Startups ‘must build new ties as investors shift priorities’

MANAMA: Global seed investments in startups have dropped by nearly 50 per cent, with accelerators and venture capital (VC) funds adjusting their priorities and startups re-evaluating their fundraising strategies, an online panel discussion of investment experts revealed earlier this week.

The HexGn-organised funding webinar noted that as a result of the economic uncertainty during the Covid-19 pandemic, investors have shifted priorities from speculative technology and luxury items to optimisation of basic needs and services delivery.

Roberto Wyszkowski of UAE-based SIA Partners noted: “We are seeing many segments like storefronts and traditional retail quickly going obsolete because they are unable to service the current needs of consumers, while others are seeing a significant increase in demand, like food delivery startups.

“This is a good time for startups to build and leverage partnerships so they don’t expand operations unsustainably.”

Mr Wyszkowski also noted there is also a renewed focus on technology and process-optimisation investments in healthcare, real estate, education, communications and food.

During this crisis, Mr Wyszkowski speculated that services that are not able to sustain themselves based on the current needs of customers would be “cleansed” from the market, making way for resilient companies that are able to service industries that are attracting revenues and investment.

Despite the 50pc cut in average investment size, Amal Dokhan, angel investor and chief executive of Global Entrepreneurship Network (GEN)’s Saudi arm, highlighted the entrance of new investors even as startups saw more competition to raise less funds in order to maintain operations.

Ms Dokhan noted: “We are in a situation where every single entity has been impacted and is altering their behaviours and expectations, whether it is consumers, investors or other corporate (companies). The companies that survive are the ones who can adapt to this change in behaviour.

“Every startup that we now coach has to prepare a Covid-19 strategy so investors have an idea how the company operates and remains profitable during times of crisis.”

In the kingdom, Faisal Ahmed Saleh, head of trading operations at the Bahrain Investment Market (BIM), revealed that due to the current Covid-19 crisis, companies that have been in the pipeline to be listed on Bahrain Bourse have now been delayed, limiting their access to liquid capital.

Additionally, according to Mr Saleh, Tamkeen’s support in covering the costs associated with listing on the exchange has been put on hold due to the current crisis, further discouraging market players from accessing and investing capital using Bahrain Bourse.




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