Sharjah’s cost advantage a win for UAE startups

Entrepreneurs are facing pressure from multiple challenges with a major one continuing to be the cost structure of doing business in the UAE.

Sharjah appears to provide a solution.

This section of today’s column is co-written with Najla Al-Midfa, General Manager of Sheraa and one of the region’s thought leaders and active architects of entrepreneurship ecosystems in the UAE.

If you are a regular reader of my column you will know that I am a little bit exasperated at what I see as deep denial in the business community about current and future economic challenges. On a personal basis this has created a challenge for me in restructuring my family investment portfolio in response to those same economic challenges. This has led me to an interesting insight.

The part of the portfolio that I was looking at that led to this insight was the real estate sub-portfolio. The real estate sector does not have as much transparency in terms of price discovery as, say, the listed equity markets. An investor needs to be continuously in the market, working with real estate brokers, to truly know where the prices are for different types of real estate in different locations. The flight from high cost residential to middle and low cost residential is relatively well known and logically sound. It is a great defensive move and one that investors believe will protect their investments and their yield. What was surprising to me was finding out that prices for these types of residential properties was rising at quite a healthy rate in the Emirate of Ajman.

A little investigation made it clear why. We have all heard about people working in Dubai but living in Sharjah due to the latter’s more affordable cost structure. What anecdotal evidence suggested was that commercial prerogatives were following personal ones, ie some companies based in Dubai who need to manage their costs are moving part, if not all, of their work force to Sharjah. So some of those working in Sharjah simply decided to live in Ajman to free up even more of their income for savings or discretionary expenditure.

Although the path that led me to investigating Sharjah was real estate investments, once I started looking into it I saw plenty of opportunities. The bottom line is that Sharjah invested at a more measured pace than some of its sister Emirates. There is no right and wrong in this, no one can tell the future, but what this does mean is that not only are Sharjah’s finances in better shape relative to its expenditures, but much more importantly the infrastructure in Sharjah is commercially viable at a relatively lower cost. This has made Sharjah’s economy far more resilient to oil price volatility.

In my attempts at understanding Sharjah I came across Sheraa, which serves as a catalyst and congregator that complements the various initiatives in Sharjah’s entrepreneurial eco-system and is headed by Najla Al-Midfa.

Sheraa was conceived in the run up to the 2015 World Economic Forum meeting at the Dead Sea in Jordan. In preparing for a panel on the youth employment challenge in the Arab World, Sheikha Bodour bint Sultan Al Qasimi, Chairwoman of the Board of Sheraa and the inspiration behind the initiative, wanted to translate words into action by providing a platform for aspiring entrepreneurs to build a better and more prosperous future for the region through entrepreneurship.

Sheraa’s accelerator programme is 12 weeks long and aimed at early-stage start-ups that wish to use Sharjah as a launchpad to grow and scale their impact. The accelerator supports the selected start-ups with equity-free funding of up to US$10,000, a free Sharjah-based trade licence, rent-free office space at Sheraa, expert mentorship, legal assistance, and access to contracts in both the private and government sectors.

Since its launch in January 2016 Sheraa’s vision has evolved into much more. It has become a key pillar of the growing Sharjah University City entrepreneurship ecosystem, as well as an anchor institution that is expanding Sharjah’s value proposition as a start-up destination for regional entrepreneurs. Sheraa works with a wide range of clients at various stages of venture creation – from students with an idea for the next billion dirham start-up, through to successful small and medium-sized enterprises looking to take their businesses to the next level.

It is Sheraa’s deep roots in the community that allows it to play such a central role in Sharjah’s entrepreneurial ecosystem. Moreover, Sheraa is enabling entrepreneurs to develop globally competitive, fast-growing companies in priority economic areas that drive economic diversification and increasing private investment in startups and growing small and medium enterprises. They are already seeing the impact from their work in building businesses that can generate high skill, high wage jobs in knowledge-based industries for youth. Yalla Pickup, which is a graduate of Sheraa’s first Accelerator Cohort, is a great example of the kind of impact Sheraa can have.

Yalla Pickup is one of Sheraa’s most successful clients, a mobile application which provides individuals and businesses on-demand access to pick-up trucks for transporting goods or personal items. Think Uber for pick-up trucks. Yalla Pickup was launched in October 2016.

Yalla Pickup came to Sheraa with a working minimum viable product, big aspirations but not much customer traction. Sheraa provided an equity-free seed grant, access to top tier mentors, and introduction to investors through our Demo Day. Partly based on this assistance, Yalla Pickup secured Dh1 million in funding and went on to win Transport App of the Year at the 2016 ShortList App Awards. Since January 2017, Yalla Pickup has been growing at a rate of 200 per cent month-over-month.

Whilst global level successes such as Souq.com’s sale to Amazon are important so too are the thousands of other startups in the UAE and the region which face significant challenges and need the right support to become successful. Sheraa’s unique formula coupled with Sharjah’s economically start-up friendly cost structure looks set to be a regional game changer.

The number one complaint that I, Sabah al-Binali, hear as an investor from start-ups and entrepreneurs is lack of funding. But if you have a competitive cost structure, then you don’t need as much funding, do you? If you’re an entrepreneur, why not think outside of the box, and give Sharjah, and Sheraa, a visit?


This article was originally published in The National.

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