RIYADH: The concept of blended financing, where public, private, and corporate funding is provided to startups, is crucial to fostering sustainable entrepreneurship globally, according to an official.
During COP16 in Riyadh on Dec. 11, the Digitalization and Entrepreneurship Adviser to Egypt’s Ministry of International Cooperation, Tamer Taha, emphasized that startups should focus on attracting investors who are aware of climate change impacts and the necessity to embrace sustainable practices.
Blended finance integrates philanthropy, government funding, corporates, and private sector investors with different risk and return expectations under one umbrella, which is where they will invest for a particular project.
Amid the global call to ensure a green future, equity funding to startups focused on cleantech and sustainability has fallen this year.
According to data obtained by Crunchbase, startups in sustainability, EV, and cleantech categories obtained funding worth $9.6 billion in the first half of this year, representing a decline of 10 percent compared to the same period in 2023.
Speaking at the event in Riyadh, Taha said: “Sustainable entrepreneurship is a business that balances profitability and impact. It will have a long-term vision that is aligned with the sustainable development goals of national and UN SDGs.”
He added: “The MENA region only receives 1.5 percent of climate VC (venture capital) funding, although it is one of the regions that is most affected by climate change. Encouraging corporates to invest in startups, along with matchmaking some investments from governments and public funds could help growth-stage startups.”
During the panel discussion, he further highlighted that sustainable entrepreneurship also requires policy coordination, networking, and capacity building.
Taha added that government regulations, which include giving incentives and subsidies to startups adhering to sustainability initiatives, are also necessary to foster sustainable entrepreneurship.
He further remarked that lack of technological skills is one of the main challenges startups are facing as they pursue their sustainability journeys.
According to Taha, forming the right tech-savvy team and maintaining proper business development skills is crucial to resolving such challenges.
“We have to give more room for technology and innovation. Startups should provide real impactful solutions to really transform all the big pledges that are discussed in these types of conferences. It has to be done through a multi-stakeholder approach,” said Taha.
During the same session, Hamza Rkha Chaham, co-founder of agricultural services firm SOWIT also echoed similar views and said that investors should be aware of the importance of socio-economic impacts of their investments and give preference to sustainability.
“Sustainable entrepreneurship is an entrepreneurial initiative that has sustainability at its core, at its DNA,” said Chaham.
He added: “An entrepreneur should be clear about what you are achieving. Profitability is behind the ability to feed the people. You need to find an investor who has the right temporality in terms of long-term investments, where the environment is being prioritized.”
Chaham added that adequate government support is pivotal for startups to achieve their sustainability goals.
The SOWIT co-founder further said that startups, compared to large corporates can embrace sustainability practices more effectively, as they can “quickly deploy teams” and implement actions effectively.
“In the face of climate change and the current geopolitical situations, if we do not have bolder moves, we will simply not be able to combat the challenges that are evolving,” added Chaham.
In a separate panel discussion, Mohammed Al-Ariefy, Saudi Arabia’s deputy minister for entrepreneurship at the Ministry of Communication and Information Technology, said that the Kingdom prefers promoting technology aligned with the goals outlined in Vision 2030.
He added that having a sustainability impact will really “add value to the potential success of startup technology companies.”
“The way we focus is starting from policy and regulations, identifying gaps between policy and regulations. Another thing is capacity building. Access to talent is a key challenge for most of the companies in the technology field, including water and food security,” said Al-Ariefy.
He added: “Our focus is also on access to finance, to different incentive programs and subsidies. We have the National Technology Development Program, which has served a lot of companies in the food and water security sector.”
The deputy minister added that the ministry is providing assistance to companies in the technology sector to cross barriers and access more markets.
