Limiting Factors for Startups in the Ecosystem

This article is written by Jeremiah Uke, a Contributor Author at Startup Turkey.

Fadi Ghandour, executive chairman of Wamda Group and refined venture capitalist was part of a fireside chat at Startup Turkey 2018, he shared knowledge on some factors which limit startups from growth in the ecosystem.

Acknowledging the rapid growth of the startup community in the past few years, Fadi rang the bell of applause but still noted that there are several limiting factors reducing the rate at which startups can grow in the region, noting that if these factors are tackled, there will be tremendous improvement for our startup community, and the economy as well. These factors include, but are not limited to the following:

• 1. Funds

The importance of funds in running a startup cannot be overemphasized, no startup can operate if funds to do so are not available, currently, the region sees an influx of funds in the range of 200-300 million annually, for an economy which accommodates much bigger than that, take for example the number of startups that applied to pitch at Startup Turkey which is
over 60,000, this means 60,000 businesses needing funds, needing to scale, comparing the influx of funds to the number of available gives a very uneven result. The result of this is you find out that a whole lot of startups end up having to stop operations because they were not able to raise that initial fund that will get them up and running, and this continues as unending cycle yearly.

• 2. Ability to scale

The ability of a startup to scale limits its growth, and scaling in this point does not just have to do with money, a typical startup in Silicon Valley does not have to worry about opening a branch in Los Angeles, or New York, but when a startup in this region wants to expand to new locations, he has to think about arranging Visa, working permits, passports and travel regulations. These lead to the presence of too many friction points, therefore a startup here would rather stay as it is than try to scale.

• 3. Government policy

Policy and laws of doing business in a region can be a great hindering factor for a startup, startups find it hard working with government agencies and most often avoid them, they end up violating a few laws and pay avoidable fines, in some cases the government agencies go ahead to ban the operation of these startups. Startups need to find ways to get the government to listen to them and also work with the government, although new policies are released all the time, startups can influence them to be in their favour.

Funds, scaling and laws are the most limiting factors for startups in our ecosystem today, and until they are addressed, entrepreneurs who find a way to go about these three factors are the ones who own today, and possibly the future.