Experts’ Thoughts

We present experts’ opinions through our podcast and private ecosystem providers

Experts Thoughts

Feb 25, 2024

Who is the hustler entrepreneur?

By: Shaimaa Ibrahim

Translation: Noha Gad

 

Hustler entrepreneurs are willing to work hard and put in a constant effort more than innovative entrepreneurs. They often start small and work towards growing a bigger business with hard work rather than capital, unlike innovative entrepreneurs.

This type of entrepreneurs usually studies all project-related factors including the investments, the project’s resources, and the risks they might face throughout their journey toward achieving all planned objectives.

Characteristics of hustler entrepreneurs

Hustler entrepreneurs are fond of unlocking opportunities to grow and broaden existing ideas; they work hard to create such opportunities rather than waiting for them.

A hustler entrepreneur is an enthusiastic business-oriented individual who is always prepared and dutiful and never lacks self-discipline or follow-through. Hustler entrepreneurs tend to be very focused and will get rid of all forms of distractions, favoring risks over short-term comfort.

Failure is not an option for hustler entrepreneurs. They always go for their goals to grow their projects even though it takes a long time to realize their ambitions, unlike other entrepreneurs

Advantages of being a hustler entrepreneur

  • Diligence and constant hard work.
  • Dedication and commitment.
  • Facing risks boldly.

Disadvantages of being a hustler entrepreneur

Hustler entrepreneurs just work harder and are willing to get their hands dirty; they often do not see the value of raising capital opposite to working harder. 

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Feb 21, 2024

Who is the innovative entrepreneur?

By: Shaimaa Ibrahim

Translation: Noha Gad

 

Entrepreneurship is the ability and readiness to develop, organize, and run a business enterprise, along with any financial uncertainties to make a profit. The entrepreneurship ecosystem could play a crucial role in bolstering the economy of any country.

There are different types of entrepreneurs based on the way they manage businesses as well as their characteristics and motivations. This includes the innovative entrepreneur; an individual who comes up with a brand-new idea that could be turned into innovative products in the market.

Who is the innovative entrepreneur?

Innovative entrepreneurship is the practice of establishing new businesses based on innovation and cutting-edge technology, along with strategic planning and effective implementation.

An innovative entrepreneur is a person who can turn innovative ideas into real businesses and projects while adopting new methods and marketing strategies. This type of entrepreneur usually inspires others.

Characteristics of innovative entrepreneurs 

The innovative entrepreneur must be: 

  • Passionate and eager to learn, innovate new ideas, and make a positive impact.
  • Resilient to adapt to expected uncertainties, understanding that risks are integral to the business journey.
  • Able to find out-of-the-box ideas and overcome challenges and obstacles with different perspectives.
  • Aware of the importance of ongoing learning to keep pace with the ever-changing business environment.
  • Have a clear long-term vision.

Challenges Facing Innovative entrepreneur

  • Securing adequate capital to turn an idea into a real business.
  • Taking a long time to bring an idea to life.

Advantages of being an innovative entrepreneur

Being an innovative entrepreneur has several advantages, notably:

  • No fierce competition when starting your project.
  • Being the sole person responsible for setting the rules for the business’ growth.
  • Having full ownership of the company’s shares. 
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Feb 21, 2024

Talhouni: 35% of Nuwa Capital portfolio is in Saudi Arabia

By: Kholoud Hussein  

Dubai and Riyadh-based venture capital firm Nuwa Capital is an investment platform aims to redefine the relationship between founders and capital by providing a progressive founder-centric approach to invest in emerging markets.

Sharikat Mubasher meets Khaled Talhouni, the Managing Partner of Nuwa Capital, to know more about Nuwa Capital’s main objectives in enhancing the entrepreneurship ecosystem in the MENA region, share insights on the targeted startups over the coming period, and discuss the company's future expansion plans in Saudi Arabia.

 

What are Nuwa Capital’s main objectives?

Nuwa Capital is an investment platform focused on investing in the innovation and entrepreneurship ecosystem MENA and Turkey. Primarily we invest in founders building companies that are reshaping their industries and solving for large and systemic problems in our economies. 

Through our $100 million fund (Nuwa Venture Fund I), we support early-stage startups to build successful businesses in the markets they operate in, while also exploring growth opportunities in regional markets. 

We are sector agnostic and have made investments across various sectors including foodtech, new age commerce, and fintech. 35% of our investments have been in Saudi headquartered companies. 

 

How does Nuwa Capital help grow startups across the Middle East?

The concept of building bridges is fundamental to how we operate. As investors, we want to see startups from the region, not limit themselves to just their home markets, but expand across the region and beyond.  The region’s startup ecosystem is at a stage where we need to scale beyond borders and we believe that we are on the cusp of seeing our founders go from the Middle East to the world. 

We don’t focus only on investments, but on building thriving businesses that can reshape the economies they operate in. Beyond capital, our portfolio companies benefit from our Value Creation offering where we provider founders with subject matter expertise through dedicated subject matter experts in technology, product, recruitment, marketing etc to unlock growth potential and streamlined operations

Lastly, we explore ways to create value for our Limited Partners (LPs) and startups by enabling opportunities for them to benefit from each other.

 

How about the company’s business in Saudi Arabia?

We not only have our roots in Saudi Arabia, but the majority of our portfolio is based there. We are anchored by a number of Saudi based institutions, corporates and high net-worths/family offices

In 2024 we have plans to aggressively deploy capital from our $100 million fund and Saudi startups are on the top of our list. We will also explore opportunities for follow-on investments in our existing portfolio as they continue to scale both regionally and locally in KSA

 

Who are Nuwa Capital’s top startups in Saudi Arabia? And who are the targeted startups over the coming period?

We’ve invested in a number of companies in Saudi Arabia including such companies as Eyewa, Calo, Raqamyah, Edfa Pay, Speero and others. Besides that a number of our startups are leveraging our local expertise to make their entry into Saudi Arabia, the region’s largest economy.

Founders at all stages recognise the significant growth opportunity in the Kingdom, aligned with its economic diversification agenda and the leadership’s vision to shape a digital economy. 

While we can’t disclose startups we plan to invest in over the coming period, we can tell you that we remain extremely bullish on the market. Beyond early stage investing, we have recognised significant gaps in capital availability for Series B and beyond companies. Growth stage funding remains a major challenge across the region and Saudi Arabia will attract bigger deals in 2024 as valuations moderate and investors seek new exit paths. 

 

What are the company’s plans for 2024? And what are the expected investments?

Since our launch in 2020, we’ve deliberately focused on early-stage companies and did not rush into making investments. This was due to rising valuations and unsustainable business models in the market. Today we have approximately 60% of our fund to be deployed and in 2024, you’ll see us being much more active in the market. 

We’ve also been analysing the gaps in the market with regards to capital flow. Across the region, data shows that the largest investments are made in early-stage companies. Growth stage businesses on the other hand have limited access to funding, given that there are few players who write bigger cheques. While we already make follow-on investments in existing portfolio companies, we will also explore later stage investment opportunities. 

Lastly, 2024 for Nuwa Capital will be about building bridges. How can we as a firm, take regional startups, into new markets. This includes helping innovative companies enter Saudi Arabia, while taking Saudi entrepreneurs to the region and the rest of the world. True growth can be achieved only by scaling in new markets and we are well positioned to unlock this for our portfolio. 

 

What are the challenges facing Nuwa Capital in the Saudi market? Is there a plan to have a branch in Saudi Arabia?

We do have a presence in KSA through our partners in Alfaisaliah Group and a team on the ground in the kingdom.

 

Does the Saudi startup ecosystem see a paradigm shift?

There’s never been a more exciting time to startup in Saudi Arabia. This is primarily because of the environment that the leadership has enabled. Today it’s much easier to set up a business, attract talent and build for large regional problems from Saudi Arabia. It’s no surprise that Saudi Arabia attracted the most startup capital in the last year. 

In terms of a paradigm shift, we believe that more founders will start to move to the Kingdom. We are also seeing the emergence of Saudi national talent, including women, whether they are fantastic coders or world-class operators who can build thriving businesses. 

Furthermore, thanks to partners such as SVC and Jada fund of funds, Saudi attracted the highest amount of venture capital in the MENA market for the first time since records have been created. This is a critical milestone in the development of both the Saudi and regional ecosystem

 

What are the Saudi sectors that might witness a growth in startups over the coming period?

Fintech is one sector where we expect to see a number of opportunities. The Central Bank has set up a world-class system to allow for fintech founders to build new products for the market. We are excited about the digitalisation of financial services in the Kingdom, whether it is for everyday transactions, investments or just regular savings. 

As technology seeks to transform large traditional industries, real estate and property is another one where we’ll see change. The Kingdom has a significant gap in housing and hotel availability to manage the influx of new residents, business visitors and tourists. This is where startups like Silkhaus are working to build the short-term rentals sector. 

We also expect to see growth in SaaS businesses as entrepreneurs build solutions for local challenges. Similarly next gen commerce businesses like Eyewa and Homzmart will thrive as consumer spending increases and the overall economy continues to grow. 

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Feb 15, 2024

Types of Startup Funding Rounds

By: Shaimaa Ibrahim

Translation: Noha Gad

 

Startups often opt for funding rounds to raise more capital by selling some shares for investors to get off the ground and expand their businesses in the market. In turn, investors acquire part of the startup’s ownership and revenues.

Startups at different stages can raise funding rounds. There are five types of rounds depending on the startup’s maturity stage, types of investors, and the purpose of the round:

Pre-seed round

This stage typically refers to when a company's founders get their business off the ground after coming up with ideas and conducting a feasibility study. At this stage, the most common funders are the founders themselves or business incubators.

Pre-seed startups must have a clear vision and revenue forecasts. 

Seed round

The seed round is the first official equity funding stage. Investment funds and angel investors are the most likely to participate in this round as they provide funding in exchange for some of the company’s shares.

Series A 

Startups often raise Series A rounds to secure larger funding to accelerate their business growth and reach more customers; meanwhile, the investor targets injecting investments into innovative startups to gain more profits.

Participants in the Series A rounds usually include crowdfunding firms, investment funds, and business clubs.

Series B

By this stage, the company will probably have a higher valuation than before and aspires to expand its presence and tap into new markets. 

Companies usually dedicate the proceeds to carry out searches and analyses as well as marketing campaigns. 

Participants in the Series A rounds are likely venture capital (VC) firms. 

Series C

A Series C round is required when a company is ready to go for rapid growth with proven success in the market. Companies usually raise this type of round to seize larger market share, make acquisitions of competitors, or for major expansions.

Through Series C rounds, companies can secure massive capital from investment banks, equity firms, and investment funds.

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Feb 12, 2024

How angel investors foster startups?

By: Shaimaa Ibrahim

Translation: Noha Gad

 

Startups depend on various sources to secure the necessary funding for their businesses, notably the angel investors who play a crucial role in the startup ecosystem. 

An angel investor is an individual who provides funding for startups at a very early stage, once or in a consecutive manner, in exchange for equity or ownership in the company.

Along with the financial backing, angel investors often provide mentorship and support entrepreneurs to grow their startups.

What angel investors provide for startups?

Angel investors can support startups in different ways, including:

  • Securing funding to grow.
  • Providing necessary support, expertise, and consultancies about business management.
  • Helping entrepreneurs make decisions to enhance their competitiveness. 
  • Unlocking cooperation opportunities with potential partners and reaching new customers.
  • Enhancing the startup’s credibility to attract potential investors and partners.

Types of angel investors

There are several types of angel investors who foster entrepreneurs, notably:

  • Family and friends: Many entrepreneurs first turn to their family and friends when seeking funding for their business; however, this type does not provide entrepreneurs with the expertise they need to get off the ground.
  • The Domain Angel: investors in this category are usually operating executives who have spent their entire careers in a specific industry or sector.
  •  The Angel Investor Group: this category comprises individuals who provide support for small startups or entrepreneurs.
  • The Fellow-Entrepreneur Angel: this type includes entrepreneurs who provide funding for other junior entrepreneurs.
  • The True Believer Angel: this type includes investors who hear a startup’s story, instantly believe, and want to immediately invest in spite of the financial risks.
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Feb 11, 2024

Saudi RHQ Program: economic impacts and advantages

By: Shaimaa Ibrahim

Translation: Noha Gad

 

Saudi Arabia started 2024 with a bright economy ahead by activating the Regional Headquarters (RHQ) Program which mandates foreign firms to have a regional headquarters in Saudi Arabia to start or expand their businesses in the Kingdom.

The program aims to boost foreign investments in the Kingdom and enhance its non-oil economy, in alignment with Vision 2030’s objectives to diversify the national economy, raise foreign direct investments (FDI) contribution to the gross domestic product (GDP) to 5.7%, and increase the net value of FDI inflows to hit SAR 388 billion annually.

Supervised by the Saudi Ministry of Investment (MISA) and the Royal Commission for Riyadh City, the RHQ Program targets alluring global firms to establish their headquarters in Saudi Arabia, transforming the Kingdom into an attractive investment destination that provides distinctive advantages and services.

Targeted sectors 

Saudi Arabia owns several pull factors for investors and foreign capitals that positioned the Saudi economy as the largest in the Middle East and North Africa (MENA) region and the eighteenth-largest in the world. 

According to the Saudi Minister of Investment Khalid Al-Falih, 180 global firms obtained licenses to establish their headquarters in Riyadh, surpassing the Kingdom’s goal to attract 160 global firms by the end of 2023.

The minister affirmed that this achievement was due to the Kingdom’s stable economy and strategic location, in addition to its unique competencies.

In a related context, the leading business expansion platform in the MENA region AstroLabs successfully accelerated expansions of more than 600 global and regional firms to the Kingdom.

AstroLabs’ CEO Roland Daher affirmed that global firms working in various sectors increasingly aspire to expand in the Saudi market, especially the multinational ones and those achieving annual revenues of more than $1 billion.  

He further noted that the number of firms that expanded their businesses in the Kingdom has doubled in one year.

The RHQ Program targets attracting firms in several sectors, including infrastructure, logistics services, advanced industries, and digital services. The Kingdom also enjoys massive investment opportunities in many sectors notably retail, real estate, tourism and entertainment, event organization, and other professional services, such as banking and tax consultancies

Tax incentives

The Saudi Ministry of Investment (MISA) added a 30-year tax relief incentive package to the RHQ Program, in coordination with the Ministry of Finance and Zakat, Tax, and Customs Authority (ZATCA) to streamline the process for multinational firms establishing their RHQ in Saudi Arabia.

The incentive package includes a 0% rate for corporate income tax (CIT), withholding tax (WHT) on dividend payments from RHQ to its foreign parent entity, WHT for payments to related parties, and WHT for services payments to non-resident unrelated parties necessary to carry out RHQ activities as defined in the tax rules.

Economic impact

The RHQ Program is expected to have a significant economic impact on all sectors as well as the products and major services provided in the Kingdom with local content. This accordingly will enhance the competitiveness of the Saudi market and transform Riyadh into a global business hub and a destination for international economic entities.

Last January, the General Statistics Authority (GASTAT) announced that the total FDI stock in Saudi Arabia recorded SAR 762 billion by the end of 2022, while the FDI inflows into the Kingdom reached SAR 123 billion.

GASTAT also revealed that the Kingdom recorded a significant growth in the net FDI flows in 2022 with net flows amounting to SAR 105 billion.

Furthermore, the total FDI inflows into the Kingdom hit SAR 17 billion during the third quarter (Q3) of 2023, while the net FDI flows touched SAR 11 billion in the same quarter.

According to the CEO of the Royal Commission for Riyadh City Fahd Al-Rasheed, the RHQ Program is forecasted to add around SAR 67 billion (almost $18 billion) to the national economy, in addition to creating 30,000 new jobs by 2030.

It is worth noting that Saudi Arabia plans to attract 480 global firms to establish their regional headquarters in the Kingdom by 2030.

Job opportunities

The RHQ Program will provide numerous jobs for Saudi youth across new sectors, enhancing the Kingdom’s non-oil economy. Additionally, the regional headquarters will bring the best global expertise to the Kingdom, enabling Saudi talents to improve their skills and gain experience.

The Kingdom is also expected to recognize its goals to achieve sustainability and enhance citizens’ quality of life as Riyadh is anticipated to be among the top 10 economies in the world, notably after selecting Saudi Arabia to host Expo 2030 and the 2029 Asian Winter Games. Hosting these mega events will attract more global firms to the Kingdom to participate in such events and will also create several job opportunities.

Green Projects 

The National Investment Strategy and the Saudi Green Initiative target injecting SAR 150 billion to encourage the private sector to invest in green initiatives and projects in Riyadh.

Recently, the Kingdom started using clean energy, green hydrogen, and solar panels as part of its endeavors to become an eco-friendly country, paving the way for global firms to invest in the Kingdom.

Logistics services

Moreover, the RHQ Program will enhance the Kingdom’s position regionally and globally as it will elevate land, maritime, and air transportation, boost airports’ efficiency, and enhance tourism and entertainment sectors. Additionally, the global firms will be able to contribute to the logistics ecosystem through the 12 ports established across the Kingdom. 

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Feb 4, 2024

What Is a Simple Agreement for Future Equity (SAFE)?

By: Kholoud Hussein 

 

A simple agreement for future equity (SAFE) is defined as a financial instrument first offered in 2013 that has gained popularity in the startup ecosystem, particularly among early-stage companies.

SAFEs do not represent a current equity stake in a company. Instead, the SAFE terms must be met before you receive this stake. A SAFE is usually triggered when a specific amount of funding is met. 

How SAFEs Work?

Since being created in 2013 as a popular fundraising option, it has been used among early-stage startups, as a more straightforward and faster alternative to equity financing or convertible notes.

Startups use SAFEs to receive funding without determining a valuation or issuing equity immediately. Investors invest in the startup, but rather than getting shares right away, their investment converts into equity only once a predefined triggering event occurs.

Benefits of a SAFE

SAFEs have several benefits for both the startup and the investor. For both parties, the most significant advantage is their simplicity. Those benefits are: 

  1. SAFEs are typically shorter and less complex than traditional equity or debt financing documents.
  2. SAFEs often have customizable terms that can be tailored to fit the specific needs of the startup and its investors.

Benefits for Startups 

Startups often struggle with accurate and fair valuation in their early stages. SAFEs let them postpone this challenge until a later funding round, usually when more information is available to determine the company’s worth. This can prevent founders from undervaluing their company early on.

Further, early-stage funding rounds can lead to significant equity dilution for founders. SAFEs can be structured to lower this dilution compared with traditional equity financing, enabling founders to keep more control over the company.

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Feb 1, 2024

What are the Different Types of Fintech?

 

By: Kholoud Hussein 

Fintech is one of the prominent highlights among different technology trends which have been gaining attention worldwide. Many of you would assume that fintech is a new-age transformative technology that could change the definition of financial services altogether. While the assumption is valid to an extent, fintech is not some alien technology to users of financial services.

The increase in fintech usage is reshaping our financial world. People’s money is easier to access, and there is more they can do with it. Fintech provides new ways to share, save, invest, and manage money, making life better for the people it touches while helping reach those underserved by legacy financial options.

What is Fintech? 

Fintech is a portmanteau of the words “financial” and “technology”. It refers to any app, software, or technology that allows people or businesses to digitally access, manage, or gain insights into their finances or make financial transactions.

Over the last decade, as consumers increasingly adopted digital tools, fintech arose as a means to help consumers address financial challenges and make progress toward financial goals. In turn, consumers have come to rely on fintech for a range of uses, from banking and budgeting to investments and lending, as well as for its tangible everyday benefits.

What is a fintech company?

A fintech company refers to any company that offers financial services or applications that rely heavily on technology. Fintech companies are often industry disruptors—they use technology to change how consumers interact with the financial industry. This often includes expanding access to financial products, lowering fees, and providing faster, more personalized service.

Types of Fintech and Fintech Products

Fintech covers a wide range of use cases across business-to-business (B2B), business-to-consumer (B2C), and peer-to-peer (P2P) markets. The following are just some examples of the types of fintech companies and products that are changing the financial services industry.

  1. Fintech banks 
  2. Digital payments 
  3. Personal financial management (PFM)
  4. Fintech lenders 
  5. Wealth management
  6. Embedded finance 
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Jan 31, 2024

Private Equity vs. Venture Capital: How they differ?

 

By: Kholoud Hussein 

Curious about the relationship between private equity and venture capital (VC)? The two industries are somewhat related but operate in distinctly different ways. Private equity involves making controlling investments in distressed companies, with the hopes of making them more profitable. VC, often considered a subset of private equity, refers to making early investments in promising companies (or even ideas) with significant growth potential.

What is private equity?

Private equity, as an industry, refers to buying and managing companies not publicly traded on a stock exchange. The hope is to acquire distressed companies that have suffered from lackluster management or lagging profitability and turn them around to deliver strong risk-adjusted returns for their investors.

Private equity firms employ several strategies to achieve these results:

  1. Leveraged buyouts (LBOs)
  2. VC
  3. Growth capital (GC) 

Private equity is considered a high-risk, high-reward investment strategy. Companies may not turn around -- or generate cash flow -- in the way that a private equity team may have hoped. In these cases, or when a portfolio company simply cannot repay its debt obligations, the private equity firm may lose money. Private equity companies also have the opportunity to earn enormous profits when companies flourish.

What is VC? 

VC can be thought of as a subset of private equity, although the VC space is a bit more targeted. As mentioned, VC is a type of financing provided to start-ups and/or emerging companies that are not yet profitable but are deemed to have a strong chance for high growth in the future.

VC firms invest money in early-stage companies in exchange for an equity stake. If the company goes on to become very successful, the VC firm will earn many times its initial investment. On the other hand, promising companies, unfortunately, fail regularly, making VC an especially risky business.

From the perspective of a target company, VC financing offers access to much-needed funding that can be used to facilitate growth. VC firms also provide a degree of expertise and guidance around start-up growth that may be inaccessible to most entrepreneurs.

Bottom Line: What is the Difference?

Private equity and VC are very similar areas of financial services, especially since venture capital is typically considered a type of private equity. However, private equity firms invest in mid-stage or mature companies, often taking a majority stake control of the company. On the other hand, VC firms specialize in helping early-stage companies get the money they need to start building their brand and gaining profits. 

Another key difference between the two is VC typically involves higher risk but offers the potential for substantial returns. In comparison, private equity usually involves lower risk compared to VC investments but may offer more modest returns.

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Jan 30, 2024

What is a serial entrepreneur?

 

By: Kholoud Hussein 

It’s not uncommon for people to start businesses, experience failure, and then try again. A serial entrepreneur is generally seen as a different sort, though, as they often have a track record of starting multiple successful enterprises.

Serial entrepreneurs start several businesses one after another rather than beginning one venture and staying focused on it for many years, like a more typical entrepreneur. They may also sell their businesses after they reach a certain level of maturity. They may retain ownership while delegating day-to-day managerial responsibilities to other people. Or, if the business is underperforming, they may close it down and move on to the next idea.

Pros and Cons of Being a Serial Entrepreneur

While each startup has unique characteristics, the process of beginning a new business does have some steps that are common to most if not all entrepreneurial ventures. Serial entrepreneurs learn from experience, sometimes the hard way by making mistakes, how to get an idea for a business in motion and off the ground. Along with developing skills, they acquire contacts among investors, talented employees, and others who can help them with the next enterprise.

Venture capital investors have expressed a preference for backing companies founded by serial entrepreneurs because of the value the experienced startup leaders bring. This preference isn’t only for serial entrepreneurs whose past startups have all been successes. Failure can be a good teacher, according to this viewpoint, and past failure can pave the way to future success.

However, the practice of serial entrepreneurship can come with some limitations and risks as well as benefits. For one thing, a serial entrepreneur who builds and sells a startup that later achieves great success can miss out on the chance to acquire great wealth by cashing out too soon.

Another risk is that soon after starting a business a serial entrepreneur will be distracted by an idea for a new startup. That may lead the entrepreneur to fail to pay enough attention to the first business so that it flounders and is unsuccessful.

Tips for Entrepreneurs

  • Starting even one business is a complex and uncertain process. Before taking it on, consider working with a financial advisor. Finding a qualified financial advisor doesn’t have to be hard.
  • Keeping a close rein on a startup’s expenses is critical. There are four tips for doing that successfully. It’s also essential to squeeze every dollar spent to get the most out of it.

 

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Jan 29, 2024

What is a business ecosystem?

 

By: Kholoud Hussein 

A business ecosystem is a network of organizations, including suppliers, distributors, customers, competitors, government agencies, and so on, involved in the delivery of a specific product or service through both competition and cooperation. The idea is that each entity in the ecosystem affects and is affected by the others, creating a constantly evolving relationship in which each entity must be flexible and adaptable to survive as in a biological ecosystem.

The theory of business ecosystems was developed by business strategist James Moore in 1993. Moore paralleled companies operating in the increasingly interconnected world of commerce to a community of organisms adapting and evolving to survive. He also suggested that a company be viewed not as a single firm in an industry, but as a member of a business ecosystem with participants spanning across multiple industries.

However, the business ecosystem consists of a network of interlinked companies that dynamically interact with each other through competition and cooperation to grow sales and survive. An ecosystem includes suppliers, distributors, consumers, government, processes, products, and competitors. When an ecosystem thrives, it means that the participants have developed patterns of behavior that streamline the flow of ideas, talent, and capital throughout the system.

Being a part of a business ecosystem provides mechanisms to leverage technology, achieve excellence in research and business competence, and compete effectively against other companies. Some other goals of a business ecosystem include:

  • Driving new collaborations to address rising social and environmental challenges
  • Harnessing creativity and innovation to lower the cost of production or allow members to reach new customers
  • Accelerating the learning process to effectively collaborate and share insights, skills, expertise, and knowledge
  • Creating new ways to address fundamental human needs and desires

It is for these reasons that in today's rapidly changing business world, a company creates its own ecosystem or comes up with a way to join an existing ecosystem by providing an advantage that is currently lacking in that ecosystem.

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Jan 28, 2024

What is the Place of Blockchain in Fintech?

 

By: Kholoud Hussein 

Blockchain and fintech interact in at least two ways. Firstly, the blockchain is an essential part of all cryptocurrency operations. The blockchain is the key processing tool whenever you use Bitcoin or Ethereum to pay for something on the Internet. All fintech platforms integrating cryptocurrency inevitably have to interact with some form of blockchain. Secondly, blockchain technology is a potent upgrade path for future financial operations with traditional currencies.

Blockchain technology has emerged as a transformative force in the field of fintech. Its decentralized and transparent nature provides enhanced security, efficiency, and trust in financial transactions. Blockchain has the potential to revolutionize various aspects of fintech, including payments, remittances, smart contracts, and identity verification, making it a crucial part of the industry’s future.

Benefits of Blockchain

Blockchain and fintech will likely produce promising innovations in the banking sector. The key reason stems from the unique characteristics of blockchain, which offers major advantages to financial institutions and the average users. Here are some of the key positives the blockchain technology provides:

  1. Enhanced security 
  2. Increased transparency 
  3. Bettered efficiency 
  4. Faster transactions 
  5. Cost savings 
  6. Enhanced traceability 
  7. Smart contracts 
  8. Financial inclusion 
  9. Data integrity 
  10. Scalability

Further, Blockchain solves several challenges facing the fintech industry, such as: 

  1. Decreasing the dependence on the centralized systems 
  2. Decreasing the common trust issues 
  3. Increasing the speed of transactions 
  4. Decreasing operational expenses 

How Blockchain Revolutionizes the Financial Services Sector? 

Blockchain in the fintech industry will likely become essential for most companies. Here are the key positives that the technology can bring about in long-term scenarios:

  1. Lowering transaction costs 
  2. Minimizing the problems with identity theft 
  3. Making payments available globally 
  4. Improving regulation and auditing
  5. Automating credit history reports
  6. Simplify lending 
  7. Enabling safe trading 
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