Areije Al Shakar, senior vice president and head of development services division at Bahrain Development Bank, reveals what Venture Capital (VC) firms look for when funding local startups.
The Kingdom of Bahrain has launched a range of ambitious initiatives to diversify its economy through entrepreneurship. The government-backed Bahrain Development Bank (BDB) recently gave a shot-in-the-arm to nation’s small to medium sized enterprise (SME) drive when it successfully closed its $100 million Al Waha Venture Capital Fund of Funds (Al Waha FoF), which aims to invest in promising regional tech startups.
“The fund is registered in Bahrain but we’re investing in funds regionally and some internationally. It is a critical asset for the regional startup ecosystem,” says Areije Al Shakar, senior vice president and head of development services division at BDB, who is leading the Al Waha FoF management team.
Bahraini national Al Shakar adds: “Al Waha FoF strives to provide access to funding for startups and entrepreneurs that are in Bahrain, or are setting up in Bahrain, to further support the country’s national aim of becoming a startup technology hub.”
As part of her remit at BDB, Al Shakar is also vice president of Bahrain’s ‘Rowad’ initiative, which provides entrepreneurs with access to different learning tools: such as training programmes, workshops, coaching programmes, incubation and a seed funding programme (Seed Fuel).
Now in her eighth year in the role, Al Shakar praises the amount of choices entrepreneurs have and their progress. Rowad has had more than 1,700 individual ideas that have gone through the programme since it launched in 2015.
According to the latest government figures, Bahrain is already one of the most diversified economies in the Gulf region and the hydrocarbons industry now represents less than a fifth of Bahrain’s annual gross domestic product (GDP). SMEs represent around 90 per cent of the kingdom’s enterprises and generate around 30 per cent of its GDP.
Al Shakar says the number of Bahraini startups has grown 46 per cent over the past three years – which “highlights their increasing importance to the economic growth and development to the kingdom”.
Al Waha Venture Capital Fund of Funds
The BDB senior vice president says: “Ultimately the Al Waha fund is looking to build up the regional ecosystem in terms of VC capability.
“We’re looking to support the regional start-up ecosystem by providing access to funding and to these fund managers through our investments in the Al Waha fund.”
Al Shakar says that the establishment of the Bahraini mega fund will naturally draw VC awareness to local startups and businesses.She explains: “We’re building relationships and interacting within the ecosystems so there are strategic elements to the fund. We don’t put any stipulations that the fund managers have to invest in local companies – they have their own metrics of reviewing and analysing the investment.
“But ultimately, there is that relationship building that happens; VC investors will be inevitably spending time here [in Bahrain] from the strategic standpoint and interacting with the ecosystem and eventually if the opportunity is right, the fund managers will jump on it and invest in local startups.”
Government Startup Investment
Al Shakar says BDB’s SME programmes look at “various levels of criteria” when investing, especially through the Seed Fuel programme, in terms of directing investment into startups.
She says BDB is seeking to invest in “founders that have solutions that have feasibility within Bahrain in terms of the market capacity to be able to absorb”.
Al Shakar says BDB aims to offer mentorship and funding to “founding teams that automatically think of the regional market, rather than just Bahrain, because that’s quite small – and with the vision to a more international scale”.
She explains: “BDB is looking for companies that are providing any sort of innovation, whether that’s innovation to a business model or an innovation of something that wasn’t in existence.
“We also look at the skill set in the team or if they plan to on-board certain skill sets if they don’t have them. We want to bridge that gap when it comes to the pre-seed stage of funding and help them build up their company so that they can apply to VC funds.”
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