12 Nov 2006
Tech start-ups in Dubai are slowly evolving in areas of web-based applications, wireless, and radio frequency identification technology. Hari Padmanabhan spoke to Gulf News about the current scenario and the challenges which start-ups still face.
Gulf News: How have things shaped up for tech start-ups in Dubai since the dotcom bust in the late 1990s?
Padmanabhan: The dotcom bust did not impact this region as much as it did the western world. The reason was that technology adoption here had a considerable lag.
The money that had gone into it for a small number of start-ups was not significant and so the impact was minimal. When the Internet City was inaugurated in 2000, about 20-30 per cent of the space was taken by start-ups.
Those who survived are now doing quite well. More recently, new start-ups are basically focusing on one or two areas of new technology, in which Dubai is actually taking a lead in the region.
Some of those areas are wireless- related such as RFID (Radio Frequency Identification) technology and to some extent, internet web-based application.
You founded a start-up way back in 1986 in Dubai. How did you go about getting it started?
I started a company when people thought it was quite foolish to start a software company. No company really focused on software and people treated software as an add-on activity to hardware because hardware wouldn't sell unless you offered software.
From day one, I focused on what was required to create products and service products. I started with creating products for the distribution segment and later on added manufacturing to the model.
One of the challenges for start-ups is the availability of funding. How do you look at it?
The venture capital scene is not very well defined. The way it works in most cases is that individuals, who have worked as managers for a long time and want to start a company, bring in their own personal savings, take loans from friends and may even ask the owner of the company to co-invest and take an equity stake in the start-up.
Rather than the venture capital scene becoming more prevalent, there is more of angel funding that is happening, which shows individual comfort with people improving. However, the seed funding for start-ups is not significant given what the market is and the opportunities it presents.
How have government initiatives helped in making things easier for start- ups?
I think one of the issues that tech start-ups always had was the sharing of the ownership or having a majority ownership in the hands of a national. There is always a certain sense of excitement in putting together the ingredients of intellectual property with investment.
And when you have 100 per cent ownership there is more to that. In that perspective, government allowing full ownership rights has contributed a great deal.
Do UAE's higher telecommunication costs, when compared to India and other cheaper destinations, act as an impediment for tech start ups?
I don't believe so. Because while working on the plan to start a company, costs are taken into account and that is passed on to the customer, who pays for the product or service. That is built into the model. I don't think it's an issue at all.
By Gaurav Ghose
Gulf News 2006. All rights reserved.
