What, in your opinion, is the biggest problem facing startups in the region?
One of the biggest problems I see is the lack of data available to startups, which impacts the entire ecosystem, both in Kuwait and the MENA region. This means startups can’t learn from the experiences of startups that came before them. In the US, I can easily look up any valuations through TechCrunch or other sources. This is especially important to investors, who need data to make investing decisions on.
We also recognized that the startup ecosystem in Kuwait was very fragmented. Designers have their own events, developers have their events, and business people have their own events. We wanted to connect all communities together to build better quality products and startups.
And the opportunities available to investors are huge, but tech startups are commonly overlooked by investors, who tend to look for real estate investments or treat startups like established businesses, demanding high collateral from them. So, Sirdab Lab began with the aim of connecting communities, offering comprehensive support, and providing seed capital to budding startups.
What services does Sirdab Lab offer to solve the existing problems in Kuwait.
We strongly believe in the power of community, which is why many of our services are geared to creating and strengthening relationships. For one thing, Sirdab Lab offered the first co-working space in Kuwait, where entrepreneurs can create and collaborate with other ambitious entrepreneurs.
We set a target for ourselves from the very beginning to host at least two events a week, so entrepreneurs have many more opportunities to meet one another. These events are sometimes educational, such as a seminar on pricing, or purely for fun, such as our movie nights. We also created a 3-week Startup Bootcamp, and many other educational programs to ensure startups are taking the right steps in building their businesses.
We offer mentorship to our members, and they can request to sit with experts from different domains – business, technology, design, legal, or even domain experts – to get the advice and guidance they need.
Has the government helped in terms of customs or making the process easier?
With the establishment of the National Fund for SMEs, the government has been working on streamlining procedures for small businesses. There have been several changes to make acquiring a business license easier, and I believe we’ll see many more changes that will make Kuwait more conducive to a startup environment. I believe a reliance on the government to manage the ecosystem isn’t a healthy approach. Private entities must play an active role in community building and contributing to the growth of the ecosystem, to ensure faster execution and quicker responses to a changing business landscape.
You mentioned the National Fund for SMEs. Dr Al-Zuhair, the chairman of the Fund, is one of our biggest supporters for the event, and he really believes things have to change here in Kuwait. What do you think has to change here?
One of the biggest hurdles we have is education. Our approach to education is very traditional, which doesn’t suit a startup environment that deals with extremely high levels of uncertainty and constant change. We still have startup founders looking to create 5-year plans, when they can’t even predict what will happen in the next month. That’s why Sirdab Lab is aiming to educate entrepreneurs on the importance of building a lean startup, conducting customer validation, testing their product, and getting early feedback from potential customers. These concepts are new to many would-be entrepreneurs, but they make a lot of difference. Engaging with thought leaders and successful entrepreneurs is very important, and should play a bigger role in educating the new generation of entrepreneurs.
Another hurdle is the legal system, which needs to be more supportive of businesses. Many entrepreneurs feel like criminals when starting their businesses, and some resort to legal loopholes just to bypass the restrictive laws in place. Incorporating is very easy in the US, but here you need 10,000 KD to 50,000 KD capital, in addition to paying rent for office space, regardless of what business you’re establishing. What many entrepreneurs do is take out a loan, use it as proof of capital to get the business license, and then return it. These are the outdated laws that need to be removed and that don’t make any sense in our current business environment.
We also need to become an open market to encourage foreign investments and an exchange of experience with other markets. If we truly want the startup ecosystem to flourish in Kuwait we have to attract the talents and expertise that can give our ecosystem a boost.
Finally, I would say there are cultural hurdles we need to overcome. There remains a cultural fear of failure, where failing in business isn’t seen as a learning experience, but a mark of shame. Many Kuwaitis are still too comfortable with their government safety net to venture into entrepreneurship. Norway shares a similar culture to Kuwait, where the welfare state makes people less inclined to take risks. There is also social pressure to stick to a government job and not start a business, where the possibility of success isn’t guaranteed. Having said that, we are seeing individuals leaving government and private sector jobs to start their own businesses. Hopefully, this trend will continue.
That is interesting. Here, a common aim is to work for the government and have a job for life.
Exactly. Many of our community members are working on their business as a side project, while holding a government job.
As a woman entrepreneur, would you say women are in a much better situation here in Kuwait than anywhere else in the region?
I really can’t compare between Kuwait and the rest of the region. From what I’m seeing, there are many women entrepreneurs in the region, and many wonderful initiatives supporting women in entrepreneurship. I have met several ambitious women entrepreneurs in Kuwait who run their businesses while successfully maintaining the right balance with their family and social lives. They let nothing stop them from living their entrepreneurial dreams.
The entrepreneurship scene is moving here, it’s growing, you are one example. Do you have any success stories?
The biggest acquisition in the region, so far, is of the Kuwaiti startup, Talabat, which was acquired by Rocket Internet. Ghaliah Tech, a Kuwaiti social media agency, was also partially acquired by Ifa. At Sirdab Lab we’re working closely with a few tech startups, such as BoxIt, and will see many startups launch in the near future.
A lot of these startups do not have a lot of money, so how do you finance yourself?
We started Sirdab Lab knowing we’ll be investing in growing the startup community, so we aim to be as startup-friendly as possible. We provide a lot of free networking and educational events and workshops.
We also have Sirdab Lab membership, which gives entrepreneurs access to using our coworking space 24/7, discounts on all our paid events, and includes mentorship hours. Sirdab Lab effectively becomes their startup base, and they can even host their launch party free of charge. All this is provided at a nominal fee.
In addition to being a great support system for startups, it also allows us to work closely with startups to find investing opportunities for us. When we find startups worth investing in we approach them with an investment offer.
And then will you help them raise the right partners in technology?
We held the first co-founder speed dating event to serve this purpose, and we aim to host similar events on a regular basis. It’s not simply a technology partner, but the right partner with a complementary skill set. When working with startups, we pay close attention to their individual needs. Do they need funding? Are they ready for funding? At times our members approach us so we can connect them to Silicon Valley mentors or investors, but we don’t make the connection immediately. We have to ensure they’re ready to make a positive impression.
This kind of business is disruptive to most markets. How many startups here are you willing to take?
I will answer with the only answer I can: “It depends.” Dealing with startups is unpredictable, so we don’t know how many startups will wow us and can truly disrupt the industries they enter.
It is interesting because I see a real niche in your work for foreign startups looking to Kuwait as a possible opportunity for business. You are the go-to people in the country. How are you approaching these foreign investors or potential startups that are looking to Kuwait?
We definitely aspire to have Kuwait attract foreign investors, and we’re keen on working with entrepreneurs to help them enter the region. It’s extremely important for us – especially at this stage – to attract smart money, which bundles financial investments with a transfer of knowledge.
What is the difference between an SME and a startup?
I’m glad you asked this question, as there is a common misconception about what a startup is. An SME is a small to medium enterprise, without a J-curve in its growth, whereas a startup is an enterprise on a constant search for a scalable business model that fits a J-curve, marking exponential growth. We are constantly emphasizing this difference, because businesses in Kuwait need to look towards global expansion, not just the local market.
How do you see yourself in two years?
We want to see a more cohesive, collaborative community, with many more events, hackathons, and meetups taking place. We also want to develop the entire pipeline of investment rounds. Not just in Kuwait, but across all MENA countries, such as Saudi, the UAE, and Bahrain, as well as Egypt and Jordan.
Is Kuwait ahead of these countries you are talking about?
Each country has it’s own advantages. Kuwait, for example, is a great test market, and has an abundance of capital. Egypt and Jordan are talent hubs, with great developers and engineers. Saudi is a huge market with the greatest mobile penetration rate in the region. Dubai has great business infrastructure, and attracts foreign talents and businesses.
What about censorship issues and firewalls?
The vast majority of startups won’t be affected by government censorship. Unless you’re working in the entertainment industry it’s very unlikely that censorship will get in your way.
One thing I have found here, and the more you speak to the young generation, the big opportunities are in tech startups, and that is where international investors have an opportunity. But can you really easily adapt startups for regional expansion? Can you adapt them, because Kuwait is quite different, how useful is it as test market?
Kuwait isn’t that different from countries in the region. It shares the same culture, which means the same marketing strategies can be applied. It also means we can easily form partnerships with locals, and this is how you enter a market. The beauty of technology is that it’s not capital intensive: it requires a small amount of capital to start, scales fast, and the cost of technology is declining year on year. In addition, Moore’s Law, which predicted the doubling of processor power since 1965 has remained consistent, meaning that our technological capabilities are growing rapidly. Cloud services and platforms, such as Amazon Web Services, is making scalability technologically and financially viable for more and more startups.
In the old days, everything on the Internet was in English. Now, Arabic is coming. Would you say that is something that you have started to research as a launch pad?
It is an opportunity we tell startups to keep in mind. The ratio between the number of Arabic-speaking individuals online to Arabic online content is huge, which means that startups who cater to an Arab audience have high potential of visibility. We recently started translating some of our online content into Arabic, and we hope to provide more Arabic content in the future.
Are you worried about the tech bubble?
Startup valuations may go down, but technology itself isn’t going anywhere any time soon. As a species, we will continue to depend on technology and will strive to find more creative ways to harness its powers and improve our quality of life. Smartphones dramatically changed the way we live, and I’m sure there will be many more innovations in the near future. It’s a wonderful time to be involved in technology, and I’m looking forward to seeing what the next generation of startups have in store for us.
Any last words about entrepreneurship and the startup ecosystem in Kuwait?
Kuwait remains an untapped market with enormous potential, and the growing interest in promoting entrepreneurship here means that it’s a golden opportunity to pursue your entrepreneurial ambitions. People tend to undervalue the importance of the community until they experience the benefits it has to offer, whether from a casual conversation at an event or a mentorship session with an expert. Now’s the time to invest in yourself and your ambitions, and to connect with others who share your enthusiasm and can help you succeed.