In a session about building strong local ecosystems to achieve global success, Usama Fayyad, Executive Chairman of Oasis 500 and Eric Gertler, Head of the New York City Economic Development Corporation, talked about the challenges and opportunities the Middle East faces in fostering innovation, leveraging technology and supporting new startups.
As an angel investor network, Oasis 500 has already supported 400 new companies with just a $7 million fund – a tiny amount, Fayyad pointed out, compared to the cost of a new building or road – which is readily allocated capital investment.
“The good news is that we are off to a very promising start,” Fayyad said. “We are seeing the beginnings of change but it is nowhere near the level it should be.”
One of the challenges faced, he said, is that the words for early investment don’t even exist in Arabic. “Seed investment, early stage financing, angel investment – there are not words in Arabic for them – even the term venture capital which is much more established is not a standard term in the language.”
Gertler added that, similarly, seed or early financing was also not always available in New York and that 13 years ago when he started up a tech business he had to find the seed investment from Silicon Valley.
Fayyad said that though there was a lot of cash in the Middle East a lot of it had been misallocated over the years which was a huge problem for the region. He also stated that the way that Government and legal systems currently operate, money is often earmarked for venture capital investment and cannot be spent, but there is no mechanism to allow this to be redirected elsewhere.
Both Fayyad and Gertler pointed to the necessity of localization in investing in new companies and new businesses. “Each country needs to find its strong point where it can grow its own ecosystem. For example, in Jordan the focus is on IT as it has the highest per capita ICT graduates in the world. In the Gulf I think there is a huge opportunity around energy. You have to pick what makes sense in each country and invest in that.”
Added Gertler: “You need to think about the DNA in your community as you develop local ecosystems as each has its own particular characteristics. New York for example developed as a merchant town, a banking town, a town about commerce whereas Silicon Valley is about big hardware companies, it’s about technology.