, it also has the responsibility to make the environment conducive to tech entrepreneurship by bringing fundamental change in the way we view businesses. A lot of archaic laws like a mandatory physical address and a substantial proof of capital in the early stages are not really necessary for these startups and is in fact

stifling, not encouraging, them. “I can’t hire anyone unless I have a letter of establishment. But why should you force me to rent a place when I don’t need one. I didn’t realise this until I was a month away from graduating from DIC,” Suliman says. “It’s a new culture and the ministry needs to understand that new policies and regulations are in order,” entrepreneur Amal Al Shammari opines. Laiali is well aware of these problems and says the DIC is doing its part to shape future amendments and laws. “There was a public consultant last year for company registration and licensing laws which we contributed heavily to,” says Laiali.

The sourest need of the hour, however, is coordination among government organisations and also those that seek to support and foster entrepreneurship. Bedaya, Silatech, Roudha Centre, EQ, they are all working in isolation, doing the same wrong things and getting the same bad results, according to some entrepreneurs. Even between different ministries, there is very little concentrated effort to help out these startups. When Al Shammari approached the Qatar Tourism Authority with her plan – a cultural consultant service that aims at being a general source of information about Qatar for both expats and tourists – they liked the concept well enough but no help was forthcoming. “These are the people who should support it but they were more inclined to merge it with their own operations. I don’t think I’d be able to innovate in such a controlled environment and that would be the death of it,” she says. Back in DIC, it isn’t any easier. “Even though DIC is in the ministry, they don’t seem to have links with other ministries,” says Mussayab, who had expected procedures like applying for registration to be smoother on account of their government affiliation but ended up having to negotiate a bureaucratic quagmire nonetheless. “Secondly, in the animation business it’s very difficult to find talent.

There are barely any animators here so we had to get people from outside. But our employees’ visas were rejected twice because of their nationalities. Moreover, our animation products are all cultural and educational, revolving around Qatar and its history. We have been trying to get support from the Ministry of Culture and the Supreme Council of Education but this hasn’t happened. We really shouldn’t have to struggle through these things when we are working directly under the ICT ministry,” he says, and it’s hard not to sympathise with him.

To develop the ecosystem and not squander away its potential, a joint effort is

imperative. “There is interest and growth in the region and a lot of people are coming to help develop the startup scene here,” says Victor Kiriakos, the Senior Manager of Strategic Projects at the new Dubai-based incubator/accelerator Afkar by Intigral. “We have had people from Portugal, France, the United States and from across the MENA region apply for our programme. They see real potential here. And we need to work together to make it happen. We try to play our role and partner with people with the same objective as well. It’s more collaborative than competitive at this stage,” he says.

Calling a spade a spade In truth, the word ‘incubation’ is thrown around too casually in Doha. And tragically, it has left many an entrepreneur severely disillusioned. Al Shammari is one of them.

The young business analyst is currently part of Qatar Business Incubation Centre (QBIC)’s 10-week Lean Startup programme, hoping to be among the first companies to receive incubation here. But before this she had burnt her fingers enough trying to get her business off the ground. Most recently – and this clearly rankles her the most – she had a trying experience at Qatar University. A startup competition, promise of incubation, a fast track into entrepreneurship.

It’s a familiar formula. Al Shammari won, was given one of those large cheques for QR50,000, and was promised support in the form of workspace and training. But it only went downhill from there for her.

“As it turned out, the funds were not given as money upfront but only reimbursed against any expenses that I might incur when I brought in the invoices. I didn’t have the capital to spend out of my pocket!” she exclaims. Worse still, she had to find out the hard way that workspace that she was offered was not legally recognised as a commercial space by the Ministry of Business and Trade as it was a part of the university.

“So that dashed the chances of me getting a business licence. We were given assurances that this would be resolved soon but tons of meetings later nothing has come of it,” she says.

While admitting that resolution of the legal status of commercial registration for companies is under process by the Centre for Entrepreneurship, Peralampi defends that decision of handing out funds through reimbursements (while clarifying that the Innovation and Entrepreneurship Contest as well as the reimbursements of the funds is being coordinated by the Center for Entrepreneurship). “Why wouldn’t this

ALI MUSSAYAB Co-Founder, Purple Cedar

There is a marked improvement in services with every new batch of incubatees.

We really shouldn’t have to struggle through some of the things [like visas, and government affliation] when we are working directly under the ICT ministry.

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development > tag this system of reimbursements work? This is being practiced widely in many European countries. Although I sympathise with the entrepreneur’s needs, this was a conscious decision taken by the Center for Entrepreneurship to prevent the misuse and mismanagement of funds.” Without going into specifics, he says similar contests have faced these kinds of problems in the past globally.

Since the Business Incubator’s launch in September 2013, 29 start-up teams comprising QU students, faculty and alumni have been provided with coaching, incubation space and contact networks. Peralampi also points out that as a university-based incubator, their job is not to compete in the market but rather to complement it. “We have had teams who have gone on to join other incubators and participate and win in startup competitions like INJAZ and Al Fikra,” he says. “There is actually a lot to do before you reach a level where you might need to start thinking about funding and registering your company. From business ideation to profitability studies and legal considerations to designing your sales and marketing, the Business Incubator at the Centre for Entrepreneurship prepares you on the prerequisites, whether it takes two months or twelve.”

AHMED LAIALI Head of Incubation, DIC Within three months of launching we started providing basic services like legal and accounting, 9-10 months later came value-added services like business coaching, mentoring, help with networking and in July last year we started our seed fund programme.

There are some businesses for which the ecosystem is not ready yet. A typical example of this is the e-commerce sector.

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A new chapter After a long time in the pipeline, QBIC finally took in its first round of incubatees and there is a sense of optimism surrounding the venture. Suliman hopes that they wouldn’t be as bound by red tape as government organisations. Al Shammari is very satisfied with some of the advanced workshops she has attended in the course of the Lean Startup programme and is eagerly awaiting the next phase. She is very clear about the kind of help she hopes for from QBIC. “Foremost, my business license; QBIC ought to ensure it meets all the criteria – logistic and monetary. A checklist of requirements to launch my business would also be great,” she says. “Veteran consultants with partners and experience in the field,” she goes on. “And finally, a small capital for me to try and experiment with my original ideas.”

How much of this is in QBIC’s own agenda is hard to say. They have a whole new approach to incubation, according to Abdulwahab. “I’d even say it’s the fundamental approach to incubating a company.”

QBIC hosted several focus groups made up of current and potential entrepreneurs to listen to what they really wanted. “We are

a startup ourselves and we wanted to speak to our potential customers about their anticipations, the support mechanisms that were needed, and the factors that hindered them,” he says. In fact, even the online application for the programme was developed in collaboration with those who’d eventually be filling them up.

Designed by serial entrepreneurs like Abdulwahab himself, the programme follows the lifecycle of an enterprise. Starting from speaker series that inspire the community to startup sessions that identify quality entrepreneurs and business ideas, QBIC will take new companies through a 10-week Lean Startup programme (“the first ever in Qatar”) which will help turn ideas into viable businesses. At the end of the programme, the companies pitch their plans on Demo Day and a select few are taken forward for incubation. Or rather, as Abdulwahab likes to call it, “the scale up”.

“This is where we provide the space, smart financing (which are basically just add-ons) and hands-on coaching by experienced entrepreneurs (which he says will be the crucial differentiator contributing directly to the success of the company). For the three months, we won’t be asking the companies to draw up a business plan but instead focus on customer validation.” Is there a market for your product/service? Will your customers pay and how much? “Once this can be demonstrated, then the company will be officially registered and then new rounds of funding will be released (in exchange for equity),” he says. He expects that many will change their business models and/or moving forward a good portion might fail but the truly robust and innovative ones will move on to the next stage.

How well will this mechanism work and how will entrepreneurs react to this? This will be answered in the coming months.

What do entrepreneurs want?

Some of the other services like legal and accounting are also god-sent for these novices. But mentorship and coaching are where incubation centres can really stand out and attract the best of the entrepreneurs.

However, there is training and there is training.

Sometimes the coaching can be of the best quality but still an utter waste if the entrepreneur was not in the right phase to receive it. Some of the workshops at QU’s Center for Entrepreneurship were put together without any thought of who they were catering to, according to Al Shammari.

“For example, one class dealt with creative

thought and how to come up with winning ideas. I didn’t need more ideas; I needed to launch the one I already had.” Sadly, this wasn’t her first tryst with unhelpful workshops and talks and lectures. “I was really disappointed with Enterprise Qatar as well.

They are a government-supported entity with a huge budget and I still had to pay for their classes, subsidised as they may be. ” And Roudha Centre is another organisation that is blatantly reneging on its obligations, according to her. “There are no workshops, no funds.” she says.

Abdulwahab is well aware that entrepreneurs here have had up to their necks with “training”. “We don’t put you in a class to learn about theoretical business cases; instead you’ll be exposed to action-oriented teaching with exercises conducted by veteran entrepreneurs who have been through this process,” he says.

At DIC Mussayab has had the opportunity to interact with the likes of Henri Holm from Rovio (of Angry Birds fame), and the Toon Boom team. “There are a couple of other companies at DIC into 2D animation and gaming, so this was extremely beneficial for the lot of us,” he says. Additionally he has been given a crash course in innovation management, agile project management, digital marketing, finance, and more. The pool of mentors and trainers is still pretty small here in Qatar though. Laiali illustrates this by talking about DIC’s difficulty in bringing in good consultants who truly understand what startups need. “For example, we can invite someone to speak about finance but that is a vast, generic topic. But what we need is someone to talk about what ICT startups need to know about finance.

There is a lot of customisation required according to subsector and company size,” he explains.

Kiriakos is certain they have put the finger on the nub when it comes to what entrepreneurs want. Launched officially at the end of last year, Afkar is currently in the middle of its first intake of companies to be grown at Afkar for the next three months.

For him, the most important value proposition Afkar has created for its incubatees is hands-on mentoring and access to market.

“Each incubator is different. The more value it provides, the more attractive it is for entrepreneurs. In our case, since Intigral is a digital media company which creates and sources digital content for our clients, who are major telcom operators in the region, we decided to create this programme to nurture startups that sit within our scope of work to create innovative products which

A Lean Startup session in progress at QBIC

we can then help take to market. We have the experience, with experts in various related fields working within the organisation, and because of our understanding of our clients and their needs, we know what kind of products and services are marketable; we, in fact, chose the companies based on our clients’ needs and put our incubatees in touch with the right people once they are ready,” he says. It’s this kind of mentorship and ease of monetisation (which, Kiriakos says, is the biggest challenge for digital startups in the region) that entrepreneurs treasure more than infrastructure, logistics and funds.

“We are not on par with mature entrepreneurial markets like Silicon Valley which is teeming with serial entrepreneurs; so we have to hand-hold our companies a bit to minimise mistakes and increase chances of survival. Failure is very common in this ecosystem,” he says.

But paradoxically, it is this failure that we have to learn to embrace; all of us – entrepreneurs, investors, incubators. Because in this scheme of things, “results come from chaos,” according to Peralampi. “There is an element of testing, partially failing, learning and adapting.” And as long as there are people like Laiali who are committed to providing a rare path to “self actualisation” for Qatari youth; as long as there are mentors who are convinced of the “ideas, enthusiasm and unexplored potential” of this young ecosystem; as long as there are dreamers like Al Shammari who don’t give up despite frustrations (“More than my business, I believe in the new economy we are trying to create”); it’s safe to assume that we are on the right track

AMAL AL SHAMMARI Co-Founder, Embrace Qatar

More than my business, I believe in the new economy we are trying to create.

It’s a new culture and the ministry needs to understand that new policies and regulations are in order.

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