Arab Entrepreneur Issues: Investment, Restrictive Policies and Protecting Intellectual Capital

Article ImageForging a career outside traditional expectations, Hind Hobeika is part of an emerging group of young Arab entrepreneurs, and she has found early success. Her start-up company’s product, the Instabeat, a swimming goggle that monitors performance, was tested by 15 Olympic swimmers from the U.S. and New Zealand during the summer Olympic games in London, and was named the winner of last year’s MIT Enterprise Forum Arab Business Plan Competition.

But as the company develops the product for the commercial market, Hobeika has learned there are numerous challenges to ensure it remains protected from unscrupulous competitors.

First, the company needs to trademark its name. Secondly, Hobeika’s six-person team has filed for a U.S. patent. Currently, Instabeat’s competitive advantage is that it is hard to copy its design and operation: Weighing only 20 grams and able to run for five hours on battery power, it can monitor a swimmer’s heart rate and time underwater, and provide visual feedback.

Hobeika expresses concern that although it only took four months and US$5,000 to file and register her company, Butterfleye, as a business, she “must still wait for a few years to finalize a patent.” Hobeika believes that once the device is patented, Butterfleye will attract more funding to expand development of complementary products. Her hope is to expand product development into other sports, like running and cycling.

Protecting intellectual property is just one of the pressing issues facing Arab entrepreneurs, particularly those within the Science, Technology, Engineering, and Mathematics fields — referred to as STEM — that are capital intensive and require generous upfront investment.

Concerns about intellectual property are one reason why Arab tech entrepreneurs often temporarily relocate to Europe or America to obtain patents, said Anthony Rabih Kory, founder of Printing in Motion (PIMtech) at the annual Wharton MENA business conference. Kory said he “had to leave Lebanon and come to the U.S.,” and that “no one dared to copy [PIM technology] in Lebanon.”

Just making business-to-business connections, the starting point for most startups, is a challenge in the Middle East and North Africa (MENA) region, which is large, yet constitutes small and separate economies.

Hobeika’s startup faces challenges if it cannot move outside her native market, noted Tarek Sadi, director of the Lebanese office of Endeavor, a global nonprofit offering advice to SMEs. “Lebanon is a small market and an entrepreneur looking to scale up cannot depend on it,” Sadi said. Hobeika’s marketing objective has already acknowledged this point, as Butterfleye aims not at individual consumers, but the institutions that support competitive swimmers.

The conference also heard a debate about whether regional entrepreneurs should be involved in determining trade policy. That was the opinion of U.S. Deputy Assistant Secretary of State, Nazanin Ash, who added the U.S. State Department’s Middle East Partnership Initiative‘s goals include support for entrepreneurship in the Arab world by promoting U.S.-Arab trade to expand business relations and growth.

Originally Published March 19, 2013 in Arabic Knowledge@Wharton

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