Boris Johnson, the mayor of London, last week put his weight behind a new £100 million ($160 million) initiative to fund Arab and Muslim technology entrepreneurs, encouraging them to set up shop in the business-friendly United Kingdom. The announcement was made at the World Islamic Economic Forum in London, with the exact details of the fund not clear and still to be ironed out. But it aims to scale start-ups from the Arab world and have them expand their businesses to London to take advantage of its expertise in investments, and financial and legal services. At the same time, London can keep building the number of companies in and around its Tech City area. London, and the U.K. government, will be a cornerstone investor in the fund, which will also try to partner with cities focused on entrepreneurship in the Middle East, and raise money from governments in countries such as the United Arab Emirates, Jordan and Saudi Arabia. “When start-ups have reached a certain stage in those countries, in the past, they had to go to Silicon Valley,” explains Jeremy Green, a partner at Quantum Capital, which is leading the establishment of the fund. “London is now easier for some entrepreneurs.” The Middle East has always traditionally suffered from a brain drain to more developed countries in the Western world. So is this type of fund likely to further exacerbate the problem? No is the short answer, according to Habib Haddad, the chief executive of Wamda, a website and investment fund designed to promote entrepreneurship in the Middle East. “I think it would be ideal for companies that are building from the region and going to international markets,” says Mr. Haddad. “I’d see it as an opportunity.” Entrepreneurs say access to funding is one of the biggest obstacles to scaling or starting up tech businesses in the Middle East, while investors argue that there very few exit options, such as buoyant and developed equity markets, to make buying into a start-up worthwhile. Nasdaq Dubai, the internationally focused bourse in the U.A.E., announced earlier this year that it would set up a market for small and medium-sized companies to list shares. But it hasn’t been successful at attracting big corporate international listings and developing that market, let alone small unknown start-ups, and so the start-up initiative has not yet managed to, er, well, start up. “It’s clear that public markets for tech companies in the region have not been exploited,” says Mr. Haddad. They might just be exploited by London first.Subscribe to MENA Opportunities and get more...
