Last week a group of some 50 investors, entrepreneurs, VCs and academics convened in the Kingdom of Bahrain. All were Kauffman Fellows, a network that spans 46 countries around the globe, representing well over 500 venture firms and organisations. Over a series of engaging panel discussions, key figures from Bahrain’s thriving FinTech ecosystem shared their insights on building a supportive ecosystem where entrepreneurs can thrive and innovation can flourish. Some of the highlights are shared below.
The Need for Balance
Bahrain was the first GCC nation to begin diversification efforts, and the Kingdom’s focus has been on creating a world-class ecosystem that aims to help startups take their first steps outside of their domestic markets and increase their international presence. Dr Simon Galpin, a Senior Advisor at the Bahrain Economic Development Board (EDB), took to the stage to discuss the need for balance in building a supportive ecosystem. Whether it’s getting the right balance in early stage funding amounts, the right balance between public and private sector support or the right balance between local and international entrepreneurs, every ecosystem will be different, but they all need balance.
Bold, Supportive and Pioneering Regulation
Furthermore, much of Bahrain’s success in building its ecosystem has been due to its ability to boldly and nimbly regulate where others simply cannot. Take FinTech. Recognising the seismic transformation experienced by financial services firms, and as part of its ongoing initiatives towards financial digital transformation, the Central Bank of Bahrain established a dedicated FinTech and Innovation Unit. The Unit, which is tasked with setting up a conducive FinTech ecosystem focused on a strong regulatory framework, is headed by Yasmeen Al Sharaf.
Ms Al Sharaf spoke about the success of Bahrain’s FinTech Regulatory Sandbox – the region’s first – which provides a virtual space for companies to test their technology-based innovative solutions, and gives local and international FinTechs the opportunity to expand and thrive in the Gulf. And the Sandbox has already seen its first successful graduates: open banking platform provider Tarabut Gateway, which is now working with the Kingdom’s banks to roll out nation-wide open banking services. It was followed by Rain, the region’s first Sharia-compliant cryptocurrency platform, which obtained a full operational license.
The Importance of Diversity
Ms Al Shakar and Ms Al Sharaf also lauded the strength of gender diversity in Bahrain’s ecosystem, noting that international stakeholders are often unaware of the prominent role played by women in Bahrain at senior levels across the board. Indeed, there was only one man on that panel, Khalid Dannish, the newly appointed CEO of Bahrain FinTech Bay (BFB), the region’s first and still largest FinTech hub. Mr Dannish revealed that some 80% of his staff were women.
It’s worth noting that the Middle East is a leader in startup diversity, with one in three startups founded by women. Within that, Bahrain leads the way. The 2019 Global Startup Ecosystem Report produced by Startup Genome named Bahrain one of the countries with the highest share of female founders in the world, with 18% of homegrown startups active in Bahrain today founded by women. Compare this to much more established hubs like London (15%) or Silicon Valley (16%). Initiatives like Women in FinTech help drive women into the industry and education at an early stage. In 2018, women accounted for 33.2% of managerial positions in the financial sector.
The power of the network
The most prominent and recurring theme of the event was “the power of the network” in how both Kauffman Fellows and Bahrain foster and support innovation. The Kauffman Fellows Network runs deep with strong bonds across the globe with more than 1,000 mentors and speakers who have supported the programme, transcending roles as founders, CEOs, government leaders, and more. Similarly in Bahrain, supportive soft infrastructure keeps people connected; provides training and advice; and offers immediate access to the people that matter, from cabinet ministers to the Kingdom’s skilled local workforce.
Indeed, the selection of speakers that night served to showcase a sample of the hyper-connected network of institutions they represent: The EDB, the CBB, Al Waha and BFB. All are working closely with each other and extending their reach around the globe, like BFB, which is selectively partnering with global companies and is part of the globally connected FinTech Consortium, with FinTech Bay’s around the world. Bringing together a diverse group of people, as Kauffman Fellows does and as Bahrain does, is key to catalyse Bahrain and the wider region’s burgeoning VC community. And to quote Ms Al Shakar’s speech: “if you know one Bahraini, you know three.”