DOHA: Qatar Development Bank’s (QDB) direct equity investment fund for small enterprises, popularly known as ‘Istithmar’ (SME Equity), has evoked huge response, especially from the tech-based innovative young entrepreneurs, said a top official of the state-backed agency which is entrusted for the promotion of SMEs and entrepreneurship to create a vibrant private sector as part of the sustainable development goal.
The SME Equity programme, which was launched in September 2015 to fund innovative projects, is the first of its kind in Qatar.
It aims to support economic diversification by providing growth capital to Qatari entrepreneurs and deploying investments in innovative small enterprises and high-potential medium enterprises.
“A lot of companies and startups, especially the youth and budding entrepreneurs, want to launch a lot of app-based services. Such innovative ideas have great potential for growth but face a lot of difficulties in obtaining loans from banks and other lenders given the high risks involved in such projects. So at QDB are doing interesting things in this regard,” Khalid Abdulla Al Mana (pictured), Executive Director for Business Finance at QDB told The Peninsula.
Al Mana added: “Such projects need ‘angel investors’, but in Qatar we do not have that system. So QDB lunched ‘Istithmar’, which is like an ‘angel investor’.Under this programme, if QDB likes an idea, which sounds promising in terms of future growth potential, we provide all needful support, including financial support of up to QR1m to such projects.”
He said that the ‘Istithmar’ scheme is getting great response, especially from the youngsters with innovative ideas but lacking finical backing.
The landmark equity fund worth QR365m has been designed to provide valuable investment to innovative startups and SMEs.
The initiative is playing significant role in developing private sector business opportunities for Qatar.
The initiative, designed to encourage new and innovative projects, intends to contribute to the country’s economic diversification, generating value neutral returns that can be re-invested in subsequent funds to help and support the economy.
Al Mana noted that the fund of QR365m is split into two with a target allocation of 20 percent for innovative startups and 80 percent for SMEs, although exceptions will be reviewed on a case-by-case basis.
The life term of the equity fund is eight-10 years, five years for deployment and three-five years as holding period.
The investment criteria may differ depending on the size of the enterprise and other conditions, such as it has to be a Qatari-owned operational firm with Qatari involvement in management with the total number of employees less than 250 and annual turnover less than QR100m.
