How The Private Sector Can (And Should) Help Startups Succeed In The Arab World

The Arab world needs thriving startups to truly deliver on its potential. By championing them, the private sector can help everyone share in their success.
How The Private Sector Can (And Should) Help Startups Succeed In The Arab World
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Acting Chief Corporate Development Officer at Majid Al Futtaim
5 min read
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Sharing doesn’t always come naturally in business. A fiercely competitive instinct is essential to win commercial success, and even more necessary to see off determined competitors. So, suggesting that companies should offer a helping hand to other businesses might seem strange. But that is exactly what established private sector players in the Arab World must do. The startup sector needs our assistance, and it makes business sense.

Entrepreneurship is deeply ingrained in Arab culture. Today, our startups are developing a global reputation for innovation and agility that is richly deserved. According to MAGNiTT’s annual MENA Venture Investment Report, 2018 saw a record number of startup deals in the region, with nearly US$900 million invested in 366 deals. And while 2018 was a record-breaking year, 2019 has already witnessed the landmark sale of ridesharing app Careem to Uber for more than $3 billion. Yet, despite these deals and the welcome government initiatives to make it easier to set up businesses, many startups face significant barriers. The population of the region is larger in size than the US and the EU, but the market is much more fragmented with complex regulatory landscapes and geographical challenges. There is also a lack of patient capital, particularly for companies looking to scale up their operations, while access to the right talent, advice, and expertise is often limited.

A golden opportunity
At the same time, established businesses in the region are facing their own challenges, to adapt and thrive in the digital world of the fourth industrial revolution. To take advantage of the opportunities that new technologies provide, we need to develop new products and ways of working.

A narrow way of approaching this challenge would be to see only two alternatives: developing new capabilities in-house, or partnering with an already established service provider. Each has its drawbacks. Starting from scratch means investing time, money, and talent in an area outside your expertise, with no guarantee the end product will even be worth it. In contrast, buying off the shelf (most likely from a supplier outside the region) means accepting a product that isn’t tailored to your particular needs.

At Majid Al Futtaim, we see a golden opportunity in a third way– collaborating with startups. As a lifestyle conglomerate with extensive interests in retail, we look to work with partners that help us ensure a signature end-to-end customer experience across all touchpoints.

Related: Local Talent In The GCC Has A Lot To Offer

And it’s not just about financial investment. Even more important to the startups’ success, we give them access to the resource that startups find hardest to reach: our customers. Not their data, of course– that is private. But customers using our stores, malls, and digital assets can use the startups’ services to have a more compelling and personalized experience.

One such example of collaboration is our partnership with a leading regional logistics startup with whom we launched a customized hands-free shopping experience in our shopping malls. It adds value for our customers, and fits perfectly with our core mission. The obvious benefit for the startup is access to capital, but access to customers, capabilities, and physical footprint is even more powerful. And their success is good for our business too. We are able to provide a service much more quickly than if we had to develop it ourselves. We deal with entrepreneurs who bring fresh approaches and ideas. By interacting with startups, our own teams gain new skills and insights. We develop a reputation as a forwardlooking organization that is open to innovation, giving us access to a wider pool of talent, and making it easier to attract the people we need.

Another example is our partnership with I.AM+ on its Omega platform. The AI powered “super app” will revolutionize consumer convenience by providing customers with a personal assistant that is integrated with multiple every day apps. Carrefour and VOX Cinemas customers will be the first to benefit, and we simply could not have done this on our own. But by working together from the start, we have been able to tailor a product specifically to our customers’ needs.

Spreading the benefits
The benefits of investing in and collaborating with startups go beyond the immediate business relationship. A flourishing startup ecosystem is good for society more broadly. Social enterprises across the globe are making a real difference to people’s lives– we have seen this first hand with Enable, a UAE-based home and garden brand that offers a range of products assembled by people with cognitive disabilities. For each product sold, 15% of the sale price goes back to the employee who created it. Rather than investing capital, we provided something more beneficial: business plan guidance, and distribution through our Carrefour stores. Education is another area where the private sector can make a dramatic impact on the region’s long-term growth prospects by enabling the next generation of entrepreneurs. In Jordan, for example, Parachute 16 has set up almost 90 innovation labs and incubators for young people and students, in partnership with national and international organizations, to grow the next generation of entrepreneurs. The Arab world needs thriving startups to truly deliver on its potential. By championing them, the private sector can help everyone share in their success.

Related: A Blueprint For The Evolution Of The SME Sector In The Middle East

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