startups; Its goals, financing methods, and how it differs from any small business

startups

startups; Learn about the definition of these companies, their importance and objectives, and what are the most important Arab business incubators?

startups; It is a company or organization in the early stages of work. One of the most important goals of startups is to focus on developing a unique product or service to grow and establish itself as a successful business. Startups are typically distinguished by their innovative approach to solving a problem, their flexibility to adapt to change, and their focus on growth and scalability. Usually made up of a small team of founders and employees, startups are funded by venture capital or angel investors. In this article, we will get to know better about startups, in terms of definition, goals, and how to establish and finance, and we will also get acquainted with the best Arab business incubators that finance these companies while getting to know the top 10 Arab startups.


What is the difference between a startup and a small business?

There is no strict definition of a startup or a small company, and the two terms are often used interchangeably. However, some general differences are often cited between the concept of a startup or the term start-up and the concept and term of a small business.

Typically, startups have high growth potential and an innovative approach to solving a problem, disrupting existing industries, or creating entirely new markets. In contrast, small companies are usually more modest in size and market scope and may be more focused on serving the local or niche market.

Also, a startup often requires large capital investments to launch and expand quickly, as it may rely on financing from venture capital firms, angel investors, or crowdfunding campaigns, and it differs from small businesses that obtain their financing from the owner’s savings or a small business loan from Bank or other financial institution.

Also, startups often have a more hierarchical organizational structure, with a small number of senior executives making strategic decisions and a larger number of employees executing those decisions. Small firms may have a more stable organizational structure, with the owner or a small group of partners making decisions and everyone carrying out the tasks.

In general, the main difference between a startup and a small business is the level of risk and potential financial returns. Startups are riskier and more uncertain but have the potential to generate much greater returns if successful. Small companies are generally more stable and predictable but may have more modest growth potential.

How do startups work?

A picture with a rocket drawn on a black background and written words around it, as part of how startups work
startups work

After getting to know the concept of startups, here we talk about how they work. Many startups are founded by entrepreneurs who have a specific idea or vision for the company and are looking to bring that idea to market. To get started, startup founders often create a business plan that outlines the details of the business, including the target market, financial projections, and marketing strategy. Start-up companies can also be funded by investors or financial institutions to finance the initial costs of starting work on the ground.

Once a startup has sufficient funding and a solid plan in place, it can begin to focus on developing its product or service, building a client base, and working toward becoming a profitable and sustainable business. This process can be challenging, as startups typically face a high degree of uncertainty and risk. However, with hard work, determination, and a bit of luck, many startups can make it through and become well-established companies.

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What are the goals of startups?

Startups generally have a few main goals, which are:

  • Developing and introducing a new product or service to the market.
  • Rapid business growth by acquiring a large number of clients.
  • Generate revenue and make profits.
  • Eventually selling the business for cash (at a profit) to a larger company or through an initial public offering (IPO).
Of course, these startup goals can vary depending on the specific nature of the startup and the industry in which it operates. Some startups may also have social or environmental missions and may prioritize those over purely financial goals.

Why should startups change their strategy?

An image containing a missile with colored circles under it on a light blue background, as an expression of Start-up strategy
Start-up strategy

There are several reasons why startups may need to change their strategy:

market conditions

The market in which a startup operates can change dramatically over time. For example, new competitors may enter the market, consumer preferences may change, or the economic climate may change. If these changes are not reflected in the startup’s strategy, the business may struggle to adapt and stay competitive.

goals of startups

As a startup grows and develops, its goals may change as well. For example, a startup that was initially focused on creating a niche product may eventually want to expand its product offering to reach new markets. In this case, the startup may need to change its strategy to achieve its new goals.

Poor performance

If the startup does not meet its performance targets, it may be necessary to re-evaluate and adjust the current strategy. This may include identifying the root cause of poor performance and implementing changes that address these issues.

External factors

The startup may also need to change its strategy due to external factors beyond its control. For example, changes in government regulations or technological developments may require a startup to adapt its strategy to remain compliant or competitive.

There are several ways a startup can change its strategy. This could include conducting market research to gather data about consumer preferences and trends, seeking advice from industry experts and consultants, and soliciting feedback from employees and customers.

In general, it is important for startups to be adaptable and open to change to stay competitive and achieve long-term success. By regularly reviewing and updating their strategy, startups can ensure that they are positioning themselves for growth and success in an ever-changing business environment.

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Financing startups

An image showing a group of people in an office in a company putting their hands on top of each other, as part of talking about ways to finance startups
Financing startups ways

There are several ways startups can obtain financing. One common way is through venture capital (VC) firms. This type of company provides financing for startups that are still in the early stages in exchange for a stake in the company. Startups can also get funding from angel investors, which are individuals who invest their own money in exchange for ownership of the company.

Another way startups can get funding is through crowdfunding platforms. These platforms fund startups after the company pitch its ideas to a large number of potential investors, who can then choose to contribute small amounts of money in exchange for bonuses or shares in the company. This method helps startups tap into a broader pool of potential investors and can be especially beneficial for companies developing products or services that have broad appeal.

Startups can also get funding through grants and accelerators. Grants are usually given by government agencies and organizations or non-profit organizations and are usually awarded to companies working on innovative projects or technologies. Accelerators, on the other hand, are programs that provide funding, resources, and mentorship to startups in return for a small equity stake. These programs are designed to help companies scale quickly, and can be a great way for startups to get the support they need to grow.

Another option for financing startups is to take out a loan. This can be a good option for companies that have a solid business plan and are confident that they can repay the loan. However, it is important to note that obtaining a loan can be very risky, especially for early-stage businesses that may not have a long track record of success.

In addition to these traditional funding sources, startups can also obtain funding through corporate partnerships or strategic investments. These partnerships can take a variety of forms, including joint ventures, licensing agreements, or even acquisitions. By partnering with larger companies, startups can access new markets, customers, and resources, which can help them grow more quickly.

For your information, some international companies support startups and offer them prizes, including Huawei International, which distributed prizes to the winners of the 2022 Huawei cloud startups competition in Egypt.

Regardless of the financing method they choose, startups must consider their options carefully and choose the one that makes the most sense for their business. This may take a lot of research, but it will be worth it in the long run. By finding the right source of funding, startups can get the financial resources they need to turn their ideas into successful businesses.
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Arab business incubators

The Arab world is home to a diverse and rapidly growing ecosystem of business incubators, which provide critical support to early-stage startups and help them scale and succeed. These incubators offer a range of services, including access to funding, mentorship, networking opportunities, and workspace to help founders turn their ideas into viable businesses.

Here are 10 of the best Arab business incubators:

  1. Flat6Labs: Headquartered in Cairo, Flat6Labs is a leading business incubator in the Arab world.
  2. Oasis500: Oasis500 is one of the leading Arab business incubators and business accelerators in the Middle East.
  3. INJAZ Al-Arab: INJAZ Al-Arab is a regional non-profit organization that supports entrepreneurship and innovation in the Arab world. The organization has a network of incubators and accelerators across the region, with a focus on supporting early-stage startups in a range of sectors.
  4. Falak Startups: Falak Startups is a Kuwait-based incubator and accelerator.
  5. Daurat: Daurat is a well-known Arab business incubator and business accelerator based in Dubai, United Arab Emirates.
  6. Impact Hub: Impact Hub is a global network of co-working spaces and business incubators that support entrepreneurship and innovation. The organization has a presence in several Arab countries, including Jordan, Egypt, and the United Arab Emirates, and provides access to funding, mentorship, and workspace, as well as a range of other resources and services.
  7. ArabNet: ArabNet is one of the leading Arab business incubators in the region, headquartered in Beirut, Lebanon.
  8. Afkar.me: Afkar.me is an incubator and accelerator based in Qatar.
  9. Startupbootcamp: Startupbootcamp is a global network of business incubators and accelerators supporting early-stage startups in a range of sectors. The organization has a presence in many Arab countries, including Egypt, Jordan, and the United Arab Emirates.
  10. Nabed: Nabed is a business incubator and accelerator based in Palestine.

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Top 10 Arab startup companies

Some are looking for the 10 most famous startup companies in the Arab countries. The Arab world is home to a thriving startup ecosystem, with many innovative companies making waves both regionally and globally. Here are the top 10 startups in the Arab countries:

  • Careem Company:

Founded in 2012, Careem is a car rental service that operates in more than 100 cities across the Middle East, North Africa, and South Asia. In 2018, the company was acquired by Uber for $3.1 billion, making it one of the most successful startups in the region.

  • Souq.com:

Souq.com is an e-commerce platform that was founded in 2005 and is now known as Amazon.ae. This company is the largest online retailer in the Arab world and offers a wide range of products, including electronics, fashion, home, kitchen, and more.

  • Fetch:

Fetchr is a logistics company that uses technology to make delivering and receiving packages easier and more efficient. Founded in 2012, the company has raised more than $60 million in funding and operates in multiple countries in the Middle East and North Africa.

  • Instabug:

Instabug is a mobile app debugging and feedback platform that helps developers identify and fix issues with their apps. The company was founded in 2012 and has raised more than $10 million in funding. It serves clients in more than 150 countries and is headquartered in Cairo, Egypt.

  • Noun:

Noon is an e-commerce startup founded in 2017 by Mohamed Alabbar, founder of Emaar Properties and the man behind Burj Khalifa, the tallest building in the world. The company has raised over $1 billion in funding and is one of the most valuable startups in the region.

  • TruKKer:

TruKKer is a logistics platform that connects companies with truck drivers and helps them find the best rates for their shipments. The company was founded in 2016 and has raised more than $60 million in funding. It operates in the United Arab Emirates and Saudi Arabia.

  • PayFort:

PayFort is a payment processing company that helps businesses accept online payments and manage their financial transactions. Founded in 2013, the company has raised more than $50 million in funding and operates in multiple countries in the Middle East and North Africa.

  • Yasir:

Yasser is a food delivery service established in 2016 operating in Egypt, Saudi Arabia, and the United Arab Emirates. The company has raised over $20 million in funding and is known for its focus on quality and customer service.

  • Nana:

Nana is a grocery delivery service established in 2015 operating in Egypt and the UAE. The company has raised over $10 million in funding and is known for its fast delivery times and wide product range.

  • Swvl:

Swvl is a mass transit company that uses technology to improve roads and improve the efficiency of public transportation. Founded in 2017, the company has raised more than $42 million in funding and operates in Egypt, Kenya, and Pakistan.

Overall, these 10 startups represent the diversity and innovation in the Arab startup ecosystem, from e-commerce and logistics to transportation and payment processing. These companies are making a significant impact in the region and beyond.
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What are the steps to creating a startup?

Starting a startup can be an exciting and rewarding experience, but it can also be a daunting task. There are many important steps to creating a startup, and it is important to follow them one by one to make sure everything is done right. Here are the steps you will need to go through when starting a startup:

  • Identify a problem or need in the market:

The first step in creating a startup is identifying a problem or need that your product or service can solve. This requires conducting market research to determine what people are looking for, and how your solution fits in the market.

  • Develop an action plan:

A business plan is a document that outlines the details of your business, including your target market, target audience, and the product or service you offer. It should also include financial projections, marketing strategies, and a timeline for achieving your goals.

  • Choose a business structure:

There are many different business structures to choose from, including sole proprietorship, partnership, corporation, and limited liability company, and each has its advantages and disadvantages, so it’s important to consider which one is right for your startup.

  • Register your business:

Once you have chosen a business structure, the next stages of the startup will need to register your business with the appropriate government agencies. This usually includes filing incorporation papers, obtaining a business license, and registering for taxes.

  • Obtaining financing:

Funding startups depend on the size and scope of the company, so you may need to secure financing to start the project, by searching for investors or applying for loans or crowdfunding.

  • Building a startup team:

As your startup grows, startup owners will need to bring in additional team members to help you achieve your goals. This includes hiring employees, hiring freelancers, and forming partnerships with other companies.

  • Launching your product or service:

After all the planning and preparation, it’s finally time to launch your product or service. This may include beta testing, market research, and marketing efforts to get your startup idea going.

Starting a startup is a big undertaking, but with careful planning and hard work, it can be a rewarding and successful endeavor, and by following these above steps, you can set yourself up for success and build a sustainable and thriving business.

In this article, we got to know startups, by presenting and explaining the concept of the term startup, its goals and financing methods, and how it differs from any small company. We also got acquainted during the article with the steps of establishing a startup company, the 10 best Arab startups, and the 10 best Arab business incubators that provide various services for new ideas to translate them into reality.

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