Talabat, Bayt, Careem, Souq, Fetchr—rings a bell? They are the startup stories of GCC worth profiling and learning from according to a recent report by Marmore MENA Intelligence, a research subsidiary of Kuwait Financial Centre “Markaz,”. While there are many startups worth focusing the lens on, Marmore choose the five as they cut across time, geography and sectors. Four of the five profiled comes from UAE while one comes from Kuwait (Talabat). All of them have customer centric business models, and hence they may be household names to many of us as users. So, what sets them apart?
These success stories highlight the value SMEs deliver to GCC economic imperatives. Even a cursory glance at the case studies reveal that these companies have shown remarkable prowess in identifying ideas that speak to customer pain points and have turned them into practical companies through actionable business models.
Another notable characteristic is that, in keeping with trends in the rest of the world, these companies have harnessed digital business platforms to drive their revenues, growth and scalability. Coinciding with the rise of the internet and information age, the success stories demonstrate that GCC has the potential, skills and the generic ecosystem to promote innovative small businesses that can go on to stake a place in the international trade architecture.
A striking feature of success in most of these companies profiled is the endeavor to customize products or services for users. Be it Talabat or Fetchr, the idea is to promote technological designs and greater investments into their services that will allow them to compete confidently with international competitors.
For some of the startup stories, there is at times the implication that they are regional clones of successful international companies. For e.g., Careem gets constantly compared to Uber. Bayt.com too gets compared with international players like Monster. However, these regional companies are at pains to explain that they are not just duplicates, but well-thought value adding services that cater to the diverse range of regional nuances and needs.
In general, there is the feeling that in many parts of the GCC, tough rules and prescriptive regulations stifle entrepreneurship. Yet, the featured success stories have, so far, shown what is possible. Thus, their models and histories need to be studied for developing a view of the SME ecosystem in the GCC, including the variations by country.
Moreover, these companies are a call to relevant authorities in the GCC to invest in innovation and people, so that SMEs that contain has the potential to be global companies can rise via sustainable business practices. In many ways, these companies have shown expertise in not only identifying trending or new opportunities in the larger environment, but have shown the capability to connect the needs of customers with satisfactory offerings. For e.g., Bayt (the online recruitment portal), was an early mover in the field of internet-based recruitment in the GCC. Over the years, the company has consistently innovated new services to keep adding greater value to clients, both in terms of recruiters and job seekers.
A key takeaway for GCC policymakers is that such SMEs can generate revenues and profits that can be ploughed back into the local economies, serving to strengthen the economic foundations with respect to private sector participation. Moreover, over time, if investment opportunities are available in such successful SMEs, an ecosystem of investors will develop in the buying and trading of stakes in SMEs, providing SMEs a viable source of funding.
In due course, to encourage emerging entrepreneurs, GCC governments may back the development of a separate segment for SMEs on the capital markets, similar to the ones already existing in Qatar and Dubai (UAE). The profiled SMEs have more than just connected sellers to products or services, but, they have raised the profile and significance of the SME segment in the overall economy. This will, over time, generate a web of supply chain relationships, thereby linking firms and even public sector entities into a sustainable cluster framework.
Often, innovators and entrepreneurs are isolated from a support system and face difficulties to find funding, partners or collaborators. Concrete social innovation requirements and possibilities must be communicated to entrepreneurs and institutions set up to support SMEs. The success of the profiled SMEs indicate that there are a large number of small businesses engaged in the field of social innovation that will enable them to find new markets, create new jobs and fine-tuning of innovative business models.
The profiled SMEs indicate that the GCC region is fertile ground for entrepreneurs to experiment and prosper. However, the regulations and the ecosystem is not very conducive for SMEs to start and continue. There are ample funding constraints and private sector investments in the form private equity or venture capital is scarce. Though there are models of crowdfunding coming up across the GCC, there are no structural legislations that will regulate and have oversight over them. Thus, for sustainable development of SMEs, there is a need for the development of a suitable ecosystem from the ground up. Small and Medium-sized Enterprises (SMEs) act as the key source of job generation and economic value addition across the world. In the GCC, the ongoing economic changes will mean that SMEs will receive more persistent attention from governments and policymakers. Though there is a widespread feeling that SMEs do not face a conducive environment in the GCC and the wider MENA region, there are still a crop of SMEs that have done well. Let us learn from them.
This blog was original published on www.emarmore.com. Marmore MENA Intelligence is a research house focused on conducting Mena-specific business, economic and capital market research. We welcome questions from our readers through email at firstname.lastname@example.org, or via twitter @marmoremena