ISSUE 142 MONTHLY FOCUS: FINANCE
SUNEEL GOKHALE ORGANISATIONS TALK ABOUT DIVERSITY BUT WE LIVE AND BREATHE IT EVERY DAY
SONIA WEYMULLER I’M KEEPING AN EYE OUT FOR COMPANIES IN THE ENVIRO-TECH SPACE.
POWER PLAYERS TAMMER QADDUMI PRIVATE EQUITY AND VENTURE CAPITAL INVESTMENTS HAVE FUNDAMENTALLY CHANGED IN THAT INVESTORS HAVE BOTH THE INFORMATION AND ACCESS TO INVEST DIRECTLY INTO OPPORTUNITIES THEY LIKE.
MEET THE VISIONARIES REINVENTING VENTURE CAPITAL.
SONIA SETH GOKHALE IDEAS ARE PLENTIFUL BUT IT’S THE EXECUTION THAT MATTERS AND WILL BE A KEY DETERMINANT OF A COMPANY’S SUCCESS.
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SME Advisor Middle East is aimed at business owners and senior executives across the GCC. Armed with practical advice, it has been highlighting key business issues for the small and medium enterprise segment since its launch in 2005. The magazine addresses real issues faced by business decision makers, without resorting to jargon. We understand that often, in small and medium enterprises, specialist business decisions are made by the owners and not by an army of c-level executives. At the same time, our content is equally relevant and useful for specialist, senior executives in mid-level enterprises. The magazine style is consumer, conversational and colourful.
From the web
Etisalat launches Hello Business Hub In line with its strategy aimed at supporting SMBs, Etisalat unveiled this new initiative. Esam Mahmoud, Acting Senior Vice President, Small and Medium Business, Etisalat said: “Small and medium businesses are important contributors to the UAE’s economy today and with the digital evolution are set for further growth in the country. At Etisalat, we work closely with SMBs and startups by enabling them with the right tools and services to drive into this digital future. The launch of Etisalat’s Hello Business Hub today reaffirms our strong commitment towards this goal of supporting this strategic community who are the key drivers of growth and development.”
For more information, please visit: www.etisalat.ae.
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Mums@Work to host ‘Return to work’ Career Fair For the first time ever in the region, Mums@Work has come up with a conference concept that will help talented women get back into the workforce. The event will be held at DoubleTree by Hilton Dubai - Business Bay, Dubai from 9 am to 1 pm on March 1, 2018. Louise Karim, Managing Director of Mums@Work, part of the Mackenzie Jones group, said: “We are very proud to be hosting the region’s first ever Return to Work Career Fair. The event supports professional women who have taken a break from their careers and are now ready to rejoin the workforce. With over 50,000 women in our community, we have some of the best talent in the region which may otherwise have been overlooked by employers without a platform such as ours.”
For more information, please visit: www.mumsatwork.ae/returntoworkcareerfair
The Global Happiness Policy Report 2018 launched During the recent World Government Summit held in Dubai, The Global Happiness Policy Report 2018 was unveiled.The Global Happiness Council has put togetherthe comprehensive document outlining best practices that governments, as well as private sector companies,should undertake to advance levels of happiness and well-being within their countries. The report reinforces the need for the highest levels of every country to partake in the happiness agenda and urgesthe transformation of public thinking.It also assesses the need for happiness data i.e. how can valuable information such as health and wellbeing levels be collected, analysed and transformed into useful policy insights.
For more information, please visit: www.worldgovernmentsummit.org/api/publications/
RUSHIKA BHATIA EDITOR
VENTURING INTO NEW REALMS Against the backdrop of the new VAT integration, SMEs have been resilient continuing their focus on success and sustainability. Homegrown businesses have always responded to fresh challenges by shifting their strategies towards technology innovation and upskilling talent. Of late, however, businesses have begun focusing on infusing a breath of fresh air into a usually neglected area: finance. Over the past decade, finance as an industry has evolved exponentially. Cryptocurrencies have dominated headlines with all the speculation that surrounds them, whereas fintech and big-data have disrupted traditional banking. This issue is an attempt to capture the impact these innovations will have on the financial services industry. Moreover, it outlines the potential for business owners to come up with innovations that transform the financial ecosystem and find a way to revamp the way services will be delivered in the future. In fact, hereâ€™s a look at three companies that have succeeded in doing this -
Verify: Verify describes itself as a distributed reputation protocol built on the Ethereum blockchain that facilitates trust-based transactions. In simple terms, the system records the history of all transactions that take place and the rating given to them by both parties. This is a concept that has the potential to transform how transactions take place. Read the full story on pg. 56
ArabianChain: ArabianChain is the first public, decentralised and consensus-driven blockchain in the MENA region. It allows for self-executing and globally accessible smart contracts and decentralised apps to be developed as well as for digital tokens to be transacted, tracked and safeguarded over a network of thousands of connected yet distributed devices. This dynamic entrepreneur has truly ventured out into a new realm with his platform. Read the full story on pg. 42.
VentureSouq: VentureSouq is perhaps one of the most diversified venture capital firms in the region, especially with its multi-talented founding team. Their story is one that stands out in the funding space not just in terms of what theyâ€™re doing externally, but also in terms of how they run their business internally. From looking out for viable business models to reaching out to global investors, theyâ€™re all in it together. So, itâ€™s only fair that our cover story featured them as a team. Read the full story on pg. 28.
We hope these strategies will prove to useful as your business gets ready to enter 2018.
Economistâ€™s view 016/ Assessing risks in the financial services industry 022/ How to create a culture of accountability
Cover story 028/ Power players: Venturesouq
Industry focus 038/ Reinventing roles: Women in finance 042/ Unlocking the potential of cryptocurrencies
066/ FINANCIAL FIRMS ARE CONCERNED ABOUT THEIR ABILITY TO RESPOND COMPETITIVELY AND MODIFY THEIR BUSINESS MODELS IN A TIMELY MANNER TO MANAGE THE ENHANCED RISKS.
WOMEN ARE A MAJOR ASSET IN FINANCIAL ROLES. THEY ARE OUTPERFORMING IN ALMOST EVERY AREA, FROM MANAGING HEDGE FUNDS TO PERSONAL FINANCE. Infographic of the month 048/ Fintech in numbers
Top change makers 050/ Project Chaiwala 056/ Verify: The company that is worried about your reputation
Organisation & structure 060/ 10 Money Management Tips 066/ Revisiting the basics of funding
Technology for business 072/ Getting practical about Blockchain
Disruptive invention 078/ Ember Coffee Mug
Meet the vibrant, enthusiastic and financially-geared team behind VentureSouq.
Success is a cup of hot, piping tea for this dynamic duo. See what they’re stirring up.
Many movements later, the conversation around women in leadership roles continues. Here’s a fresh take on the subject...
Refresh the basic concepts of funding with our expert’s compelling insights.
What if every transaction online had a ranking and could manage your reputation? Find out more.
42 Home-grown blockchain platform ArabianChain recently launched a new digital asset exchange: Palmex. We get the latest scoop.
C O N T E N T C U R ATO R S 014
Presenting this month’s portfolio of industry specialists and thought leaders, who played a critical role in producing the feature content of our magazine and ensuring that we were more topical than ever. YAZIN ALIRHAYIM CEO, VERIFY
““ HEATHER HENYON, FOUNDER, WOMEN’S ANGEL INVESTOR NETWORK (WAIN)
Today, we’re tied to bank accounts in specific countries and fees vary massively depending on the origin/ destination of funds. I see us transitioning to a point in the future where anyone connected to the internet will be a firstclass citizen of the internet and all the peripheral services like banking will follow.
Women are a major asset in financial roles. They are outperforming in almost every area, from managing hedge funds to personal finance.”
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““ MOHAMMED ALSEHLI, FOUNDER AND CEO, ARABIANCHAIN
ArabianChain is the first public, decentralised and consensus-driven blockchain in the MENA region.
““ ADHIL SHETTY CEO, BANKBAZAAR.COM
The equity market is scaling new heights each passing month, and India remains one of the bestperforming stock markets in the world.
““ MURTAZA MANJI DIRECTOR, ACTIONCOACH
The metrics for measuring outcomes need to be correct. Metrics – also referred to as KPIs – need to be quantitative and outcome-based. SME ADVISOR
E conom i st â€™ s v i ew 016
THE BIGGER PICTURE: Assessing risks in the financial services industry To pursue profitable opportunities in dynamic markets, it is important for decision makers to be armed with a trusted assessment of risks. We turned to experts at Protiviti Global to provide an authoritative outlook on the risk sentiment within the financial services landscape. SME ADVISOR
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E conom i st ’ s v i ew 018
EDITOR’S PICKS 01. Expectations of key stakeholders regarding the need for greater transparency about the nature and magnitude of risks undertaken in executing an organisation’s corporate strategy continue to be high. 02. Alongside this digital revolution is the ever-present and ever-growing threat to firms’ cyber security, which again ranks in the top five risks for financial services firms.
echnological advancements. Disruptive innovations threatening core business models. Recurring natural disasters with catastrophic impact. Soaring equity markets. Turnover of leadership in key political positions. Potential changes in interest rates. Cyber breaches on a massive scale. Terrorism. Elections in Europe. Threats of nuclear engagement. A strong US dollar. These and a host of other significant risk drivers are all contributing to the risk dialogue happening today in boardrooms and executive suites. Expectations of key stakeholders regarding the need for greater transparency about the nature and magnitude of risks undertaken in executing an organisation’s corporate strategy continue to be high. Pressures from boards, volatile markets, intensifying competition, demanding regulatory requirements, fear of catastrophic events and other dynamic forces are leading to increasing calls for management to design and implement effective risk management capabilities and response mechanisms to identify and assess the organisation’s key risk exposures, with the intent of reducing them to an acceptable level. In the sixth annual survey, Protiviti and North Carolina State University’s ERM Initiative report on the top risks on the minds of global boards of directors and executives. Our respondent group, which includes 728 board members and C-suite executives from around the world, provided their perspectives about the potential impact over the next 12 months of 30 risk issues across these three dimensions:
ϭϭ Macroeconomic risks likely to
affect their organisation’s growth opportunities
ϭϭ Strategic risks the organisation
faces that may affect the validity of its strategy for pursuing growth opportunities
ϭϭ Operational risks that might affect
key operations of the organisation in executing its strategy
A look at the insights Regulatory pressures continue to be top-of-mind for financial services firms as regulatory change and scrutiny again tops the risk issues in the industry for the fourth year running, but the financial technology, or fintech, threat has surged into second place in the top risks rankings. The financial services industry is being disrupted by the onward march of the financial technology, or fintech, sector. This trend is evidenced by a significant shift in the number of respondents highlighting the strategic risk posed by the rapid evolution of innovative technologies. Not only did this concern over the rapid speed of disruption rise three places since last year to become the second-highest ranked risk for financial services organisations, but the significance of this risk has increased substantially over the past two years. Financial firms are concerned about their ability to respond competitively and modify their business models in a timely manner to manage the enhanced risks.
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Financial firms are concerned about their ability to respond competitively and modify their business models in a timely manner to manage the enhanced risks.
This fear is pushing some financial institutions to advance the pace of their own digital innovation centres by partnering with fintech companies and is driving larger institutions to acquire many new fintech market entrants.1 Risks are present with each of these options and specific emphasis needs to be placed on the importance of robust third party risk management when developing technology in partnership with non-traditional organisations that have less mature product development and regulatory compliance processes.2 Alongside this digital revolution is the ever-present and ever-growing threat to firms’ cyber security, which again ranks in the top five risks for financial services firms. Concerns over preparedness for dealing with cyber events are increasing, while the
implementation of several cyber security regulations and guidelines in the United States and around the world is keeping the cyber threat high on the agenda for chief executives and board members. Another heightened risk for all financial institutions is privacy and the need to protect customer data. New regulations coming into force in 2018 — especially the European Union’s General Data Protection Regulation (GDPR), which applies to all firms that store or use customer data, or even those firms who market to EU clients — have increased the focus of the compliance function on this area, requiring more resources over the past year.3 From a macroeconomic perspective, the industry appears to have priced in the strategic impact of interest rate rises
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Concerns over preparedness for dealing with cyber events are increasing.
1 Wealth and Asset Management 2022: The Path to Digital Leadership, Roubini ThoughtLab: www.protiviti.com/Wealth2022. 2See Protiviti white paper, Enabling Speed of Innovation Through Effective Third-Party Risk Management: www.protiviti.com/3prm. 3 www.protiviti.com/US-en/general-data-protection-regulation-gdpr.
already, while worries over the sustained low-interest environment on operations also appear to be alleviating, albeit only slightly. Due to the relative good health of the capital markets and the global economies, fears that economic conditions will curtail growth or that currencies and financial markets will be subject to volatility have reduced, with these macroeconomic risks falling out of the top five risks for 2018. Financial services respondents indicate that the magnitude and severity of the risks their organisations will be facing over the next 12 months with respect to reaching or exceeding profitability (or funding) targets is falling. That said, more organisations indicated that they will be devoting additional time and resources to risk identification and management over the next 12 months.
HERE’S WHAT FINANCIAL FIRMS CONSIDER AS THEIR TOP RISKS IN 2018: Regulatory change Fintech Sustained low-interest rates Cybersecurity Privacy and data protection
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H O W TO CREATE A CULTURE OF
ACCOUNTABILITY SME ADVISOR
econom i st ’ s v i ew 023
Murtaza Manji, Director, ActionCOACH, takes a hardened look at the basics of HR management and shares lessons on integrating the right values within your company’s culture.
ccountability’ is a big, heavy word. It means a lot of things to a lot of people. It’s used as a measure of proactivity, productivity and manageability. It’s probably safe to say that every company that has a culture of accountability will continue performing and/or improving, even in challenging times. Conversely, stagnation, finger-pointing and under-performance are characteristic of firms where this culture does not exist. The question that business leaders often ask is: How can we create this culture of accountability in our company? There are two major parts to this question, and each one plays a large role in answering it. Accountability It is only fair for a person to be accountable for an outcome if three things are in place: the target, the measurements and the opportunity. If you want to see the level of accountability increase in the business, here are the steps you’ll need to take. Step One: Besides the CEO of the company, no one person is responsible for the performance of the entire firm.
Therefore, targets should be split down to the lowest level of responsibility – but not further. Each person must have his/her individual outcomes made clear, discussed and agreed upon even before they join the team. If the individual and their manager have different expectations for the outcome, it is unlikely that the managers’ goals will be achieved. Action point – ensure every department and every individual is aware of their targets (not just the sales teams). If everyone is pushing in the same direction, chances of success are much better. Step Two: The metrics for measuring outcomes need to be correct. Metrics – also referred to as KPIs – need to be quantitative and outcome-based. They are the numbers which tell the story of how the business is doing. If these numbers are reported on time and analysed correctly, warning signs can be picked up early enough to make important changes before any damage is caused. Action point – every individual should have KPIs reflecting their targets. These should be analysed frequently to rectify any issues early.
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EDITOR’S PICKS 01. Communication is such an important element for a successful company. 02. Sit teams down and help them understand how the actions of one affect the other. Design and execution often live in different worlds, and finance is usually on a planet of their own.
Step Three: KPIs assign responsibility, which is why it is crucial to understand where one team’s responsibility ends and shifts to the other. Marketing creates leads, which the sales team converts. Only then can operations service the customer. KPIs around the number of deliveries must be tied to sales numbers, else the Ops team will fall short on something outside their control. Each person and every team should have the opportunity to deliver, else the measurement is both incorrect and unfair. Action point – sit teams down and help them understand how the actions of one affect the other. Design and execution often live in different worlds, and finance is usually on a planet of their own. Creating culture If accountability was a case of setting metrics and reporting KPIs, it would be relatively easy. Given that almost every company I’ve worked with (from five-people start-ups to 450-staffed organisations) didn’t have this in place, it is safe to assume that the exercise is a lot harder than it seems. And yet, even the setting of KPIs is not quite the answer. There is a process around setting KPIs. But the culture element, that is a whole new challenge. Culture is not a process, nor is it contained in employee handbooks. It is a living, dynamic entity, and affects the entire company – both positively and negatively. If there are noticeable ‘cliques’ in social settings – that is a culture. If managers come late and have reserved parking spots outside – that is a culture. If every time someone goes to make a cup of coffee asks the team if they’d like one too – that is a culture. How does this all come about? Culture is created – it is shaped, refined, instilled and taught. Good culture is intentional, not automatic. Not-so-good culture, on the
other hand, has a way of establishing itself in a firm and spreads itself throughout the company. You don’t have to do anything to get a weed-filled backyard, but creating a beautiful garden is constant hard work. The same applies to culture – left to itself, it will often be counter-productive. There are a few fundamentals to keep in mind for creating a culture of accountability, and each one plays a huge role. 1. Transparency and trust: If I’m accountable to someone, it means I am putting myself up for review by them. If I don’t believe they have my best interest in mind, I would be hesitant to put my success and future in their hands. What is the level of trust within your organisation? Do team members work well together or are there silos? Do individuals or teams have unhealthy competition between them? The single best way to ensure there is trust across the board is insisting on transparency. Everyone speaks the same language, there are no hidden agendas, and everyone is on the same page. It is easy to feel everything is fine while sitting at the top, so make sure you hear the voices of those down the line. It could provide valuable insights. 2. Two-way communication and proactivity: There is a difference in ‘talking to’ and ‘talking at’. What we would consider a normal conversation is ‘talking to’. When the communication is in the form of orders issued, it’s ‘talking at’. If someone is being told what they need to do, it’s difficult for them to feel motivated or excited about it, especially during tough times. Therefore, communication is such an important element for a successful company. Imagine the difference in enthusiasm
econom i st ’ s v i ew 025
Metrics – also referred to as KPIs – need to be quantitative and outcome-based.
you’d feel in these two hypothetical conversations with your superior – Scenario 1: “These are your targets. I expect this to be achieved by the end of this month, and let me know how you’re doing each week. Any questions?” Scenario 2: “These are the targets we have for the company. What do you think you need to do to help us achieve this number? And how do you see yourself doing that? What resources will you need? If we were to put a number on it to help us keep track, what should we aim for each week? How could I support you in this? Let’s have a 10 minute debrief each week to
see how you’re getting on, shall we?” Which would you feel more motivated to achieve? And which would make you more willing to be accountable? Note the way you are the other managers are communicating with the team members. Get their buy-in, talk to – not at, and let them be proactive about what they will achieve. It will be remarkable. 3. Have – and be – a role model There is a saying worth remembering: A fish rots from the head down. If we don’t like what the organisation looks like in the middle, chances are the same issues exist further up the line. Here’s something worth considering:
econom i st ’ s v i ew 026
Micromanagement is exhausting, ineffective and counter-productive.
if the entire company behaved like the department heads, would the company be in better or worse shape? (I use department heads as indicative of senior team members but under the level of shareholders/C-suite). Are the team leaders good role models of culture for the rest of the team? Accountability begins with leaders acting like leaders. When you’re busy, it’s easy to let the small things slide, like not responding to emails or showing up to a meeting late. But it’s detrimental to workplace culture if employees see leadership as unaccountable or above-the-law. 4. Autonomy Micromanagement is exhausting, ineffective and – unsurprisingly – counter-productive. If accountability only happens when you follow-up a dozen times on what you need, the culture has not been adopted yet. The real value will be seen when team members put their hand up voluntarily on two occasions: to take on a task, and to offer updates. This is, arguably, the most difficult to get right. Autonomy means allowing someone
the freedom to do their own thing but for that, you need to trust that they are capable and willing to do it. The only way to build this is ‘trial by fire’ – we try it, and either we were right to trust them and everything works, or we were wrong and get burnt. Start with small tasks, and watch closely; sometimes the ones you have the least expectations from will surprise you when given a free rein. 5. Carrots and sticks! As is normal for any organisation, there may be positive or negative results at the end of the day. What I often see are companies very quick to reward and incentivise, but very slow and unwilling to enforce consequences. Accountability does mean each person proactively says what they have and haven’t achieved, but it’s not a free pass for underperformance. If a team member hasn’t delivered, it’s good for them to admit it, and it’s better for management to support them and address the issue. If the lack of results is consistent, however, it would be unfair to the rest of the team to allow them to get away.
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C over story 029
POWER PLAYERS They invest. They run companies. And they rule the region’s VC space. Who are they? What do they have in store for the future of finance? A stellar interview that you shouldn’t miss.
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EDITOR’S PICKS 01. VentureSouq (VSQ) is an early stage equity funding platform. 02. The premise behind the platform is to democratise access to quality deal flow. 03. The company’s job is to keep a pulse on the market demand (investors) and ensure that it continuously provides them with a quality deal flow that resonates with their preferences and appetite.
Tell us about VentureSouq. What is its mission and how did the idea come about? Sonia Weymuller: VentureSouq (VSQ) is an early stage equity funding platform. The premise behind the platform is to democratise access to quality deal flow. People associate the Middle East with deep pockets - family offices, sovereign wealth funds and the like - but we believe there is a large, untapped pool of regional capital sitting with young professionals interested in the angel investing space. From what started as an informal investor club amongst friends, we have grown organically to a current reach of over 800 angel investors across the GCC and invest in both regional and international tech-enabled businesses. We have so far successfully executed 29 funding rounds into 19 companies hailing from India,
Africa, the UK, the US, Hong Kong and our home MENA region. We listen and cater to our investors’ diverse geographic interests and risk appetites and, subsequently, have invested at the seed stage as well as series A and B along with several follow-ons. We review 50 to 70 deals a quarter and select the top opportunities to present to our community of VentureSouq investors. For a start-up ecosystem to flourish the investor base needs to mature and evolve in lockstep with the entrepreneur base. Subsequently, we developed our own investor education curriculum to support investors who want to explore the angel investing space but are not quite sure how to go about it. We bring in regional case studies and accompany our investors on their journey, teaching
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Ideas are plentiful but it’s the execution that matters and will be a key determinant of a company’s success.
them about term sheets, valuations, due diligence and investment strategies in an interactive and engaging manner. This VSQ Investor Accelerator vertical has grown from strength to strength over the years and is a testament to the emerging regional appetite for angel investing. Why did you decide to come together as partners? What kind of rapport do you share with one another? Sonia Weymuller: Tammer and I went to university together so we’ve known each other the longest. We met Sonia G and Suneel in 2011 and became friends. Maan came on as our KSA partner in 2017 as we started to focus on growing our regional reach, specifically in Saudi. We started angel investing ourselves and noticed the interest from our group of friends who also wanted to invest alongside us. VSQ grew in an organic manner, bottom-up, out of a need in the market that was evidently not being addressed. We are fortunate to have a very transparent and respectful relationship with each other; we are aware of each other’s strengths and weaknesses and therefore have developed an honest, efficient collaborative and supportive approach in all that we do. The fact that we remain, close friends, is a testament to the strength of our relationships. Suneel Gokhale: Our team rapport is great. Each of us is interested in certain things without our overall mandate so the team is great at recognising that and letting people run with initiatives that are clearly in their respective wheelhouse based on previous experience. Sonia Gokhale: Our team started as friends and continues to value this relationship, in fact, Sonia W and Tammer are godparents to our child. We love and respect our business partners and hope that they will pass down their amazing
qualities to the next generation through our son. Tammer Qaddumi: TThe four of us kind of sought each other out – it was self-selective. We each had a different vantage point professionally, and we each were strong on the network side meaning, everyone had broad networks that they could also bring into investments with them. So, we just assumed our role as the workforce behind an organically growing network of budding investors. Maan Eshgi: For me, it all started when I came back from Switzerland and decided to invest some of my own savings in start-ups in the GCC, which I saw as a golden opportunity. As a result, I was approached by my friends (angel investors) to help them source good quality companies and co-invest alongside myself. The network started growing and through mutual friends/clients, I was introduced to the VentureSouq team, which complemented what I do in Saudi and from there on we joined forces by integrating Saudi angel investors in addition to institutional and governmental entities, which shortly qualified us to be the largest angel network in the region. Our rapport is amazing given that most of us worked in big financial institutions or multinational companies which gives us an understanding of what teamwork is and that’s a recipe for success. Do you think having five partners on board adds value to the businesses you work with because you all bring something unique to the table? Sonia Weymuller: TThe key to VSQ’s success has been the complementary skill sets and the diverse perspectives and experiences we each bring to the table given our respective professional trajectories across multiple sectors, namely: PE, corporate law, strategy and data analytics. Conversely, when entrepreneurs approach us there is bound
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You must put a lot of trust in the team that’s running the company that it is receiving the investment can keep up with the dynamic market.
to be at least one of us with some level of experience in the sector who can provide added value to the assessment of the opportunity with his or her own lens. Suneel Gokhale: Organisations always talk about diversity and it being key to how they do things but we live and breathe it every day. We have two female founding partners, which is not the norm when you look at venture capital firms globally and all 5 of us are members of visible minority groups, which also is not commonplace. For us, diversity is not just about “doing the right thing,” it’s a strategic advantage to us because we focus so much on emerging markets such as MENA, India and Africa, where having that diversity to draw on helps us in assessing investment opportunities and risk. Sonia Gokhale: I love working with individuals that I can learn from and I am constantly learning from my partners at VentureSouq. I am an actuary and thus have a mathematical mind, I see the world in numbers and formulas, whereas my partners are very different. Suneel is a lawyer with
a very commercial mind, he can identify a great investment opportunity yet is very practical in his approach. Tammer is a big picture thinker and he is constantly looking for companies with a similar approach and pushes VSQ to think big and outside the box. Maan is a master business developer and can see and identify the needs of our investors, which helps us provide a better service offering. Finally, Sonia Weymuller is looking for efficient ways to better the world we live in – whether it be her efforts to educate angels to become better investors, scouting the world for scalable investment opportunities that have a lasting impact, making powerful connections between people across a variety of sectors, mentoring young budding entrepreneurs, she is always looking for ways for VSQ to contribute to the ecosystem in meaningful ways. The combination of our various strengths as a team helps to propel us forward. Tammer Qaddumi: Yes. The five of us keep each other honest. We all have the way we ourselves would want to do things,
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but because of each other, we are forced to adopt practices that apply to everyone. Which makes us better. We’ve figured out a way to leverage five people in terms of both capabilities and networks, so we’re five times stronger than any one of us. What was the biggest challenge of setting up VentureSouq? Suneel Gokhale: One of our challenges was about figuring out who we were and what our USP was. When we started this in 2013 there were several resources dedicated to entrepreneurs and start-ups and after some research we identified a huge gap in the tech start-up ecosystem – no one was paying attention to angel investors and ensuring that Dubai and the region had a strong angel investment ecosystem to drive investment and growth within the start-up community. Once we figured that out, it was about how to best provide value to angel investors and we came up with a platform focused primarily on providing access to global investment opportunities to our network and education
and development initiatives to people looking to develop the skills required to make angel investments. Tammer Qaddumi: Another was making sure we as a team are aligned with priorities. With the five of us working in unison, achievement of any goal is basically certain. The challenge is in making sure we are all prioritising the same things at the same time. Looking back to 2017, what were some defining moments for VentureSouq – both positive and negative? Sonia Weymuller: We are grateful to have had a successful 2017 closing 12 rounds of funding into companies from the US, the UK, Africa and MENA, the highest for us historically. These included globally recognised companies including Andela, reddit, what3words and Dubai-based Fetchr. We hosted our third annual Angel Rising investor education conference with startAD at NYU Abu Dhabi, which attracted over 250 investors; again, this a testament to the growing regional appetite for angel investing.
The numbers have grown year on year. Our fourth one took place on March 24, 2018, and we encourage you to join the movement. We expanded our reach to KSA by bringing Maan on board as our Saudi partner and we took a proactive approach by hosting Investor Round-Ups and investor education sessions in Jeddah. Tammer Qaddumi: I think milestones for most businesses revolve around personnel. The four Dubai-based partners were together from the beginning. So, the major milestone was bringing on board Maan, a partner based in KSA. This opened a whole new market for us, which happens to be 10x larger than our existing market, and which brought a whole new set of priorities. And given how dynamic the Saudi market is right now, and how focused the government is in technology right now, Saudi is really more and more of a focus for us. With Maan there, we’re starting to see ourselves almost as much of a Saudi company as we are a Dubai company. Really, we consider ourselves a GCC company. More than one third of the money invested across the MENA region last year went into technology-based start-ups. Do you think investments are too slanted towards technology? Tammer Qaddumi: No. The term “technology” is broad now. Most new businesses popping up are leveraging technology in ways that are more efficient than the incumbent players. It doesn’t make sense not to. I am of the view that basically, all new investment should go into businesses that are technology-driven. We’re in the middle of a fundamental change in the way people consume everything, the way government is accountable to citizens and residents, the way power is generated and distributed, absolutely everything. KSA is the most jarring example of this transition happening in real-time. Traditional companies in this region do not adapt quickly to change,
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so the fact that more and more investment dollars are going into new tech-enabled businesses is both expected and sensible. Maan Eshgi: No, I don’t think it is too slanted as this is where most of the money is being made. Technology plays an important role in a wide range of sectors; such as products, processes and organisation. We use technology to extend and simplify our abilities. What is VentureSouq’s overarching investment focus? Do you look at certain industries with more interest than others? Suneel Gokhale: Our focus is really split between early-stage opportunities in technology and technology-enabled companies in growing emerging markets such as the MENA region, Africa and India and then opportunistically in the US. From an industry standpoint, we are agnostic and really look at companies that provide services or products SME ADVISOR
that people “need to have” rather than just “like to have”. This is different depending on the market and geographic location(s) that a company operates in. In looking back, our portfolio has a lot of tech-enabled companies, which are essentially trying to solve a real onthe-ground problem using technology. Maan Eshgi: We have developed our own internal rating system and one of the criteria we look closely at is the company’s ability to disrupt a certain industry. We look for companies that can change the way traditional services are provided to consumers. What kind of companies are on your radar for 2018? Sonia Weymuller: I am keeping an eye out for companies in the environmental tech vertical, in line with my personal investment thesis and interest in this space. We recently invested in BioCarbon Engineering, which
uses emerging technologies to deliver precision planting and mapping to increase forest development, essentially combating industrial-scale deforestation with industrial scale reforestation. These are the types of companies that get me going: financially sustainable and geographically scalable endeavours led by a stellar team that harness the power of technology to tackle some of our planet’s most pressing challenges. What are some factors or considerations that influence where you invest? Suneel Gokhale: For VSQ, three primary considerations drive investment decisions: the strength of the founding team, scalability of the company and upside potential and finally whether the company is providing something that people need. At VSQ, we are looking at companies that have the potential to be unicorns and we focus on ‘diligencing’ the upside. Part of this is really
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The industry of private equity and venture capital investing has fundamentally changed in that investors have both the information and the access to invest directly into opportunities they like.
trying to find companies that are providing or making something that people need and are in line with customer demands in their market. However, probably the most important consideration is the founding team; all the companies in our portfolio that have outperformed our expectations and really done well have founders that are extremely intelligent, highly commercial, recognise their weaknesses and have boundless energy. Sonia Gokhale: We find Emerging Markets such as Africa and India extremely interesting due to their growth potential. These markets are distinct from one another and have their own idiosyncrasies thus it is important to be on-the-ground with intimate knowledge of the markets. We travel to each of the geographies in which we invest from India to the US and have strong trusted partners in each market that help us navigate the various quirks. We feel this gives us an edge when investing abroad. Sonia Weymuller: It’s important to note here that we are not a fund; we have a wide and varied investor base of over 800 individuals – each investor comes with his or her investment preferences (sector, geography) and varied risk appetites (seed, Series A), which will ultimately dictate his or her investment decisions. Our job is to keep a pulse for the market demand (our investors) and ensure we continuously provide them with a quality deal flow that resonates with those preferences and that appetite. We’ve taken a patient approach over the years to better understand the psychology and rationale behind each of our investors’ decision. Tammer Qaddumi: The industry of private equity and venture capital investing has very clearly fundamentally changed in that investors have both the information and the access to invest directly into opportunities that they like. They don’t need to go through blind PE or VC funds anymore, and a lot of them really prefer not to. Their problem now is a filtration problem: sure, they can get access, but how do they assess what’s good and what’s
bad? That’s where we come in; understanding what direct VC deals our investors have an appetite for, then sourcing, screening and executing. While investor preferences vary wildly, we see some clear patterns on characteristics that investors like: Solid demonstrable traction, with a strong preference for revenue traction; Backed or being backed by recognisable investors, and Hook to this part of the world. What are some characteristics of companies, entrepreneurs or ideas that catch your attention? Sonia Gokhale: We look for businesses that have commercial viability. We are looking for companies with strong margins and potential for exponential growth. We are swinging for the fences and are looking for that home run. Tammer Qaddumi: I really like to see concrete examples of how bigger companies or huge consumer demand bases fundamentally need their products or services. This allows me to conceptualise better how big the company can get. Suneel Gokhale: The companies in our portfolio that have done the best have driven founders that are all over their businesses, always pushing for excellence and continuously thinking about the next growth opportunity for their companies. Sonia Weymuller: For entrepreneurs, a sense of purpose, humility and integrity are essential to me as they reflect conscious leadership traits. A founder who is a strategic thinker, commercially-oriented and has a clear understanding of why he or she has decided to embark on this journey. One that is willing to put ego aside and is self-aware enough to understand that the strength of a company lies in its team and therefore can put together a stellar set of individuals with complementary skill sets. Ideas are plentiful but it’s the execution that matters and will be a key determinant of a company’s success. Maan Eshgi: It is often said that a start-up is only as good as its people and their ability to adapt to unexpected market changes; so SME ADVISOR
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internally by one partner who takes the lead and pushes it through.
Most new businesses popping up are leveraging technology in ways that are more efficient than the incumbent players.
a strong team is extremely important other than any smart technology that could possibly change the way we live. This is what would surely attract my attention. On the flip side, what’s the ultimate deal breaker? Sonia Weymuller: Immediate red flags we’ve seen include part-time founders, evident team misalignment on commercial strategy and an absence or limited understanding of the competitive landscape in their sector How important is it for all partners to come to a consensus on an investment decision? Suneel Gokhale: Consensus is a big part of VSQ’s ethos and culture. We think of each other as smart and experienced and value each partner’s opinion, so in most cases, we all agree on a way forward when decision points come up, usually by trying to make a case for taking a specific course of action. With that said, each of the partners has specific mandates or parts of the business where they are the primary lead so we also make sure that we defer to each partner on certain matters which is just about recognising each partner’s strengths. Sonia Weymuller: Consensus is key when it comes to moving forward with an investment opportunity. Each deal is typically championed
Tell me a little about your investment portfolio. What’s worked and what hasn’t? Suneel Gokhale: In general, our portfolio has performed well. It’s still early days given that we tend to come in at the seed or series A stage of a company’s financing life-cycle but we are optimistic. We have had significant uplifts from our initial investments in portfolio companies such as Zoomcar, Knot Standard, Andela and Fetchr. What3words just announced a large investment from Daimler, which is great. We are really excited about investments we made in 2017 in Piggy and Helium Health, which are both YCombinator companies. We are close to closing on a couple of exciting deals in the drone and automotive spaces that will be announced to the market soon. At this early part of our portfolio’s lifecycle, it seems that some of our best-performing companies are focused on solving real, everyday problems in emerging markets. We love these types of opportunities because as an investor you don’t have to spend too much time figuring out whether there is an addressable market for what the company is trying to do – you know there is already a pain point or a problem to be solved, it’s just about developing technology that makes delivery of an existing service or product faster, more cost-effective and more scalable. Given the early stage nature of our portfolio, there is a relatively high degree of risk there and some companies take a bit longer to hit their stride and start to really figure out what their customers want. We have a few of those as well in our portfolio like any venture capital investor but we remain hopeful that things will continue to move in the right direction. With fluctuating markets and a lot of noise within the technology space, how do you stay confident with your investment decisions? Suneel Gokhale: Time will ultimately tell but in this business and as an investor you must
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ultimately trust your founders. If you do the work when assessing the company, the founder and the opportunity at the time of making the investment, the rest is then up to the founders. We are always there to provide advice and guidance. With many of the companies within our portfolio, we are regularly dialoguing with the founders – we have over 20 portfolio companies now and can draw on experiences from each of them to assist companies in navigating through their growth lifecycle. Tammer Qaddumi: You must invest a lot of trust that the team that’s running the company that’s receiving the investment can keep up with the dynamic market. That’s why we’re investing into these guys rather than a traditional operator in x, y or z sector. We trust them more than we trust ourselves to stay on top of how their respective market moves. We would never put our money into a deal that we perceived to have a fixed business plan with limited ability to move with a fluctuating market Start-ups often struggle to find a sustainable business model and there’s the debate between value and valuation. We’ve seen several heavily invested companies that end up burning cash. What’s your take on this? Sonia Gokhale: One of the first questions we ask a company that is looking for funding is: if we invest in your company what will you do with the money, how will the company grow and how long will this money last? We are looking to avoid companies that will burn through the cash before noticeable growth is experienced. “Burning cash” is necessary to see exponential growth, but there is a difference between spending for the sake of spending and spending smartly for the sake of growth. We invest in the latter. Tammer Qaddumi: The bet that you’re making with any of these investments is that they will be able to reach scale. A well-trodden strategy to achieve scale is effectively to buy market share, i.e. burning cash to grow at the top-line. We can buy into this strategy if it’s
well thought through, and that the company knows exactly how long it wants to play this came and where the money to play it will be coming from. In terms of valuation, you really must dig deep to validate that the performance and growth parameters the company is sharing with you are accurate, and then cut those metrics in several different ways to make sure that the valuation is on par with the market. Ultimately that’s what you want to be sure of: that the price you’re paying is fair relative to the broader market. We always hear that there isn’t sufficient access to capital within this region. Do you agree? Or, is it simply the case that the ecosystem hasn’t fully developed? Suneel Gokhale: I disagree – there is enough capital in the region from a quantitative perspective. However, it’s about finding the right capital for each part of the ecosystem, which at all ends is relatively young. We can’t look at the regional start-up ecosystem the same way we look at what’s going on in Silicon Valley. With that said, as the ecosystem continues to develop, we as investors need to keep pushing ahead and bringing others who have been less active in the fold. For example, sovereign wealth funds and other large financial institutions on the buy-side have largely remained on the sidelines when it comes to investing in early-stage technology companies. However, I worked at a large sovereign wealth fund for almost five years and know that internally these organisations are beginning to understand that they need to be investing in early-stage technology companies because these companies will ultimately be disrupting their existing portfolio companies. I think it’s headed in the right direction but we as one of many participants in the ecosystem must keep the momentum going. Tammer Qaddumi: I completely disagree. There is a ton of capital in this region. It just sits in different pools than what people are accustomed to, and it can be hard to manoeuvre around to find it. It doesn’t sit neatly in pension funds or endowments with
big welcome signs on their doors. It sits with individuals or family offices, which you need to hustle to find, and then work hard to earn their trust. Or it sits with big government-related entities, which have their own decision-making processes and strategic priorities. Finally, what’s next for Venture Souq? What’s in the pipeline for 2018? Suneel Gokhale: For VSQ, 2018 is all about scaling and expanding. Investing more capital in regional and global investment opportunities and continuing to push on investor education. We will continue to look at high-growth emerging markets outside of the MENA region very closely, particularly India and Africa, where we plan on being very active this year. Sonia Gokhale: We are also working more with family office and corporates that are looking to diversify from their current investments and increase their exposure into private tech companies globally. Sonia Weymuller: We will continue to grow our investor education pillar by further developing our content and taking a multiplatform approach. This feeds into the virtuous cycle we are creating – we strive to empower individuals by providing them with the tools they need to make informed investment decisions. This, in turn, will help sustain and grow the investor base in the region. You’ll also be seeing more of us in KSA as we look to support the investor ecosystem in line with Vision 2030. Tammer Qaddumi: Strengthening our own technology backbone is also a major focus. It will allow us to scale what we’re doing already, and opportunistically run after big initiatives with strategic partners. Maan Eshgi: Enhance and leverage our relationship with regional and international startups to create more synergies in addition to the work we do with institutional investors and government entities in the region to help close the gap in the ecosystems and that can be done by using our technical know-how and investment track record and capabilities. SME ADVISOR
WOMEN IN FINANCE Heather Henyon is not one to be sidelined by gender stereotypes or glass ceilings. In fact, in her career spanning over two decades, sheâ€™s done the exact opposite: pave the way for a new generation of female leaders. Here, she talks to us about combatting gender biases in finance.
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Angel Investor Network (WAIN) in 2013; today we have 50 female investors and have made seven investments in womenled start-ups. I also helped to start another angel group called Dubai Angel Investors, where I am a member of the Investment Committee. Cross-border investing especially in venture requires creativity, flexibility and risk tolerance that isn’t for everyone. When I set up the loan guarantee fund, the MFI directors and I would visit the banks and set up a tender process for them to respond. We wanted to create competition to increase their interest and get the best deal for the MFI. I have lived and have been working in the Middle East off and on for 20 years, starting from when I studied abroad in Egypt.
HEATHER HENYON FOUNDER & DIRECTOR WAIN - WOMEN’S ANGEL INVESTOR NETWORK
Can you tell us about your journey within the regional financial landscape? What has it taught you? I have worked in finance for almost 20 years in a variety of roles. In the MENA region, I set up and managed a regional microfinance company that was a joint venture between the Abdul Latif Jameel Group and Grameen Foundation. To help manage foreign exchange risk (most of the microfinance institutions or MFIs were borrowing in hard currency), I structured a US$50 mm loan guarantee fund to back local bank loans in local currency to MFIs. Our first transaction was in Egypt, which was fortunate considering the devaluation there last year. More recently, I have been involved in early stage investing in the region. I started an angel group called the Women’s
What sparked your interest in finance? I studied economics in college and always enjoyed working with numbers. My dad was an active stock market investor outside of his career as a statistician; my mom was a high school math teacher and my brother is an electrical engineer. When I went to business school, I concentrated on finance and entrepreneurship, where I had the opportunity to learn about venture finance from leading professors like David Ben Daniel and Zach Schulman. What can businesses do to harness the talents of women in financial roles? Women are a major asset in financial roles. They are outperforming in almost every area, from managing hedge funds to personal finance. What recommendations would you make to the industry to improve gender diversity in financial services? The literature states that companies need at least three women on a management
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Women are a major asset in financial roles. They are outperforming in almost every area, from managing hedge funds to personal finance.
team and on the Board to be effective. I have witnessed this firsthand – when I am the only woman on a Board, my views are ignored and therefore I am ineffective. I recommend that companies not only ensure that they have women on their management team and Boards but a significant number so that they can be effective. What are some of the top challenges women still face in the world of finance? Women continue to be a minority in the finance world and unfortunately the numbers seem to be going the wrong direction. The sexual harassment lawsuits across multiple industries reinforce what many of us have observed our entire careers. They continue to struggle to advance to top roles with power like partners at VC funds and managing directors at banks. Do you think this is because of lack of confidence? I do think that women lack self-confidence when it comes to finance, which is part of why I started WAIN. I saw successful women business executives and professionals who were still intimidated by numbers. Part of what we do at WAIN is provide financial literacy – as the women learn about angel investing and valuation, they are increasing their self-confidence around financials. You’ve rose through the ranks to become a mentor for women in finance. What initiatives are you undertaking through WAIN to cultivate female talent? Our WAIN investors are active mentors to female founders whether we invest or not. Many of them need help with setting
up advisory boards, thinking through strategy, financing and capital structures. Looking to 2018, do you foresee a rise of female-led venture capital funds? On the flip side, do you also think we will see a rise in funding across female-led businesses? We are already seeing many more women-led venture funds in the US and will hopefully see more globally. I am working on a new global venture fund called Mindshift Capital that invests in women-led companies in the US, Europe and Middle East. With my 80 investments through angel groups and funds in these places, I see an opportunity to build and focus on women-led companies, which have been quoted as returning 63 per cent greater returns than non-diverse teams (Source: First Round Capital). There is data showing that women invest in women – therefore, with more women asset managers, I expect that we will also see an increase in funding to women-led companies. What is your take on cryptocurrencies – here to stay or just a bubble? I have been following bitcoin for the last five years. I have always believed in the potential of digital currency (especially for financial inclusion use cases like remittances). There’s currently high speculation and too many uninformed investors are involved in the market; however, following a correction, I do think that crypto is a form of disruption that will continue to pervade the financial industry. Finally, what piece of advice would you give women starting their careers in the finance world? Show up!
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UNLOCKING THE POTENTIAL OF
CRYPTOCURRENCIES Thinking about diving into the world of cryptocurrency trading? Well, look no further. Home-grown blockchain platform ArabianChain recently launched a new digital asset exchange: Palmex. We spoke to Founder and CEO Mohammed Alsehli to get some insights.
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EDITOR’S PICKS 01. Palmex allows crypto to crypto trading; if you have purchased any coins before, you can deposit them in the system and exchange them for other coins. 02. ArabianChain is the first public, decentralised and consensus-driven blockchain in the MENA region.
Tell us about ArabianChain and its offering. ArabianChain Technology is a UAE-based venture that is unlocking the potential of tomorrow’s economy by enabling today’s blockchain innovation. ArabianChain is the first public, decentralised and consensusdriven blockchain in the MENA region. It allows for self-executing and globally accessible smart contracts and decentralised apps to be developed as well as for digital tokens to be transacted, tracked and safeguarded over a network of thousands of connected yet distributed devices. We also offer DBIX, which is the fuel of ArabianChain and the first minable digital currency in the region. Galaxy wallet is the easiest way to store and transact DBIX and tokens on ArabianChain. DBIX Scan is our light explorer where all your transactions are posted and verified. ArabianChain APIs are the quickest way to integrate our blockchain with your business. ArabianChain Studio offers easy to use environment for developing smart contracts. And of course, Palmex is among the first digital assets exchanges in the MENA region. What motivated you to launch Palmex? How does it work? The motivation came from the realisation that the market has started recognising cryptocurrencies as an investment opportunity and there are not many companies or ventures that are providing access to people within the region to that market. So, we decided this is an opportunity to provide that gateway to and make that happen. Presently, Palmex allows crypto to crypto trading; if you have purchased any coins before, you can deposit them in the system and exchange them for other coins. Soon enough we will enable Fiat currencies, which means you can deposit dollars or any other currency that we decide to have on
the system and from there you can directly purchase any other cryptocurrencies. Do you foresee rising demand for cryptocurrencies in the region? Yes, we do. There is an increased awareness in the region and people are accepting cryptocurrencies as an alternative investment opportunity. The adoption of blockchain technology on a strategic level will impact the whole economy in the region and ultimately bolster the growth of cryptocurrencies. What’s your take on the cryptocurrencies scene in the UAE? Well, currently, it has been in the grey area still and is not completely regulated while it is not prohibited. So, cryptocurrencies are currently considered as commodities and regulators are working on setting up sandboxes to allow innovators shape these regulations in the future. From a demand point of view, the involvement of the community is quite high and there is high-level of awareness. People have a lot of knowledge of cryptocurrencies and their impact, and this is driving demand for it. Therefore, it becomes important for businesses like us and the regulators to meet this demand in a structured manner. What excites you the most about blockchain? The blockchain technology is not just a technology, it is a set of thoughts, ideas and philosophies that go together to make it revolutionary and potentially change the way an economy works. One other aspect is the realization of the potential of blockchain and the added value that it can bring to businesses and services. Public and private sector entities are looking to leverage blockchain and that motivated us to become one of the first companies in the region to be innovating within this space.
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Cryptocurrencies represent value in themselves and they carry their value over the network, that is its appeal to people, entities and governments.
Why do cryptocurrencies present such a massive opportunity? This is for the first time in human history that we can transact value peer to peer, person to person or entity to entity, directly across nations instantly. This has never been there before, not even with the internet. Yes, we use the internet to send messages and information, but not the actual value and asset itself. Cryptocurrencies represent value in themselves and they carry their value over the network, that is its appeal to people, entities and governments. They can send their payments and transactions and do their exchanges on the spot directly without intermediary or a loss of value and the transfer of the value itself.
A lot of businesses are trying to find a way to benefit from the rising popularity of bitcoin and other cryptocurrencies. What advice would you like to give to companies looking to seize the opportunities of such technology? There are two aspects to consider: investment and business. On the investment part, I do recommend that you invest for the long-term and diversify investments. More importantly, make sure you are investing an amount that is not more than you can afford to lose as it is considered to be a risky investment. On the business side, blockchain technology is the platform that made cryptocurrency possible and I would encourage every public and private sector institution that has use cases
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There are already sandboxes put in place by many governments to experiment with the technology and to work with the innovators to regulate the best way possible to enable this innovation rather than hinder it.
for this technology to experiment with it. For instance, if you have multiple suppliers or tend to deal with third-party companies; when you have processes that require the involvement of different countries and audiences, blockchain technology would be a great platform to apply smart contract and decentralised applications. This will give you the opportunity to be on the very edge of technology and will help in seizing a lot of opportunities, reducing the cost of production or operations massively and gaining new clients. What are key considerations an amateur investor needs to bear in mind when investing in bitcoin and other cryptocurrencies? For investors, there are multiple things. You must do your research and diversify your investment. Do not put all your eggs in one basket. Focus on investing for the long-term especially if you are not familiar with the day to day trading mechanics. This is the simple advice I would have for any amateur investor.
MOHAMMED ALSEHLI FOUNDER & CEO ARABIANCHAIN
Are we going to see further improvements in the regulatory framework to streamline the use of platforms such as yours? Yes. There are already sandboxes put in place by many governments to experiment
with the technology and to work with the innovators to regulate the best way possible to enable this innovation rather than hinder it so this a lot of work in progress now and I think 2018 will be the year when most of these things are going to be put in place and we will have a better and more transparent framework to allow innovators to innovate in this space. There has been an ongoing debate regarding the prices of cryptocurrencies, particularly bitcoin, where do you see prices headed over the next few months? With regards to prices, usually, we prefer not to speculate on prices. However, if bitcoin is to replace gold as a store of value in the upcoming few months, then prices will be going higher. This is combined with the limited supply of 21 million bitcoins only and the increasing demand and the utility of companies and people accepting this coin as payment, we see that this will be pushing the prices to go even higher. From a simple study of the charts and the way the market has been behaving and presenting itself, you can assume that the bitcoin will be valued over the US$50-100K in the future. Of course, we do not have a specific date that we can speculate when this will happen but this is the indication that the market is giving.
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Tapping into the
Global adoption of fintech is predicted to increase by
Global fintech adoption
Rate of fintech adoption across key markets:
s i n
Countries with highest adoption among their customers include:
x i o
has been deployed into global fintech investments.
o r e
US$ 16.6 bn
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When finance meets technology Areas where fintech is being used the most:
Money transfer and payments
A business imperative
of organisations believe that fintech have already are monitoring urges them to improve partnered with fintech fintech and related their focus on companies to improve developments closely customer experience. their offering.
of fintech start-ups express interest to collaborate with larger corporates.
Fintech partnerships Fintech-related are poised to increase projects are estimated by 82% over the next 3 to have an annual ROI to 5 years of atleast 20%. SME ADVISOR
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Project Chaiwala: Steaming hot success While most people would argue that coffee is the best way to start a busy morning, there are few that love to indulge in a cup of tea. Ahmed Kazem and Justin Joseph want to give that segment of the local community a unique tea-drinking experience.
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EDITOR’S PICKS 01. Enthused by tea farms in Sri Lanka and India, Project Chaiwala is a unique concept that makes tea varieties from all around the world available locally. 02. Through participation at pop-up events, Kazem and Joseph have managed to create quite a stir with their concept and gain the attention of tea-lovers.
Established: February 24, 2017 Employees: Currently 4, including both co-founders Unique Selling Point: Product offering and nostalgic experience.
nthused by tea farms in Sri Lanka and India, Project Chaiwala is a unique concept that makes tea varieties from all around the world available locally. “The tea culture in other parts of Asia is very different from what we see here. Drinking chai is an experience and you will often find street side vendors selling tea with their own unique twists. So, we decided to bring this authenticity to Dubai with Project Chaiwala.” Kazem and Joseph have gone the extra mile in ensuring that customers get the most out of their tea-drinking experience by handpicking every supplier. “Quality is extremely important because the flavour of our products is the premise of our offer. We not only focus on the traditional black chai with milk, but also have several variations.” Stirring things up Standing out in an oversaturated F&B market is no easy feat, but the entrepreneurial duo believe that they are in a league of their own. “We are not really competing with other tea vendors because our core offer is farm-sourced tea directly to your cup. It’s much more than just the beverage you are drinking, it makes you nostalgic. Imagine that you are sipping on a cup of tea and the experience transports you back to your hometown, all this while still maintaining the flavour and essence of the tea itself,” quips Kazem. And, Joseph adds: “We are an authentic concept that offers a range of products that are traditional yet with a unique twist, as well as an unparalleled street vendor style experience that you don’t find commonly in urban environments. We’ve transferred and adapted a nostalgic practice from the streets of South Asia to an urban city like Dubai, UAE; all while staying as true to the origins as possible.”
An important dimension of Project Chaiwala is its commitment to social and environmental causes.
Making a difference, one cup at a time An important dimension of Project Chaiwala is its commitment to social and environmental causes. “We believe in being socially and environmentally conscious and we’re classified as a social enterprise. The idea behind our concept is not only enjoying a top-quality beverage, but also giving back through every cup served.” Planting a future Through participation at pop-up events, Kazem and Joseph have managed to create quite a stir with their concept and gain the attention of tea-lovers. With this exposure and customer base, they are ready to launch their first outlet. “We are going to make the announcement very soon as we currently
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As it looks to scaleup, one of the biggest operational challenges that Project Chaiwala is currently facing is recruitment and training.
work towards setting up at a permanent location. We are also looking to expand Project Chaiwala throughout the UAE and hire staff accordingly.” In line with this plan, they are also streamlining their internal processes. “We realise that as we enter a new phase of our business, we need to invest more time in improving our back-end operations. That’s exactly why we standardized our recipes to ensure consistency across all our events and outlets and implemented a detailed inventory system in our operations.” As it looks to scale-up, one of the biggest operational challenges that Project Chaiwala is currently facing is recruitment and training. “Our operations are dependent on our ‘chaiwalas’ because they are a huge part of the customer
experience. Hence, not finding the right chaiwala can have an adverse effect on the business. We actively search for potential chaiwalas in their homelands. If we come across someone who could potentially fit the bill, we carry out interviews and ultimately make the decision of whether to hire them or not. We’re looking to hire people beyond their tea-making abilities. Their personalities play a big role and they eventually become our brand ambassadors so it’s very important for us to pick the right people.” So, what’s the ultimate dream for Project Chaiwala? “We want to build a concept that strikes the perfect balance between flavour, experience and nostalgia.” Well, making that happen is surely Joseph and Kazem’s cup of tea!
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THIS COMPANY IS WORRIED ABOUT
REPUTATION SO YOU DON’T HAVE TO BE
Yazin Alirhayim’s young company offers a unique concept: a reputation verification tool that aids buyers and sellers to trust one another when they transact online.
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EDITOR’S PICKS 01. The system records the history of all transactions that take place and the rating given to them by both parties. 02. Alirhayim is still reeling in the success of his recent token sale, a special accomplishment for his young start-up because it’s the first of its kind in the region.
erify describes itself as a distributed reputation protocol built on the Ethereum blockchain that facilitates trust-based transactions. In simple terms, the system records the history of all transactions that take place and the rating given to them by both parties. For those that build a good reputation, it offers benefits. Yazin Alirhayim, the enterprising entrepreneur behind the concept, explains further: “The Verify protocol assigns participants a reputation score that is dynamically adjusted based on their participation in the network. Each transaction or participation in the network is ensured using CRED tokens; i.e. an insurance policy for every transaction that happens in the network. The insurance policy is set to protect both buyers and sellers. It is important to note that a transaction does not necessarily mean payments, but it means any kind of participation between parties in the network.” So, what does this mean for buyers and sellers? “Our platform solves significant challenges both for the buyers and sellers. So, for instance, first-time buyers can be assured that they won’t be short-changed by the buyer. Meanwhile, sellers can transact with the confidence that they will receive timely payments from the buyer. The idea is to make it easier for people to transact online. But, it’s not just that. The beauty of the platform is that you can build applications on it. We’ve added Verify payments as an application on our platform and this gives our users an added benefit,” he explains. The region’s first token sale Verify began operations in 2017 and straightaway considered going down the route of an initial coin offering or ICO. An ICO, which is also referred to as a token sale, is when investors back up a company
in exchange for digital coins. “We recently completed a US$2.5 million token sale that was oversubscribed by three times. We had over US$7 million in commitment and had to turn down majority of these funds. Our goal in the short term is to establish dominance in a niche market by building a compelling blockchain-powered solution that no existing financial instrument can compete with,” he beams. “This funding will go towards covering our operational expenses for the next 18 to 24 months. We are currently hiring for several key technical and business development positions.” Alirhayim is still reeling in the success of his recent token sale, a special accomplishment for his young start-up because it’s the first of its kind in the region. Token sales differ from traditional equity investments in that the company is not selling “stocks”, but a utility token that buyers would be able to use when on the platform. In Verify’s case, the tokens
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Blockchain is going to have a huge impact on how we conduct business.
WHAT IS A TOKEN SALE? An ICO, which is also referred to as a token sale, is when investors back up a company in exchange for digital coins.
WHAT IS REPUTATION?
pre-sold are used as “insurance policies” on transactions that take place on the network - no seller can complete a transaction without these tokens. Re-wired for the future His entire focus for the past few months was preparation and execution of a successful token sale. But, he now hopes to shift focus towards customer and product development, where he will talk to customers and build out the product in tandem. “Our goal is to build a product that solves a problem today, not to implement an idea that we think could be useful. This requires that customer development i.e. getting out and talking to prospective users of the product goes together with product development. Our plan is to start with a niche market that has strong demand for the solution we are providing, dominate that market and then later expand into other niches,” he explains.
“Reputation is, in its essence, a value that sums up the ‘rating history’ of all previous transactions undertaken on the Verify protocol (as rated by the counterparty) and a confidence level in that value.”
And, how does Alirhayim plan to execute this? “By listening to customers, both current and prospective,” he quickly responds. He is also keeping his eye on trends that have the potential to impact his business. “Blockchain is going to have a huge impact on how we conduct business and not for the obvious reason (Bitcoin, etc.). I think the real potential lies in using this technology to run existing business applications more efficiently both technically and operationally,” he adds.
In fact, Alirhayim thinks that we’re just scratching the surface in terms of where the financial services industry is headed. “I predict truly borderless payments. Today, we’re tied to bank accounts in specific countries and fees vary massively depending on the origin/destination of funds. I see us transitioning to a point in the future where anyone connected to the internet will be a first-class citizen of the internet and all the peripheral services like banking will follow,” he quips. To tap into the massive potential that the sector holds, Alirhayim urges small businesses to pull up their socks. “It’s easy to think that larger companies know what they’re doing, and that they have a disproportionately large chance at duplicating any success you may achieve. That’s thoroughly untrue,” he advises.
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MONEY MANAGEMENT TIPS Adhil Shetty of BankBazaar.com shares his thoughts on how companies can marry financial acumen with strategic investment strategies to drive growth forward.
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EDITOR’S PICKS 01. When you live in a different country, you need to be careful of so many things: your bank account, investments, assets, taxes, the exchange rate, and so on. 02. If you invest in India, your money will depreciate faster than in foreign countries. You must make these calculations before you plan an investment in another country.
ctive money management is critical to financial health. If you are a resident Indian, your task is easier compared to an NRI. When you live in a different country, you need to be careful of so many things: your bank account, investments, assets, taxes, the exchange rate, and so on. Let’s look at 10 important money management tips for NRIs to stay financially fit. 1. Key bank accounts: NRIs are not allowed to keep their money in a normal savings account in India like a resident Indian. So once your residence status changes to NRI, you must convert your saving account to an NRO account to transact without any restrictions. You can use the NRO account to deposit all your income from ancestral asset or existing investments.
ADHIL SHETTY CEO, BANKBAZAAR.COM
2. Power of Attorney: Before you leave India, you need to assign caretakers for your assets. So, if you have a relatives or close friend whom you can trust, you should appoint them caretakers of your property. They would need power of attorney to perform all tasks related to the NRI’s assets in his absence. For example, if an NRI wants to purchase or sell a property in India, it may not be possible for him to come to India only to sign the documents. So, a representative who holds the POA can perform all such tasks on his behalf. 3. Where to invest? The investment rules for NRIs are simple. They can easily
invest in shares, real estate, mutual funds, bank fixed deposits, etc. As interest rates in India have been trending downwards for the past three years, debt instruments are not very attractive today. But equity, mutual funds, and the real estate market remain attractive. The equity market is scaling new heights each passing month, and India remains one of the best-performing stock markets in the world. Likewise, mutual fund inflows have grown rapidly in the last two years. In 2017, the Indian mutual fund industry witnessed the largest ever fund inflow. The realty market is now safer than it used to be. With RERA and GST implementation, NRIs can get huge benefits from the realty
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Inflation in India and the country of your residence may vary. So, investments should be planned accordingly.
market. The sector is also getting lots of support from the Indian government and it is expected to grow consistently in the coming years. 4. Buying a property: NRIs can buy real estate – both for commercial or residential purposes – but they cannot buy agricultural land or farmhouses. However, there is no restriction on an NRI inheriting a farm land or agricultural property. It is mandatory that all transactions for property buying and selling happen through an Indian bank and in Indian currency. NRIs must obey FEMA rules in real estate transactions.
5. Is life insurance useful for NRIs? NRIs can buy an Indian life insurance policy subject to fulfilment of certain conditions. If you are planning to settle back in India or if you still have lots of connections that keeps you attached to the homeland, you can think of buying a life policy here. You must check the tax implication of such insurance policy in the country where you live. You should ascertain the medical check-up requirements and whether insurance companies allow you the flexibility to submit the report from your country of residence. 6. Buying a health policy: NRIs often seek medical treatment in India because the healthcare here is competitively priced,
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You should be mindful of currency rate fluctuations while investing in India.
and the NRIs may also have a social network—family or friends—for support. NRIs can buy a health policy in India, but it is important to take care of certain points. It is important to check the geographical coverage of the health policy, because you may also need the policy for a treatment in your country of residence. Health insurance companies should have a good presence in your country and cover most common healthcare needs. You can claim the tax benefit under Sec 80 (D) for premium paid towards the policy and reduce your tax liability for income accrued from India to that extent. 7. Managing your loans: If you have pending loans back in India, you
should make a simple analysis. Check the loan interest rates in your country of residence. If the rates are lower, consider taking a loan there and repaying the ones in India. For this, you would also have to factor in the exchange rate, processing costs, and foreclosure costs. If there are significant long-term savings, you should take this option. Similarly, if the interest rates in India are cheaper than the ones in your country of residence, take a loan in India to foreclose the loan. 8. Consider the exchange rate fluctuation: You should be mindful of currency rate fluctuations while investing in India or while taking a loan. For example, you invested
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US$1000 i.e. INR 63,000 (Let $/ INR=INR 63) in an asset in India in for one year, and that investment returned 10 per cent per annum. While redeeming the investment, the currency value changed to INR 68. If the rate had stayed at INR 63, your investment value would have been US$1100. But at a rate of INR 68, your investment value is US$1019.11, implying effective returns of just 1.9 per cent. To maximise your investment gains, you must be aware of the impact of exchange rate fluctuations. 9. Adjusting for inflation: Inflation in India and the country of your residence may vary. So, investments should be planned accordingly.
Suppose in your current country, the inflation rate is 2 per cent and you are getting an ROI of 6 per cent PA on an investment, while in India, the inflation rate is 6 per cent. So, it is easy to figure out in this example that though the ROI is the same in both countries, if you invest in India, your money will depreciate faster than in foreign countries. You must make these calculations before you plan an investment in another country.
or not. If you do plan on returning, you can start building an investment corpus in India, and start looking at its tax efficiency, tenure, risk and reward. As an NRI, you need to take care of tax laws and investment scenarios in both countries. It important that maintain financial discipline and consult your financial advisor regularly.
10. Returning to home country: You must decide as early as possible about whether you want to stay in a foreign country or come back to India. Depending on your decision, you can decide whether you should increase your investment exposure in Indiaâ€”
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Mohammad Abu Musa, CEO, UsersProof.com, goes back to the basics as he outlines key strategies to access finance. SME ADVISOR
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EDITOR’S PICKS 01. Expectations of key stakeholders regarding the need for greater transparency about the nature and magnitude of risks undertaken in executing an organisation’s corporate strategy continue to be high. 02. Alongside this digital revolution is the ever-present and ever-growing threat to firms’ cyber security, which again ranks in the top five risks for financial services firms.
inding an investor is just liking finding your customers, you must find them in the right place at the right time. Approaching investors with a straightforward mind-set will help your business find the perfect match for your company. Entrepreneurs often forget that investors are humans just like you or me and get caught up in creating a pitch that doesn’t resonate at all. In my experience of speaking to dozens of investors while building different start-ups, I can confidently say that investors simply expect a conversation that can help them understand the fundamentals of your business. Meanwhile as a business, you must identify if the investors that you approach match your company culture and the way you do business.
ϭϭ Think and feel. What’s on their
An introduction to Empathy Maps A great tool that I’ve discovered and one that really aids in understanding people is the ‘Empathy Map’, which is a collaborative tool that businesses can use to better understand potential investors. While this is typically used for customers, it perfectly fits the premise of an investor as well. Let’s look at it. It’s made up of a picture of the investor surrounded by six distinct sections, which are:
mind? What matters to an investor? What are their aspirations? Hear. They say that no man is an island, and that’s true of investors. What are friends, networking connections and other investors saying to them that could affect their thinking? See. Look around. Who is investing in your competitors? What do they see their peers doing? What are current business factors that can influence their investment decision? Say and do. Time to look at their actions and words. What is their attitude towards others? What do they do in public? How has their behaviour changed? Pain. What does failure look like to this investor? What fears, frustrations or obstacles potentially stand in their way? Gains. On the flipside, what does success look like? What are they hoping to get out of the relationship?
Drawing up an empathy map, like this example, will give you a significant head start and prep you for investor meetings. Humans are wired in way where our thinking and feeling is based on what we hear and see; investors are no exception. As an entrepreneur, it is important to observe the things happening around
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What does he
THINK & FEEL? what really counts major preoccupations worries & aspirations
What does he
What does he
what friends say what boss say what influencers say
environment friends what market offers
What does he
SAY & DO?
attitude in public appearance behaviour towards others
fears frustrations obstacles
Financial firms are concerned about their ability to respond competitively and modify their business models in a timely manner to manage the enhanced risks.
“wants” / needs measures of success obstacles
you and empathy maps are fantastic in making you more aware about your surroundings. It may require time and effort, but the outcome is worth it. The 10-point investor checklist Here’s a list of questions that you should consider asking a potential investor to judge their interest and fit with your business. 1. When was the last time you met a failure/success start-up? What kind of impression they left on you? If you listened carefully, you will read between the lines to understand what that investor appreciates or dislikes.
2. Have you heard about investors who got into troubles with their portfolio companies? This question will help you understand how that specific investor perceives other investors. 3. What do you love/hate the most about media that talks about entrepreneurship/ startups? You want to understand how they see investment space. 4. What are you worried about the most? Sometimes it is just good to ask the question directly. 5. When the last time you failed as investor? What were the reasons? Can you see the signs of failure now? Investors are
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often asked text book questions, so if they answer you with generic answers or something they read in a book while they gain their MBA, I think you should watch out.
MOHAMMAD ABU MUSA CEO USERSPROOF.COM
Concerns over preparedness for dealing with cyber events are increasing.
6. Do you have a workflow to manage investment deals? If you read on their website that they will help you build processes in your startup, but they do not have a workflow to manage their very basic process. I would think twice before applying. 7. Read their website, word by word. This founders, partners, and associate’s profiles on LinkedIn. Those are the people you will be working with. One of the common misleading information that investors use is “Agnostic Investors”, if their whole team comes from a financial background for example, then you pitch a restaurant you will be wasting your time and theirs. Know who they are. During the investor meeting, do not make it one way, it is not they ask, and I answer, make it two ways communication get to know who they are, ask questions like this 8. What is your investment criteria? How do you evaluate start-ups you invest in? I noticed many entrepreneurs get disappointed after they got rejected by an investor, simply because they did not know what is the criteria of success for that specific investor. 9. What is your decision-making process? Is the whole investment team makes the decision about your start-up or a single person? 10. When do you feel excited about a start-up?
DO YOUR HOMEWORK! These ten questions can prove to be a good ice-breaker with investors, but of course investing is a two-way street so don’t forget to prep yourself before approaching them. Here’s what you should bear in mind:
ϭϭ Identify and understand the pain points of an investor – what are areas they aren’t comfortable with?
ϭϭ Research about their interests and current portfolio. What are the kind of events, activities and sectors that they are interested in?
ϭϭ Be humble. ϭϭ Maintain transparency.
Her Excellency Dr. Maryam Matar Chairman & Founder, UAE Genetic Diseases Association
Under the Patronage of Cabinet Minister and Minister of State for Tolerance UAE and President of UAE Genetic Disease Association.
Her Excellency Maryam Eid AlMheiri Chief Executive Officer, Abu Dhabi’s Media Zone Authority & twofour54 Her Excellency Amna Al-Nakhi Director General Government of Sharjah Her Excellency Khawla Al Serkal Director General Sharjah Ladies Club (SLC) Sheikha Dr. Alia Al Qassimi Social Expert at Community Development Authority & Specialist Obstetric & Gynaecology, Al Garhoud Private Hospital Nisreen Shocair President Virgin Megastore – Middle East Laila Hareb Assistant Director General GCAA Ambareen Musa Founder & CEO Souqalmal Nashwa Al Ruwaini CEO & Board Member Pyramedia Fatima Alkaabi Youngest Emirati Inventor
Dr. Tariq Ahmed Nizami Founder & CEO CEO Clubs Network Worldwide Mahmoud Al Burai CEO, DREI the Educational Arm of Dubai Land Department Hussein Al Sayed Anchor CNBC Arabia Salma AlBaloushi First Emirati Female Pilot Etihad Airways
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A lot has been written and said about blockchain as a technology and the raft of benefits it offers to businesses. But, what is still unclear is how can companies integrate it within current systems? How does one practically implement it? To answer these questions, we reached out to the renowned risk and implementation expert Silka Gonzalez, President at Enterprise Risk Management (ERM).
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EDITOR’S PICKS 01. Blockchain technology will be used to improve inefficient processes. Think of the processes that are used to buy and sell things, identify ownership or even ourselves. 02. The initial implementation and use of the blockchain represents the most vulnerable time since embedding vulnerabilities at inception have the greatest chance of success and going undetected in the future.
hat could be the single most transformative technology concept that could change everything we know about risk and internal controls. If you have not heard about the blockchain, you certainly have heard about bitcoin. Bitcoin, and other digital currencies like it, are built on the concept of the blockchain – also known as a distributed ledger. The capabilities and benefits of utilising a blockchain for other use cases holds significant promises for transforming how we do business.
• The trading partners do not trust each other
• The trading partners do not trust a central authority
The blockchain inherently manages these two conditions by being transparent, authenticating all transactions and recording them indefinitely. Creating alternative to the infrastructure needed for institutional trust; changing the way our society functions. What changes with the blockchain? The following table illustrates how financial statement assertions and control assertions are addressed inherently it how it works: How is it currently being used? Everledger, a diamond registry founded by Leanne Kemp, uses blockchain to track and protect the diamonds throughout their life. The genesis of a diamond isn’t always clear. Knowing the origin of a jewel can stop insurance frauds, sort out synthetic diamonds or those sourced in war zones. But even then, the documents can be forged. “Blockchain is immutable; it cannot be changed, so records are permanently stored,” says Kemp. “Information on the blockchain is cryptographically proven by a federated consensus, instead of being written by just one person.” Starting at mines they originated, each diamond is given an ID based on several dozen different features and then is put into the chain; becoming the record of the jewel’s ownership throughout its life. How will it impact business and society? Blockchain technology will be used to improve inefficient processes. Think of the processes that are used to buy and sell things, identify ownership or even ourselves. They are typically slow, error prone and dependent on people. However, the amount of uses a transparent, verifiable record of transaction data on a decentralised platform, which requires no central supervision while maintaining fraud resistant, is seemingly endless.
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Blockchain Value Proposition
If it’s on the chain, it tool place
Explicit agreement to use the chain for all transactions by trading partners
Transaction accuracy is reinforced by the trading partners and available for rewew.
The Transactions are recorded when they occur - real-time accounting.
Could be forced to be acknowledged on the chain.
If it’s not on the chain, it did not happen.
Rights & Obligations
Documented as part of the transaction and available for review.
The entire transaction is available for review
Value & Allocation
The Transactions is available for review & establishing its value is available to all trading partners.
Blockchain and implementations based on it heavily depend on the keys that they use to operate.
Giving blockchain the potential to make enormous changes to our economic and social climates that will revolutionise a wide range of industries including: Financial Services, Healthcare, Music, Manufacturing, Identity, Automotive and Government. What does the world look like from a Risk Management perspective? ϭϭ Audit – Historical accounting and auditing continues to be the best we have today to provide reasonable assurance to stakeholders on the accuracy and completeness of the financial statements. In a blockchain enabled world, audit can exist real-time. If the auditor is a participant in the blockchain, transactions can be audited
real time before being recorded. Realtime and transparent audit. In addition, the endless list of document requests can go away – everything the auditor needs is already there for their review. ϭϭ Regulatory Compliance – In highly regulated transactions, the regulator could be part of the blockchain reviewing and certifying each transaction for compliance. ϭϭ Cybersecurity – The use of tokens and cryptography reinforce the confidentiality and integrity of the transactions and the participants on the blockchain ϭϭ Business Continuity and Disaster Recovery – The distributed nature of the database means data is not
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The distributed nature of the database means data is not vulnerable to a single point of failure. Business can continue regardless of the loss of part of the blockchain.
vulnerable to a single point of failure. Business can continue regardless of the loss of part of the blockchain. Let’s slow down here – she security challenges With cryptography as its foundational block, the blockchain starts off on firm footing. However, blockchain poses some key security challenges – ϭϭ People: People are still the weakest link even with all the fancy crypto in place. People are the main actors performing the transactions. All the typical cybersecurity problems from authentication to data compromise directly apply. And a lot of what we do today happens on smartphones – an area that’s yet to see the full impact of what havoc poor cybersecurity can wreak. ϭϭ Targeted Attacks: If there’s something that the huge data breaches at bitcoin exchanges like Mt. Gox and Bitfinex are telling us, it is to take a step back and look at where this is heading. Blockchain-based bitcoins were simply stolen with direct attacks at the exchanges. Think about this at an individual level – individual wallets could be compromised with social engineering attacks and malwarebased attacks. The end-result is that the blockchain and its proponents will need to come up with a way to address fraudulent losses – much like how a bank would cover the losses a customer faces when hacked. ϭϭ Inherent Key Weaknesses: Blockchain and implementations based on it heavily depend on the keys that they
use to operate. Software-generated keys have been known to have flaws, including the generation of weak keys that could be compromised by a determined hacker. ϭϭ Privacy: The distributed ledger, as the name suggests, is distributed among several individuals and they will have the ability to view the transaction histories including those transactions where they weren’t even a part of the transaction. This inherently violated privacy and when you think of the “right to be forgotten” and how you’d go about implementing it with blockchain, you have a pretty difficult task at hand. For instance, how would you prove that all transactional data has been deleted (even if eventually) from all parties and counterparties? ϭϭ Legal: While technology has no boundaries, boundaries and nations do exist in the world we live in. The legalities and jurisdictional implications surrounding issues related to blockchain will be truly challenging. Throw in regulations and compliance and you have the perfect storm. So, there’s a blockchain project or proof of concept underway, what are the risks? With the promise of blockchain, there are several risks that should be considered and monitored as it is implemented and operated:
Pre-Implementation The initial implementation and use of the blockchain represents the most vulnerable time since embedding vulnerabilities at inception have the greatest chance of success and going undetected in the future. Here are some pre-implementation considerations: 1. Terms and conditions – What exactly is the legal arrangement for using and participating on the blockchain? 2. Hosting risks – Hosting the technology on shared infrastructure may increase the risk of unauthorised access to blockchain data. Insist on isolation and separation to protect against external attacks. 3. Encryption – Do not assume all data is encrypted. Evaluate that all data in encrypted form and that encryption keys are not stored with the data. 4. Administrative rights – Gain a detailed understanding of the precise
7. 8. 9.
administrative access that will be managed and monitored. Data governance – No ambiguity should exist in any of the data elements recorded on the chain. They should be documented and mutually agreed to by all participants. Forked chains – What happens if there’s a disagreement, how is this going to be addressed, how do you reduce the risk of multiple chains for the same transaction activity. APIs - Validate that all APIs writing or reading from the chain have no inherent security vulnerabilities. Personally identifiable information – How are you preventing and/or detecting PII from being stored on the blockchain? Get help – None of us are complete experts in any of these new technologies. Consider hiring outside experts regarding cryptography and other relative security experts to review your implementation.
Post Implementation So, the blockchain is in place, what do you do know? Here are some practical considerations: 1. Incident response – What is the plan and approach if participants are raising concerns regarding transactions or data leakage? What is your organisation prepared to do? Can you continue to transact if the whole blockchain was disrupted? 2. Governance – How are internal policies and procedures being adapted and maintained considering the use of the blockchain? 3. Information Security – Are you following the best security practices ranging from general security considerations to technical security considerations such as encryption.
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INGENIOUS INVENTION OF THE MONTH:
EMBER COFFEE MUG The concept: Keeping functionality aside, the design of the ceramic mug is visually appealing and has won it many accolades. The beautiful exterior has been designed to offer the best customer experience. The company has invested years of research and design iterations to find the perfect temperature for coffee i.e. 135 degrees Fahrenheit. But, the mug is flexible in letting you decide the temperature you like best within the range of 120-145 degrees Fahrenheit. In fact, Ember uses patented technology to make this happen.
Find out more at https://ember.com/.
The challenge it addresses: Well, the mug solves the hassle of your coffee being too hot or too cold. Moreover, it eliminates the hassle of worrying about your coffee being left on your desk while you are in meetings or answering calls at work. You can use a mobile application to control the temperature of the coffee remotely and get notified when its ready. In addition to all of this, the app lets you apply LED colours to your mug and save different preferences for different drinks.
Do you have an ingenious invention that youâ€™d like to share with us? Tweet to us @SMEAdvisorME using #IngeniousInvention!
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Products could include handmade rugs and carpets, creatively designed furniture, ceramics and pottery, camel leather products, textiles (Sadu) and jewellery. We want regional artisans, designers and artists to participate in the upcoming tender that will be launched on 5 December. To participate, sign up now at esource.expo2020dubai.ae
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