May 28, 2013 - SME Funding: Risk Takers Move to Fill Gap Left by Play-safe Lenders - The Financial Times

When Tarig El-Sheikh lost his investment banking job in 2008, he co-founded a bespoke tailoring service making suits and shirts in Dubai, predominantly for US customers. Knot Standard has over the past few years raised $2m, a third of which came from the Middle East and north Africa (Mena) region. “We did a sales process, selling shares in the company,” he says. “In the Mena, there are traditional venture capitalists, investment networks and angel groups banding together.”

 

Mr Sheikh’s venture is a success story in what is a mixed – and potentially risky – environment for regional entrepreneurs seeking start-up and growth funding.

 

Some small consultancies, whom he describes as “unscrupulous investors”, are trying to force entrepreneurs to take expensive capital by discounting valuations of emerging businesses, or charging exorbitant advisory fees. “We came across equity loan sharks. With the good comes the bad,” he says. “It’s a little like the Wild West here.” 

 

SME funding_ Risk takers move to fill gap left by play-safe lenders - FT-1.pdf