Six Pillars of the Startup Ecosystem
Bahrain’s startup success derives from the strength and support of the entire community. Bringing together a like-minded group of entrepreneurs who can share ideas and create connections is critical to the ecosystem, a fact evidenced by the growing number of startup events emerging across the Kingdom.
Similarly, we’ve witnessed the influence of the community on other longstanding events, such as the World Islamic Banking Conference, which was transformed by the emergence of FinTech. To fuel this progress, Bahrain EDB and other government entities have made it a priority to attract new members to the community by hosting local events and attending international conferences.
Incubators and Accelerators
As an abundant pool of knowledge and guidance, the community’s incubators and accelerators are the lifeblood of Bahrain’s startups. In the past year, the number of incubators and accelerators launching in the country has increased significantly.
Organisations such as Tamkeen and the Bahrain Business Incubator Centre, in affiliation with Bahrain Development Bank, offer dedicated platforms for education, guidance and financing. Fab Lab, Level Z and Brinc have also entered the market to bolster the support given to fledgling businesses, while C5 and Amazon Web Services (AWS) have delivered MENA’s first cloud accelerator – the Scalerator – in Bahrain for the wider GCC region.
These services join Bahrain’s existing accelerators and incubators of CH9, Rukn and The Hive as an invaluable source of guidance for young businesses. Furthermore, in 2017, the financial services sector received an added boost with the arrival of a FinTech Regulatory Sandbox to help companies test and fine-tune their ideas - quickening the process of gaining regulatory approval for products and services.
In addition to that, the availability of Unido ITPO’s Entrepreneurship Development and Investment Promotion Programme (EDIP) assists entrepreneurs through collective preparation and empowerment, counseling, technology tie-ups, development of full-fledged joint ventures, business plan preparation and financial linkages.
Running in parallel to an increase in the number of accelerators and incubators is a rise in the funding options available to entrepreneurs. This ensures that entrepreneurs not only have access to ample capital, but the right option to fund their growth. This could take the form of a grant, bank loan, VC investment, IPO, or an angel investor. For example, the availability of Tenmou, which is Bahrain’s first business angels company, provides capital to high potential innovative Bahraini entrepreneurs from the seed stage. Moreover, new crowdfunding regulations have been introduced to increase the opportunities to invest in startups and reduce the cost of raising funds.
Once in business, Bahrain’s entrepreneurs have many opportunities to nurture their skills or those of their growing team. The Kingdom is working to develop world-class training in its fastest growing sectors, such as in new areas of finance through the Bahrain Institute for Banking and Finance (BIBF), or cloud computing with new AWS qualifications offered through Tamkeen. Between 2015 and 2017, Tamkeen supported training and development programmes for 15,000 Bahrainis across a spectrum of specialisations, while creating over 1,000 jobs. Moreover, over the next three years, Tamkeen’s focus will be on training programmes targeted at enabling innovation and supporting startups.
One important trend witnessed in 2017 was an increase in the number of corporates engaging with the startup community. Such corporates act as accelerators, mentors, investors, testbeds and customers. AWS will be revolutionary for startups in the same regard, as it tears down the barriers to new sectors by giving access to large amounts of data with low latency. Looking further into the future, AWS will also enable startups to scale up much quicker through access to secure and cost-effective data storage. Encouraging more corporates like Zain and Batelco to engage with the startup community will further support the growth and success of startup businesses in Bahrain.
Policy and Legislation
With the current round of regulatory reform targeting small businesses, the outlook for Bahrain’s entrepreneurs will only become brighter. The Ministry of Industry, Commerce and Tourism has set up an SME Development Board to nurture an entrepreneurial ecosystem by identifying and implementing initiatives that would enable SMEs to grow.
Specifically, this includes a 2017 regulation allowing onshore crowdfunding in conventional and shari’a-compliant finance as alternative financing opportunities for startups and SME’s. Moreover, new rules have been introduced to support VC investment such as the Limited Investment Partnership Law and a new business activity was introduced, permitting the setup of incubators and accelerators in the Kingdom.
To the same end, other recent regulatory reforms include:
- FinTech Regulatory Sandbox
- Virtual Commercial Registration (CR) and Sijilat Registration Portal
- Protected Cell Companies Law
- Lower minimum capital requirement to start a business
In a major step during 2018, the government will introduce a new bankruptcy law to better protect startups from failure, encouraging more to leap into business ownership.