The incubation industry in Oman is in its infancy. It’s a growing industry with currently three incubators, all of which are government-owned. The first incubator was set up in Knowledge Oasis Oman in 2003. More incubation projects are expected to come up. The question is, is it time for more incubators or is there a need for more investors?
Incubators can be sector-oriented and the business models can vary. The government-owned incubators, the National Business Centre at KOM, Public Establishment for Industrial Estates (PEIE) and the incubator based in Riyada help mixed businesses, whereas the SAS Entrepreneurship Centre, which comes under the Information Technology Authority, looks at Information and Communications Technology (ICT).
The first initiative from PEIE in 2003 saw 15 companies graduating and some of the companies are successful and are still around. At the same time, there have been lessons learnt as well, said Malak al Shaibani, the Director-General of National Business Centre. Since then, there have been many more achievements.
When asked if there is a common misunderstanding of incubators being considered as cheap real estate she said, “It is not cheap real estate, the whole idea of incubation is the service it provides to reduce the failure rate. It is a package of services that includes business planning, marketing, understanding the industry, training, teaching, mentoring, and networking. Some incubators, not necessarily in Oman, can also include funding. The idea is to support the startups or people who have great ideas.”
According to the Director General, the critical time is when the business is being set up because that is the time where the chance for failure is high. Worldwide failure rate of any new business is 90 per cent in the first year.
“Out of the 10 per cent that survive in the next three years, at least 50 per cent will fail. That is why facilities like this help in reducing the failure rate and giving the startups a better chance for survival. We follow up even after the companies graduate to see how they are performing.”
Incubator is only one part of the ecosystem, it is not whole ecosystem, Al Shaibani pointed out. “Other processes come into play such as the funding and the economy, for example. The startups need to develop networks. We, at NBC, do host CEOs with our power breakfasts where they get to hear inspiring stories from other startups.”
Threshold of success
In about three years or when the startups reach a level of employees or reach a level of revenue, the companies in the incubators are ready to graduate and after that they become an alumni and they need a different set of services.
“We market our companies. Some of our companies that have graduated today have contracts with the leading industries in the country. A couple of years ago, nobody knew them. The networking is important so as a programme you have to be credible that when people are looking at your SMEs, they realise they are well-trained, know their product and most importantly can deliver the services. We have an electronic catalogue we send to companies. The companies have given the SMEs business and given us their feedback,” explained Al Shaibani.
The milestone programme of NBC looks into the various levels an SME can reach during each period. One of the incubators at NBC that specialises in occupational health has just won a huge contract with an oil company for providing occupational health services. A year and a half ago, it was just a professional medical doctor who walked in seeing a need in the field of occupational health.
Businesses are started at home many a times in Oman and if one is successful, it is time to scale up, says Al Shaibani. “Initially, it is good to test your product but eventually if you are ambitious and see yourself going beyond a home business, then you need to begin thinking of something more structured. You need to look at your mentors and networking opportunities. One of the things about starting business from home is that you may not have networking facilities. A lot of entrepreneurs meet others through facilities such as incubators, training and events. When you are working from home, your target audience is limited. People are always supportive and eager to give you a referral once they know your service.”
One of the challenges incubator facilities are facing is funding issues. “The incubators are fully funded by the government. We have to be resourceful. There is a reduction in spending.” The ecosystem is still growing, said the Director-General, adding, “The more people are aware of entrepreneurship, more innovative ideas will come through. The more we work with the ecosystems such as the universities, we have better intake into our programme. At the moment because we are just starting up, we want to encourage two things — one is innovation and the other is self-employment. We do not just take high-tech business ideas, we also take businesses that are there in the market but are doing it differently. We have two interior decorators who graduated from us and are doing great.