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SME innovation
in the UAE
CO-AUTHORED BY:
Content
Founders note
4
Founders note
Executive summary
What is innovation?
10
of UAE
Three learnings from
Innovation is in
the DNA of UAE
12
14
in the UAE
10
17
SME innovation
Innovation drivers and
Three learnings
from the Beehive
roundtable
18
challenges
12
How the UAE
inspires SME
businesses to
innovate
17
Conclusions
20
Thank you to
21
contributors
About Beehive
22
References
23
Founders Note
Apple. Ford. 3M. Tesla. Amazon
Their names roll off our tongues, without even a thought, when
we think of innovation. They made an eternal mark on history,
revolutionised industries, changed the world, and generally made a
positive impact in our lives.
They created industries and powered revolutions. They made the
seemingly impossible possible and the mundane incredibly exciting.
They are the innovators that symbolise the advancement of
humankind.
For the past year, Beehive Group has led a campaign to spotlight and
cultivate innovation within our own community in the UAE.
Craig Moore - CEO
We hope this report will serve as a starting point for a broader conversation about innovation in the SME sector
in the UAE and beyond. We will look to continue engaging in this conversation with our community and our
industry to help the UAE become a centre of innovative thinking.
We at Beehive want to inspire and enable innovation, learning from the examples of the great innovators of our
time. We hope you find this report insightful and informative.
Partners
Thomson Reuters
Arabian Business
Khalifa Fund
Dubai SME
DMCC
Executive Summary
In 2014 the UAE Government launched the National Innovation Strategy, declaring 2015 the
Year of Innovation. As part of the drive to make the UAE one of the most innovative countries
in the world, Beehive, the UAEs first Peer-to-Peer (P2P) finance platform, in collaboration with
Thomson Reuters, launched an in-depth study on innovation within the Small and Medium
Size Enterprise (SME) sector in the UAE.
This whitepaper presents the landscape for SMEs innovation in the UAE, how it is used for
growth and improvement of the businesses, the challenges, and the opportunities that SMEs
face when innovating.
Following the assimilation of multiple SME research sources and working with many SME
partners, we found compelling insights on how SMEs approach innovation, foster it within
their operations and apply it to enter new markets and grow.
The research showed that while SMEs in the UAE evidently see the value in developing a
clear innovation strategy, issues arise in terms of understanding how to actually execute that
strategy to deliver growth within their business. Gaining access to the appropriate funding to
finance an innovation strategy is also a barrier to optimum execution.
Most important, our findings affirmed that innovation is thriving in the UAE. Indeed, all our
survey respondents highlighted that innovation remains the lifeblood of this rapidly growing
nation, fueling its growth and growing sophistication.
SME are
92%
of businesses
in the UAE
The UAE has long been seen as the centre of innovation in the
Middle East and continues to attract talent from all corners of
the world eager to launch new ideas and business models.
That is thanks, in part, to geography. The UAE is literally the
centre of the world today; its airlines, Emirates and Etihad, are a
bridge between continents and increasingly help turn the gears
of the global economy.
But Government policy plays a crucial role as well. The UAE
is decidedly pro-business, supportive of diversification and
embracing of technical and technological development. The
spirit of innovation thrives in every corner of the country.
In 2014, SMEs accounted for some 92% of all the businesses
in UAE; they contributed around 60% to the UAEs GDP and
provided 86% of all private sector employment, according to the
UAE ministry of Finance.
Yet what really sets SMEs apart is their drive and ability to do
things faster, better and more efficiently. Innovation is their
lifeblood and a key enabler for growth and differentiation.
The importance of innovation in growing businesses and
boosting market share is apparent in the most successful
companies around the world, a study by PWC showed recently.
It is no coincidence that the worlds most successful companies,
like Google, Amazon, Tesla and Apple are also some of the most
innovative. All have dedicated innovation strategies to fuel the
growth of their business, PWC noted, and all rank as some of the
biggest spenders on Research and Development (R&D), making
a major financial commitment to achieving their innovation
goals.
86%
of private sector
employment
60%
contribution
to the UAEs GDP
The UAE is already the most innovative Arab nation. Our target
is to be among the most innovative nations in the world. The
competitiveness race demands a constant flow of new ideas, as
well as innovative leadership using different methods and tools to
direct the change
His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the
U.A.E. and Ruler of Dubai.
Innovation is in the
DNA of UAE
A considerable driver to innovation in the UAE is the leadership of the Government itself.
During 2015, now formally embraced as the Year of Innovation, the Government paid
considerable attention to innovative thinking and behaviour. The strategy targeted seven key
sectors: renewable energy, transport, education, health, technology, water and space.
The initiatives within the strategy offer a way forward for the UAEs entrepreneurs and beyond.
Emirates such as Dubai and Abu Dhabi project a sense of innovation and accessibility, and
reflect, a constant strive to be regional leaders of innovation.
As the home to over 30 Free-Zone business hubs with business-friendly processes, tax-free
status and 100% ownership, the UAE is fertile ground for entrepreneurship and innovation,
fuelling the development and growth of the SME sector. (See Graph 1)
The UAE attracts talent from all over the world with its central geographical location, topdown Government policy that supports business and embraces technical and technological
innovation.
Demographics, too, are evolving and the UAE is a highly-competitive and advanced market.
Consumers are always looking for new and improved ideas and products further fuelling the
need for rapid innovation to compete.
Young
Market
Infrastructure
Geographic
Location
Access to
Finance
Access to
Skilled Talent
Graph 1: UAE is an attractive market for SMEs because it is tax free, Free-Zone infrastructure, relatively young in demographics
and centrally located in the world.
Regulatory
Support
Engagement is important.
When you get a team that has
great ideas, you get them to
run with it and build it.
Omnia co-founders
Participents (left to rigth) Ravi Bhusari: DUPLAYS, Shahriar Khodjasteh: DDE, Dany Eid: Pixelbug, Adam Booth,
Steve Haysom: Omnia, Craig Moore, Peter Tavener: Beehive, Vishaal Shah: Panache International
Re-defining innovation
in the UAE
As outlined earlier in this study, innovation can
be defined and represented in many different
ways. Almost 45% of SMEs we surveyed believe
that adapting an existing idea to a new market is a
definition of innovation in the UAE. (See graph 2)
Delivering innovation by adapting tried and tested
ideas from other markets can often prove a more
efficient, simpler and often lucrative means of
delivering a competitive advantage. The UAE has a
strong history of taking the best examples of many
industries such as architecture, retail and the arts
and improving and tailoring them to better deliver
for local market needs.
Our findings identified innovators in Dubai as
generally second-movers in the concepts they apply,
but first-movers in the local market, adapting existing
concepts to the local environment quickly and
efficiently.
The importance of innovation among SMEs
is certainly well-recognised, but while many
respondents saw their business as innovative, our
10
20
30
Graph 2: SME innovation in the UAE tends to be defined as adapting existing ideas to this market.
14
40
50
My company is innovative
20
40
60
80
Graph3: SMEs in the UAE describe themselves as innovative, but are unsure how to develop or put innovation strategies into practice.
100
16
1%
HH Sheikh Mohammads
brand Dubai is different. It cuts
through any trouble and gets to
business. That really keeps us
motivated.
Steve Haysom, Omnia, Founder
1%
33%
25%
26%
Graph 4: The level of competitive pressure and desire for first in market positioning
are factors that drive innovation in the UAE.
70
60
50
30
20
10
18
0
Graph 5: Factors that limit innovation in SMEs
Regulations
40
Partners do not support
Market factors
80
Knowledge factors
Cost Factor
When asked about the key factors spurring future innovations, the
surveys revealed three important themes: Knowledge, community, and
transparency are crucial.
8%
8%
8%
25%
10%
18%
24%
Conclusions
As the Year of Innovation draws to a close, the Government focus placed on innovation has
added considerable weight to making the UAE one of the most innovative countries in the
world. As a centre of innovation in the region, attracting talent from all corners of the world
to come here to work and create new businesses and ideas, the UAE now plays on the world
stage, standing as a symbol of pioneering success in the region. The UAEs airlines, industry
and hospitality sector are the envy of many nations, attracting talent, skills and innovators
from all over the world.
At the heart of this innovation are the SMEs, addressing gaps and niches in the market and
continuously seeking new ways to do things better.
The most successful entrepreneurs in the Middle East have relied upon their innovative
thinking to drive new ideas forward. Their success is driven by the traits they all have in
common: imitating and improving on what already works; making decisions quickly; ensuring
ideas are better capitalised; and being willing to take calculated risks.
Inspired by the countrys leaders, driven by the market, and fuelled by demographics, the SME
sector is growing rapidly and bringing prosperity with it.
Being regarded as one of the worlds most innovative nations will rely heavily on cultivating
SMEs as the engine of the economy, helping them to apply innovation best practice and grow
through key enablers such as:
Better access to funds to enable execution of innovation strategies
A collaborative SME community and culture to share learnings and connect
experienced innovators with SMEs eager to learn and develop
Knowledge and transparency in information to enable competitive benchmarking
Guidance and advice on the development and execution of innovation strategies
The UAEs innovation strategy will pave the way for the countrys SME community,
providing the knowledge base, the guidelines, best practices for strategy development and
implementation, and a formalised ecosystem for innovation. These steps can only further
develop the optimum environment to foster innovation within SMEs in the UAE and deliver
against the vision to be regarded among the worlds most innovative.
Beehive, utilising technology to develop innovative new finance solutions, continues to support
strong businesses with the funds they need to innovate and grow their businesses. Together
with Thomson Reuters, Beehive will continue to work on developing platforms that provide the
necessary information and transparency helping to accelerate the innovative culture within
the SME sector in the UAE.
20
About Beehive
Launched in November 2014, Beehive has rapidly grown into the
UAEs leading online peer-to-peer finance platform. The brainchild
of serial entrepreneur Craig Moore, supported by Rick Pudner,
former Group CEO of Emirates NBD, Beehive facilitates flexible
funding solutions for established SME businesses seeking finance
for up to AED 1,000,000 for the duration of 1 to 3 years.
Since Launch, Beehive has been awarded Start-Up Business for the
year at Gulf Capital SME Awards 2015, received over 2,600 investor
registrations and has successfully funded more than AED 25 million
to around 50 businesses.
Individual investors can invest from as little as AED 100 into each
business listed on the platform and receive monthly repayments
at target rates ranging between 8% APR and 20% APR. Beehive
undertakes thorough due diligence on each business listed on
the platform and the company facilitates the finance agreement
between the business and investors, charging a small percentage
fee of the finance amount.
Investors are also able to buy or sell their finance parts to other
investors on the platform through Beehives secondary market,
giving investors access to a liquid market place where they can
trade finance parts, in a similar manner to a bond market.
Following the success of its UAE platform, Beehive is currently
exploring expansion into new markets.
22
Reference
Roundtable by Beehive; attended by business owners; Dany Eid - founder and CEO of
Pixelbug, Adam Booth and Steve Haysom Founders of Omnia FZ LLC, Ravi Bhusari
Co-Founder and & Managing Director at DUPLAYS, Shahriar Khodjasteh - Founder of
Dubai Desert Extreme (DDE) and Vishaal Shah - Panache International
SME funding gap: P2P lending to the rescue
http://www.businesspulse.ae/Enrich/story/read/ZAWYA20150510114042
Dubais ruler launches National Innovation Strategy
http://businesspulse.ae/Grow/story/read/WAM20141019152048057
SME innovation potential high, but stumbling blocks remain
http://businesspulse.ae/Grow/story/read/ZAWYA20140928110507
PWC - The top innovators and spenders
http://www.strategyand.pwc.com/global/hhttp://www.strategyand.pwc.com/global/
home/what-we-think/innovation1000/top-innovators-spenders#/tab-2015