It’s high time we realized that nurturing tech startups is key to staying relevant in a fast changing world.
By Nader Museitif
Our region is falling more and more behind when it comes to developing new technology. Some astounding advancements in artificial intelligence and robotics are being made in the United States and Japan. Google (or Alphabet), Palantir, and even Facebook are breaking ground in transportation, health care, and other sectors, meaning that some major disruption is on the way. Technology is advancing faster than ever, and we’re being relegated to mere importers that may or may not be lucky enough to afford what we’re allowed to buy.
There’s nothing new about us being behind on technology. But the world is changing and technological irrelevance poses huge social and economic dangers. Markets with proprietary access to latest technology will leap in efficiency and disrupt most of the current methodologies. During disruption, one party leaps, and another is rendered obsolete. If we don’t keep up, we’re doomed to the latter.
Save for a few exceptions, the majority of regional governments and corporates aren’t doing much to change the status quo. They’re slow to react, and classic sectors like real estate and oil continue to draw most of the money from investors. This mentality has to shift and unless we move towards tech we won’t advance very far.
Tech startups are our best bet to stay relevant. And those who harbor them shall reap the most. This has been proven by the large corporates in the United States and other developed markets. Investing in startups is one strategy to hedge against disruptive competition and to remain close to the potential disruption rather than being out of the loop. The reasoning behind such a strategy isn’t so complicated. One argument is that startups act faster and more independently. They innovate better, provided they have a minimum level of competent driven management and capital. Nevertheless, large corporates should play a key role in supporting startups by providing them with access to resources without hampering their momentum and freedom. It’s easier said than done. But if it’s done well, everyone wins.
Another argument is that startups can be a viable bridge to innovation in developed markets. Entrepreneurs are by nature networkers who will gladly reach out to anyone—even Martians—if it means getting the information or resources they need. They will network with investors, mentors, accelerators, and other entrepreneurs across the world for capital, guidance, or cooperation. We’re already seeing it with US investors, funds, and organizations that are crossing borders and looking to add value to entrepreneurs globally and in the region. Think Tiger Global Management, Naspers, and 500 Startups, among others.
Finally, startups don’t have to be from the region. Capital is borderless and early investing is becoming almost standardized with BVI and Cayman structures. Entrepreneurs look for diversity in their investor portfolio as it opens up future doors for their unbound ambitions. In return, investors get to be on board with new waves of innovation in new markets. Granted they might be riskier investments, but that’s where the corporate’s experience becomes invaluable in terms of how it mentors and guides the startup to minimize risk.