Alexandar Williams, Director or Strategy & Policy

1. Getting Business Finance - Getting Started: Incubation, Investors (Angel) and the Role of Government Alexandar Williams, Director or Strategy & Policy

2. Moving Forward: a different economic development pathFrom “Bigger” to “Better” Moving Forward - The New Economic Imperative “Better” path → Productivity Output (economic growth) “New” path → Innovation Need to move to new growth path “More” path → More labor and capital • Dubai’s current situation in key sectors, e.g. • Real estate • Decreasing returns for each additional unit of labor and capital • Increasing macroeconomic challenges (demographics, environment, • infrastructure) • → Rising cost of growth Reaching optimal scale Reaching minimum scale Inputs (Labor and capital) 2

3. Vision, Mission, Roles & Core Initiatives Dubai SME 100, Gov. Proc. Prog., YBL Incubation, Idea Lab, Entrepreneur Capability Development, YEC Vision Dubai as a Global Center for Innovative SMEs Corporate Governance, Access to SME Financing, Ease of Doing Business , IP Roles Mission Entrepreneurship & Entrepreneur Development SME Sector and SME Firm Development (Groom Dubai’s Top SMEs) Foster the development of a flourishing entrepreneurial culture and a competitive SMEs sector to support Dubai’s economic development 3

4. Ideation and Incubation- The Dubai SME process

6. The life cycle of Entrepreneurship Development, Firm Creation and Funding Stages

7. Understanding the process of firm creation and exit view • Pre-IPO • viable • Market interest • Heading to IPO or M&A $ • Expansion/scaling • high growth • head count • multiple cycles • market acceptance • Start-Up • Support functions • Administration • Marketing • Revenue growth • Broadening customer base • Seed • Legal entity • Founders=mgt team • Minimal/Zero revenue • Slow growth • evolving market acceptance • customer tests & acquisition • Validation of product/services • Idea/Concept & Discovery • Bright idea • Experimental • Research • Business Plan • Proof of Concept TIME 7

8. 4 Expansion/Scaling • international market support & access • branding • diversification strategies • training • fund raising • financial governance • technology licensing $ Understanding the Needs at each stage • 3 Start-Up • Recruitment • business development • Market access • business model iteration • IP validation • customer acquisition system • 2 Seed • Corporate & secretarial • financial • First hires • PR & networking • Business development • Potential IP valuation • customer acquisition • Commercialization support • 1 Idea/Concept & Discovery • Prototyping/POC • Project Management • Premises/Incubation • Mgt training • IP support /advisories TIME Varying levels of government enablement (direct & indirect) 8

9. The Enterprise Development Financing Process R & D Start-up Early Growth Accelerating Growth Sustaining Growth Maturity Growth Stage in Cycle Proof of Concept Seed First Round Second Round Development Capital Replacement Capital/MBO/MBI/Development Capital Type of Funding Public Sector (e.g., matching funds) Founder, Family, Friends Business Angels Source of Funding Corporate Venturing Venture Capital Funds Public listing/IPO (source: WIPO)

10. SME Investment – Risk Continuum Angel market addresses the investment gap between love money and serious money Founder, friends & family High Business Angels Venture Capitalists Level of Investment Risks Assumed by Investor Corporate VC Equity Markets Commercial Banks Established Seed Start-up Early Growth Low (source: WIPO)

11. The Enterprise Risk Financing Schema Efforts made by financiers Cash flow Risk Time Commercial & Savings Banks Innovation Seed Capital Funds and Public Funding Private Investors and Business Angels Corporate Fund & Venture Capital I Idea Start up Market Introduction Growth Maturity Transfer

12. Angel Investing

13. Who are business angels?Individuals who invest their own monies locally into unquoted companies, usually at their seed to start-up phase. Besides cash, they also make available their experience, know-how and networks of contacts. It is not cheap money, charity or grant. A return on investment is expected at some future point. Key role is to bridge idea to a formal business organization. Define the products and business model. Well rounded expertise (experienced entrepreneur –turned BA). Is part of the team.

14. What are business angel networks/clubs • “organizations” who bring business angels in contact with quality deal flow • National federations and associations • Umbrella Organizations at national or regional level for the networks, enabling exchange of good practice and supporting professional standards (e.g., EBAN)

15. Importance of Angel Investing • Primary source of risk capital and support for start-ups in a number of countries. It is frequently overlooked as angel investors are often not visible. • Primary drivers of a flourishing start-up/entrepreneurial ecosystem • Angel investment is a powerful source of financing for high-growth potential start-ups. • Angel investors tend to be less sensitive to market cycles than venture capitalists

16. What is the Entrepreneur looking for in Angel Investors? Money to start, grow idea into a business Expertise and advice on execution Experience in a particular domain knowledge (finance, investment, Industry verticals – Digital Media, F & B, Logistics) Contacts and networks with other resources such as financiers, consultants, buyers, procurement executives, suppliers, key talents Time and Commitment to develop the entrepreneur, the team and business Credibility and trust to see the business develop

17. What the angel investor is looking for in the entrepreneur? Passion, ambition, industriousness, self-discipline, decisiveness, self-confidence, and tenacity of the entrepreneur and his team Domain knowledge, numeracy, understanding of risks (to de-risk the business), sense of urgency, and a belief in Kaizen (continuous improvement) “Chemistry” with the team yet maintaining a “tough love” relationship Preference for start-ups with mentors & advisors (culture of openness and listening to external views) An executable idea, backed by a sensible & solid business plan

18. Entrepreneurial Finance Lab Psychometrics EFL utilizes a proprietary psychometric application process that incorporates an entrepreneur’s attitude and outlook, ability, business acumen and character to identify high-potential, credit worthy entrepreneurs. Ethics & Character Intelligence Risk Business Skills Attitudes & Beliefs

19. Some Challenges for BAs in ME • Lack of good data & information on the activity • Lack of awareness & understanding of BA concept • Still risk – averse culture, but gradually changing • Many wealthy individuals prefer to invest in art, real state etc. • Financial sustainability of BAs (some co-funding/matching funds from government required) • Up-to-date and enforceable company and share ownership laws on transfers, exits, etc. • Lack of a strong university-private sector- government linkage, low R & D commercialization experience • Still Nascent but will evolve gradually • Need to highlight more success stories

20. Role of Government- Foster a Conducive Environment

21. SME Financing in the Dubai / UAE Context Supply Side Factors (Disincentives for lending) Demand Side Factors (disincentives for borrowing) Information available about the industries Quality of financial information No Tax Benefit of debts Psychological factors Trading focus -need of finance Costs of information verification Start Ups & SMEs Banks & Be Bankable Short planning horizon Speed of getting finance Asset light businesses Underlying Structural Factors Legal Framework Information Infrastructure Auditing Environment Skip-Risk Nature of Economy

22. Preferred Source of Funds for Business Growth

23. Be Bankable.org (to be launched in 2015) Launching a website to enable SMEs prepare themselves for accessing bank finance. Guide SMEs through a step-by-step process to approach banks for finance An SME using BeBankable.ae will be able to prepare a bank finance application and also self-assess readiness for banking SMEs can learn more about banking products, services, processes and documentation to confidently negotiate the best suited financing options Guide SME owners to qualified auditors (Good / Bad Balance Sheet, Auditing Contract, How to select an Auditor)

24. Be Investable Initiative (to be launched in 2015) Initiatives /pogrammesto be launched (over next few years) Undertake Dubai SME Equity Financing Study (started) Set up Dubai SME Angel Investor Directory Network/platform Dubai SME “Accreditation” programme for Dubai – based Angel Investors Guidelines for angel investors in Dubai/UAE context “Build your equity story” programme for entrepreneurs Business Valuation and value drivers programme Diagnostic tool kit to assess entrepreneur readiness for BA Investing Case studies of BA in the UAE/Region

25. Initiatives /pogrammes to be launched Conferences/Seminars/Workshops/Roundtables on Angel Investing Training course on Angel Investing Mentorship programme Pitching competitions Dubai Best Start-Ups 50 List Dubai Angel Investor Awards Recognition

26. Thank you for your attention