During "The Role of Venture Capital in Support of Small Enterprises" Seminar in Asharqia Chamber:
90% of Saudis want entrepreneurship and set up their own businesses
Al-Maliki: Only 2% of the volume of financing for small projects of the loan portfolio in the Kingdom
Al-eissa: The venture capital should not stop at the limits of financial support and should go to other types of support
Officials and experts in investment and entrepreneurship confirmed that 90% and more Saudis want entrepreneurship and starting up their own businesses. Thus, the size of financing for small projects is only about 2% of the volume of loan portfolio that is provided in the Kingdom. They stressed that entrepreneurs with new ideas or small projects should not exaggerate with regard of financing, especially with other challenges that may impede the implementation of ideas or the development of small enterprises. In fact, this may outweigh the issue of financing such as marketing, knowledge of regulations and laws, and ways to deal with them. They pointed out to the importance of determining the responsibilities or having a supervisor's presence on the implementation of projects at the beginning, as well as the trend to invest in the new and incomplete sectors in the Kingdom, as the two in a thirst for ideas and new projects and innovation.
This came during a seminar on "The Role of Venture Capital in Support of Small Enterprises" that was organized by Asharqia Chamber on Thursday, April 19th. It was attended by the Chairman of the Chamber, Abdul Hakim Bin Hamad Al-Ammar Al-Khalidi, and number of the Board members, and many pioneers and business leaders in the region. Mr. Mohammed Al Malki, Deputy Governor of the General Authority for Small and Medium Enterprises for Finance, Qais Al Issa, Executive Director of Roya Investment Company, and Mazen Al-Dandashli, Head of Investment Banking at Musharaka Capital Company, were among the speakers. Dr. Sami Al Wahaibi, Professor of Strategic Management and Family Business moderated the seminar.
Al-Wahaibi explained that entrepreneurship consists of four aspects, starting from the need and then the solution, which means the commercial project that provides the product to the customers, through the culture, which means the container that contains both former aspects, and ends with the laws and regulations, which is an important aspect in the organization of the relationship between the Investor and the Entrepreneur.
Mohammed al-Malki, Deputy Governor of the General Authority for Small and Medium Enterprises, said that 90% of Saudis want to establish their own projects. Thus, the size of financing for small projects is only about 2% of the volume of loan portfolio in the Kingdom. He pointed out that the capital of the entrepreneur is his mind; therefore, it has to be fed with knowledge and information so that it can provide new, innovative, and feasible ideas. He referred to the experience of "Morni" to solve the problems of roads, which implemented and was able to expand the provision of providing various services.
Al-Maliki talked about avoiding the confusion between venture money and private ownership. He said that the latter needed more governance because it started to take a safe path; thus became in need of liability procedures. However, if the company spends too much time in its early stages on governance, it may hinder the progress of these small businesses.
Al-Maliki stressed that the issue of financing should not be overstated because of other challenges, such as marketing, knowledge of the laws and regulations, and above all the appropriate choice of the idea in line with the priority sectors in the Kingdom, as well as its anchors, which vary from region to region. He advised entrepreneurs to invest in new and promising opportunities through paying close attention to the needs of the major strategic projects that were being implemented in the Kingdom such as Qiddiya, Neom and other projects.
In addition, Qais Al-eissa explained that the bold investment comes from a simple idea that goes according to a sequential process starting from paper to execution and financing. He pointed to the difficulty of the competing partner to the owner of the idea provider because the partner's interest is in the success of the idea. He said that the obstacles of the environment in general needs further work on awareness and the importance of such seminars in the awareness of entrepreneurs.
Al-Issa stressed the need to respond to the variables market and not to stop the bold capital at the limits of financial support only, but to go to other types of support such as marketing and other types of subsidies. He advised not to sell a large stake in each stage of funding as well as spending full-time on this process, which is important in the success of projects.
Moreover, Mazen Al-Dandashli said that the investor's concerns are mostly about the inability of the entrepreneur to implement, as well as the conflict of interest between the investor and the owner of the idea, as the investor takes the idea and implements it in a different way. He stressed the importance of confidence between the entrepreneur and the investor with the clarity of the legal structure between all parties. He pointed to the importance of defining responsibilities or the presence of a supervisor on the implementation of projects within the framework of primary governance. He advised entrepreneurs to perseverance and good preparation of the idea and implementation.
At the end of the seminar, Ibrahim Al-Sheikh, a member of the Board of Directors of Asharqia Chamber, gave commemorative shields to Mr. Mohamed Al Malki (Deputy Governor of the General Authority for Small and Medium Enterprises for Finance), Mr. Qais Aleissa (CEO of Roya Investment Company), Mr. Mazen Al-Dandashli (Head of Investment Banking at Musharaka Capital Company,), and Dr. Sami Al Wahaibi (Strategic Management and Family Business professor).
