Investment needed if region is to progress

Entrepreneurs in the Middle East need the right environment to nurture their success.

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By  Peter Branton Published  April 12, 2007

The fact that Intel's venture capital arm almost literally cannot give money away to invest in tech firms here in the Middle East may not be that surprising - but it is still alarming.

Two venture capital funds set up in 2005 by the chip giant - which counts itself as the world's largest high-tech venture capital firm - have made slow headway, despite having as much as US $150 million to invest. Intel chairman Craig Barrett said this week that so far less than 10% of the capital has actually been invested.

The problem, according to Barrett, is not a shortage of ideas - he claims the region has plenty of eager engineers with bright ideas - but a lack of the entrepreneurial structure and culture to nurture them. "It's hard for me to visit any country and talk to bright young engineers and for them not to have some ideas and some degree of entrepreneurial spirit," he told IT Weekly this week. "What you have to have is the environment that really makes them successful."

Barrett is hardly the first high-profile overseas executive to make such a claim. Google CEO Eric Schmidt cited the "sub-par entrepreneurial spirit" in the region before hosting last year's Arab Strategy Forum.

Right now, it is almost a catch-22 scenario: there is not a strong research and development (R&D) community in the region because of a lack of investment; in turn because there is not that strong community, investors are reluctant to commit to R&D projects. Governments and organisations in the region have so far done comparatively little to drive investment in R&D or to help create a culture that will support R&D.

If the region wants to continue to develop sectors such as oil exploration and finance - sectors that rely heavily on technology - that could prove a problem in future.

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