“Mentors, by far, are the most important aspects of businesses,” according to American entrepreneur and Shark Tank host, Daymond John. The authors of this blog could not agree more. Mentors play a key role in connecting entrepreneurs to both financial and non-financial resources.
A new report, produced by Wamda Research Lab, with support from Endeavor Insight, highlights the role that mentorship plays in building entrepreneurial ecosystems in the Middle East and North Africa. Wamda Research Lab surveyed 494 entrepreneurs based in Egypt, Jordan, the United Arab Emirates, and Lebanon in order to understand how the ecosystem evolved as well as to map the major challenges companies face in the region.
Over the past five years, 60 percent of the entrepreneurial institutions created in the MENA region were in Egypt, Jordan, Lebanon, and the United Arab Emirates. The majority of the new institutions in the entrepreneurial ecosystems were new capital funds, incubators, and acceleration facilities, as opposed to new corporate programs, media initiatives, or educational programs. On the other hand, many local businesses are still not looking to scale, even though these new additions are evidence of increasing entrepreneurial activity and support in the region.
Limited supply of capital and lack of non-financial support from investors were the two most common challenges to further growth that entrepreneurs cited. Both of these problems would be solved through providing entrepreneurs with more access to experienced mentors.
There is also a large mentorship gap in all four countries. While having a mentor can help entrepreneurs access both financial and non-financial resources such as talent and wisdom, it appears that mentoring is not common enough in the region. The infographic below provides a snapshot of how mentorship impacts the entrepreneurs’ access to capital.
Across all four countries, access to a mentor affected entrepreneurs’ access to credit. Overall, entrepreneurs with mentors are more likely to fund their companies through means other than personal or familial funding.
Four of the major problems cited by entrepreneurs in the report could be solved through stronger mentorship relationships:
- Finding partners to help navigate regional markets: Due to the small population of many MENA countries, scaling a company often requires expanding outside of the founder’s home country. Guidance from an experienced mentor can help negotiate the disjointed legal, linguistic, and cultural features of the region.
- Building a dialogue with investors: Since 2009, investment in entrepreneurs has increased rapidly. Despite the increasing amount of funding towards entrepreneurs in the region, more communication between investors and entrepreneurs is necessary for a healthy funding environment to develop. Access to mentors who understand what financial and non-financial services different investors can offer can help entrepreneurs make educated decisions on how to fund their companies.
- Acquiring talent: While finding qualified employees is a challenge globally, entrepreneurs in these four countries found the process particularly difficult because there is little interest in working for startup companies within the region. Since 2008, over 80% of the entrepreneurial institutions were created by local MENA stakeholders. Through mentorship, the increasingly developed entrepreneurial ecosystem in the MENA region could help connect experienced talent with fast growing regional firms.
- A lack of marketing and sales skills: Even the best products can fail without proper marketing. Many of the entrepreneurs surveyed reported that they struggled with a lack of experience in marketing and sales. Mentors that understand how to market and sell a product both locally and globally can help entrepreneurs over the first business hurdle getting their product out to consumers.
To read the complete report created by the Wamda Research Lab, please click here.
Contributed by Emily Luepker.