As someone who studied at Stanford University and was exposed to the culture of Silicon Valley, entrepreneurship seemed like a likely career choice for Emirati national Najla Al Midfa, CEO of the Sharjah Entrepreneurship Center (Sheraa ).
Instead, she chose management consulting and worked in the United States for a few years before returning to the United Arab Emirates in 2010, eventually embarking on the path of supporting entrepreneurs. But it wasn’t a “planned move,” she said in an exclusive interview with Gulf News.
In 2010, the regional entrepreneurial ecosystem was in its infancy. We weren’t even talking about entrepreneurship as it is today, recalls Midfa. “So when I got a job at the Khalifa Fund, my decision to leave a successful career in management consulting to enter the industry was perplexing to many.
“But for me it was an opportunity to use my skills to help young Emirati entrepreneurs with their business ideas. In many ways it was similar to my previous work as a consultant. The only difference being that this time I accompanied small entities and individuals to understand the fundamentals of business creation.
Given that you returned to the UAE at a time when start-up culture as we know it today was taking off, do you think you were in the right place at the right time?
Midfa: “I strongly believe that, not just because of the opportunity to work with Khalifa Fund, but another similar opportunity with Sheraa in my emirate of Sharjah. Looking back, I feel like I had a seat on the rocket, the entrepreneurial ecosystem. Not only have I had the chance to see the entrepreneurial ecosystem flourish, but I have also played an active role in the development and support of start-ups.”
Not only have I had the chance to see the entrepreneurial ecosystem flourish, but I have also played an active role in the development and support of start-ups.
– Najla Al Midfa
How have you seen Sharjah’s entrepreneurial ecosystem evolve over the past decade?
Midfa: “Ten years ago, Sharjah had universities and young talent, but lacked an entrepreneurship platform until the launch of Sheraa in 2016. The mandate was to help young entrepreneurs start their business. Six years later, we have supported entrepreneurs at different stages of their journey, and during this period, our start-ups have raised more than 125 million dollars (460 million dirhams) in capital and generated more than 185 million dollars (more than 680 million dirhams) of income. And it all started with an idea!
What are the unique factors that have helped Sharjah evolve as an entrepreneurial hub?
Midfa: “Sharjah has a critical mass of young talent which has helped the emirate evolve very quickly into a hub of entrepreneurship and innovation. Over the years we have been fortunate to work with high potential university students, although the goal was not to turn them all into entrepreneurs. The goal was to equip these students with the skills necessary for the future of the workplace while developing an entrepreneurial spirit among them. It served double goal of creating a strong talent pool that start-ups could build on while helping graduates set up their own businesses.Additionally, Sharjah’s position as a creative and educational hub, coupled with its increased focus on “green” initiatives, attracts many creative start-ups, focusing on education technologies and sustainability.
What are the different financing stages for an entrepreneur?
Fundraising allows investors to invest money in a growing business in exchange for equity or ownership. The initial investment – also known as seed funding – is followed by different rounds, known as rounds A, B and C. A new assessment is carried out during each round of funding.
However, the first stage of financing a new business occurs so early in the process that it is usually not included in financing rounds at all. Known as “pre-seed” funding, this stage generally refers to the period when a company’s founders start their business for the first time.
Has the fundraising landscape changed as well?
Midfa: “The fundraising landscape has evolved significantly from a decade ago, although gaps exist. On the scaling side, growth capital remains a challenge beyond Series B funding and at the very early “pre-seed” stage. But there is a sweet spot for “seed” funding and Series A funding. Additionally, with investors interested in specific sectors such as fintech [currently], other sectors such as hardware and deep technology are still underfunded. We need a diversity of investors looking to invest in a variety of sectors. Overall, the funding ecosystem continues to grow and these gaps will be filled with the entry of international venture capital (VC) firms such as US-based Sequoia Capital.
Even after being funded, some top start-ups have shut down. What are the financial mistakes that start-ups tend to make and should avoid?
Midfa: “First of all, I think it’s not a good idea to treat fundraising as a measure of vanity. It is extremely important to look at other metrics for success beyond fundraising. Second, in a bull market (explained below) when capital is relatively easy to come by, VCs are comfortable with cash burn (explained below) narrative to achieve lightning scale or growth at any cost. The problem is that economies work in cycles and during a downturn the same venture capitalists talk about conserving cash and think about fundamentals like profitability. This change in narrative can have a negative impact on start-ups. Therefore, it is collectively incumbent on VCs and ecosystem builders to encourage startups to be careful with cash, have a clear path to profitability, and grow sustainably.
Explained: bull market, cash burn and VC – what it all means
A “bull” market, primarily associated with the stock market, is the condition of a financial market in which prices are rising or are expected to rise.
The “cash burn” rate is the rate at which a new business spends its venture capital to fund its overhead costs before generating positive cash.
A venture capitalist (VC) is a private equity investor who provides capital to companies with high growth potential in exchange for equity participation.
What is one oft-repeated financial advice you give to entrepreneurs?
Midfa: “Cash is king so be careful with your money. That’s what I learned in college, and it remains true no matter how the entrepreneurial ecosystem changes.
Would you agree that there are misconceptions that age is a barrier to entrepreneurship?
Midfa: “There is a certain kind of romanticism around dropouts who build unicorns. Whereas the reality is that the most successful entrepreneurs tend to be in their 30s and 40s. Regardless of age as well as economic background and nationality, access should be offered to those who are genuinely interested in starting their business.In this context, the UAE government’s decision to allow Emirati public sector employees to take a year off to start their business is a step in the right direction. Such initiatives are a timely reminder that it’s never too late to start something new after understanding the opportunities and pain points. After all, our goal is to create an ecosystem diverse and inclusive where everyone feels included.
I think it’s not a good idea to treat fundraising as a measure of vanity. It is extremely important to look at other metrics for success beyond fundraising
– Najla Al Midfa
The fear of failure and the culture of restlessness have a negative impact on entrepreneurs. Could you please share your thoughts on both?
Midfa: “There are two sides to the fear of failure, one that keeps a person from getting started. This is why ecosystem builders must consciously focus on destigmatizing failure in young people by constantly emphasizing the need to try regardless of the outcome. The other extreme is completely burning yourself out for the start-up to succeed, which leads to a culture of restlessness. Therefore, alongside the foundations of the company and the products, as a builder and supporter of the ecosystem, we have a huge responsibility to ensure the well-being of the founders.“
When you look at the future of entrepreneurship in the region, what excites you the most?
Midfa: “When I look at the future of entrepreneurship in the region, one thing I’m proud of is that some brilliant ideas have come from young minds who haven’t even graduated yet. Given that the entrepreneurial ecosystem is no longer in its infancy and that we have several success stories in the region, it should serve as an inspiration for the next generation of changemakers. I’m really excited to see the rise of many other innovative start-ups born in the region with global ambitions. Also, as we invest more in research and development activities, more innovation will emerge from the region.
A message for the start-up community?
Midfa: “Beyond tactical advice on finance and fundraising, I would strongly suggest that entrepreneurs be part of a community, because entrepreneurship can be a lonely journey.”