Some established companies are making direct investments in the startup space. The Middle East Broadcasting Center Group (MBC), the first private free-to-air satellite broadcasting company in the Arab world, recently began investing in startups focused on media and entertainment through its funding arm, MBC Ventures. Aside from cash investments, which range from $100,000 to $500,000 per deal, MBC will leverage its expertise to support the startups in areas such as advertising, social media, and legal issues.
Several of the region’s incubators backed by established companies also include a funding component. Turn8 will invest $24,000 to help teams with promising ideas design, build, and launch a prototype. Intigral’s Afkar.me is using a different financing model. Instead of offering seed capital for an equity stake, it will offer as much as $20,000 in seed investment as a loan. Once startups launch their products, Afkar.me will introduce them to a network of partners and investors such as STC Ventures, MBC Ventures, and Middle East Venture Partners.
“We don’t want to place a value on the company from Day One,” explained Victor Kiriakos, senior manager of strategic products at Intigral, according to an article in Wamda. “Our objective is to create a company that could sit as a partner with us, so that we can set up revenue shares. We’re not looking for a return on investment; we’re looking to enrich the ecosystem.”
We’re not looking for a return on investment; we’re looking to enrich the ecosystem.
CSR as Change Agent
Although we expect large companies to continue and even increase their promotion of entrepreneurship and job creation in the Middle East, the full impact of their activities won’t be felt for several years to come. Even in the near term, though, the direction of corporate thinking about CSR and entrepreneurial investments demonstrates a keen understanding of the region’s problems and where the gaps in the entrepreneurial framework exist. Increasing collaboration among governments and companies to establish an ecosystem favorable to SMEs could be pivotal to the MENA region’s economic development. It may also become a template for other developing regions and for multinationals looking to start CSR programs in those regions. CSR can be much more than a bit of corporate theater. It can be an agent for genuine and much-needed economic progress.
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- Ramez T. Shehadi is a partner with Booz & Company based in Beirut. He leads the firm’s digitization platform globally and the business technology practice in the Middle East.
- Mounira Jamjoom is a former senior research specialist at the Ideation Center, Booz & Company’s think tank in the Middle East.