What’s happening in the Bahrain startup scene in 2021?

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Bahrain startup scene

Bahrain houses various accelerators that have given birth to not only tens but hundreds of start-ups across the country. The fast-growing start-up scene in Bahrain has been supported by the country’s initiative to get people connected to the internet. 98% of Bahraini citizens already use the internet which is third in the world according to the World Economic Forum.

Bahraini accelerators have successfully catalyzed innovative yet competitive start-ups in diverse range sub-sectors but financial technology has a special place in the country. With a minimum capital of as little as $100, citizen entrepreneurs can establish a fintech start-up as the government reduced it from $50000 back in 2019. Economic Development Board(EDB) Bahrain argued that the country’s financial technology subsector would sustainably attract investors and determine the start-up scene.

The Government of Bahrain very welcomes investors, incubators, and accelerators entering and shaping its start-up business ecosystem. That’s why start-ups and business initiators have more diverse options of accelerating platforms to get support and funding on their business ideas. Some notable platforms include Flat6Labs Bahrain, Bahrain FinTech Bay, and the Economic Development Board(EDB) Bahrain. The Bahraini government ensures that these ecosystems are accessible for all involved entities.

EDB itself has considered Bahrain’s strategic position in the GCC as a promising opportunity for the growth of diverse start-ups. Bahrain was the top 15 Global Ecosystems for its affordable talent. The Bahraini start-up scene is highly scalable to GCC and MENA’s regional market. On the other hand, registered start-ups can enjoy limited wage increment support and 0% corporate and personal tax. In fact, Bahrain employs the most liberal tax regime in the GCC. This also explains why more accelerators come to Bahrain despite the competitive tech entrepreneur growth in the region.

Surviving Covid-19 Pandemic: Convertible Bonds, Solid Accelerator Programs, and Government Incentive

Like other countries in the Middle East region, Covid-19 has also hit Bahrain hard both in economic and social sectors. If you read this article, you might have spent some time to find updates about Bahrain’s start-up scene during the pandemic but couldn’t find any. Some sectors are indeed directly affected by the Covid-19 pandemic and it took several months until the Bahrain government issued the convertible bonds that turned out to be solutions for the country’s start-up scene.

 

It’s very interesting to recall the fact that Bahrain’s start-up supported the country’s self-isolation back in April 2020. A range of start-ups with vertical operations and ICT expertise gained more exposure following the stay-at-home obligation. The diverse range of start-ups provided solutions to the changing customers’ behaviors during the pandemic covering communication, education, healthcare, utilities, and entertainment. Some notable names like Skiplino, Alrawi, Akalati, Weyak, Hayatech, GetBaqala, and Springing were thriving throughout 2020 and they’d likely sustain the success in 2021. However, start-ups with horizontal or physical operations were indeed hit hard by the isolation.

Convertible bonds that were launched in November 2020 are the major breakthrough brought by the Kingdom To support its entrepreneurial ecosystem. Emerging start-ups in the kingdom can benefit from these convertible bonds for their fundraising. But how does it actually work in Bahrain’s start-up scene? Convertible bonds or also renowned as convertible notes are basically a debt instrument or simply a short-loan that allows start-ups or business initiators to raise capital without being obliged to early valuation. This way, start-ups can enjoy incentives in the form of discounts that help them raise more capital ahead. This would enhance the growth of small Medium-sized Enterprises (SMEs) and start-ups in the country.

Even though the government’s press release didn’t specifically mention the pandemic-urgency reasons, we know the issuance of those convertible notes was a necessary step to maintain the start-up ecosystem in Bahrain. The global pandemic has also become a catalyst of the government’s measured policies in controlling entrepreneurial development in the country. The convertible-bond approach has a successful record in the United States according to Paul Graham of Y-Combinator.

On the other hand, the convertible note holdings could mean very positive for start-up founders. Instead of the stockholders, founders would have more control of their rights and start-up companies as well. No more ideas vetoed or excessive controls from shareholders that forcefully change the start-up company’s direction. Start-ups wouldn’t have to give up their ideas, impacts, and competitiveness for stockholders’ narrow business visions.

Despite convertible bonds, the start-up scene in Bahrain also enjoys financial support from a government-issued COVID-19 stimulus package. The liquidity support fund is also doubled to $530 million that boosts the start-up scene and becomes the fuel for the Bahrain ecosystem during these hard times.

Bahrain’s start-up scene is still thriving also because of the fact that it still has solid accelerator programs supported by established accelerators and incubators. The renowned entities include EDB, BDB, UNIDO, MOICT, Tamkeen are still in charge of supporting the ecosystem in Bahrain. For example, EDB Bahrain still welcomes new start-up businesses in the country and is ready for start-up incubating and providing business scale-up support.

 

EDB Bahrain became a hub of diverse supporting entities, funding & venture capital, accelerators, and communities. Bahrain also has a still-active that’s led by StartUp Bahrain that consistently grows start-up culture among local business practitioners. Start-up events are still held including investment forums, panel discussions, accelerator programs, boot camps, and various webinars.

The start-up ecosystem in Bahrain has been shaped by competitiveness factors. Start-ups must have well-developed concepts, embrace high impacts on society, and strong selling points. Accelerator and Covid-19 play as multi-layered catalysts for the start-up scene in Bahrain. However, convertible bonds are a great approach from the government to support the establishment of vibrant start-ups in Bahrain. Together, these elements make the entrepreneurial ecosystem in Bahrain remain competitive.

Sectors Funded

Despite Covid-19 hurdles, the financial technology sub sector is still leading the start-up scene in Bahrain but more areas are currently covered. In fact, the convertible bonds and stimulus packages were launched by the kingdom to cover more areas. These include business-to-business services, financial & payment services, mobile apps, education, healthcare, real estate tech, electronics, and so forth. Government and accelerators in Bahrain are “teamed up” to empower domestic entrepreneurs.

Despite the competing business ideas, Bahrain’s start-ups and SMEs can benefit from convertible bonds and stimulus packages to raise capital whenever they’re eligible. Founders can repay the notes with equity without losing control of their companies. This approach also allows competitive ideas with huge impacts in the pandemic situation or for further goals to thrive in Bahrain. It’s a revolutionary way to support the startup scene and Bahrain is the first country in GCC to adopt such an approach.

Bahrain startup scene