Entrepreneur types will tell you that every problem is an opportunity in disguise. If that were true, Pakistan would be the “land of opportunity”. But are they wrong when they say it? Nearly all of Pakistan’s problems can be monetized into successful businesses that make someone money and solve someone’s problems. Yet there is a serious shortage of people who view things that way.

Quaid-e-Azam once wrote to the people of a Muslim village. The people in the village complained how the British Raj had not done enough to improve issues in their village. Jinnah’s response to them was to take ownership of their problems: “to identify their issues, make plans to resolve them, and act on their plans” and not wait for the British government to come help them. It sounds simplistic but really in many cases, it really is as simple as that. Jinnah understood the psyche of our nation well and we, as a whole, haven’t changed much since.

MO_quoteA lot of solutions — I would argue that all of them — begin by a determined individual taking ownership of an issue. Technical challenges, financial constraints, leadership, or even motivational impediments are really direct effects of strong willed people taking ownership of the problem. In my view, there is no shortage of people trying to take ownership. What is required is guidance and reinforcement to these people to stay the course.

I propose what we require are a series of incubation facilities that help develop the entrepreneurial spirit, and then to coach it into sustainable businesses. Incubation is the chosen medium for this around the world. Seoul, Korea has over five hundred incubators alone. Compare that to that three (that I know of) in Lahore. For Pakistan, the idea has simply not kicked in yet. Governments lack the funding and universities lack the infrastructure required to generate ground-breaking innovation and deploy technology in a financially sustainable way.

This article is the first in a two part series to explore the concept of incubators in Pakistan. The first part introduces incubators and deals with considerations needed to establish incubators in Pakistan. The second part details efforts of my partners and myself to develop a practical model for incubation in Pakistan.

About incubators

Incubators come in various forms with various objectives and degrees of success. Incubators based in property firms try to add value to their offering, non-profits trying to encourage entrepreneurship create jobs and affect social change, universities trying to encourage industry collaboration and monetize research, investor driven incubators look for high returns from the next big idea, and corporations try to expand into new markets or looking to encourage entrepreneurial talent within their enterprise.

Incubators provide:

  • Premises that are accessible on easy terms for a limited amount of time:
    • Other physical facilities including conference rooms, restaurants, catering, security, furniture rental, office equipment rental, telephone, library and reference material, vehicle rental, cleaning and maintenance, child care, and overnight accommodation.
  • General business services:
    • Audio visual equipment, Shipping and receiving, mail services, fax, photocopy, printing, reception and messaging, word processing and clerical and administrative services, access to laboratory and computer equipment.
  • Professional services:
    • Legal matters, intellectual property, accounting, book keeping, recruitment and staff selection, education and training services, IT and internet services
    • Liaising with schools and colleges for training of their people and MBAs
  • Management and business strategy service:
    • Technology assessment (R&D strategies, competitive positioning, patents and IP protection, technology partnering)
    • Business plan development (CSF, Revenue models, Wealth generation strategies, exit strategies)
    • Marketing plan (Launches, Alliances and Partnerships, Sales and distribution strategies, PR campaigns)
    • Corporate Finance (Capital raising, Mergers and Acquisitions, IPOs). Government and grant loans, equity finance arrangements, debt financing arrangements, business tax, risk management and insurance.
  • Networking opportunities: These include interaction with academics, other entrepreneurs, financiers and service professionals
  • Guidance according to the phase of development the company is in (creativity, direction, delegation, coordination, and collaboration)

Incubators in a Pakistani context

For Pakistan, the concept of incubation needs customization before incubators become viable, sustainable units. Incubators in Pakistan need to go beyond acting as investors or financiers assisting in ideas that someone else brings in. Entrepreneurship is generally missing in our society so incubators need to make the job of starting a business easier by having pre-fabricated business templates. These can include strategically appropriate areas to begin, points to investment and supporting in hiring and delivery. This is particularly true in the early stages of the business and more so for first time entrepreneurs.MO_BlockQuote2

Unlike western countries, capital in Pakistan is largely private equity. For religious reasons, a significant percentage of the population will not go to banks. This makes networking in the right circles all the more important. If the investment is to be generated within Pakistan, investment also includes a long period of investor education in the technology’s potential. This extremely intensive relationship building can overwhelm entrepreneurs, if left unassisted. Incubators should also focus on business templates that are not capital intensive in the first place.

Incubators need to start businesses with proven models and a proven customer base rather than one where the customer adoption is likely to take years. The appetite for risk is fairly low and ideas like disruptive innovation die in R&D before the investor’s patience runs out. Many new start-ups fail, not because their ideas didnt make sense, but because they run out cash before the target markets accept their ideas. Most product ideas fall under this category where the ideas make sense on paper, and even at times have successful implementations in other parts of world, however these just don’t have an accepted customer base in their target markets yet. Attempts to implement eBay equivalents are just a few such examples.

Training is an essential part of any organization’s portfolio. With a high turnover of talented people from the country and constantly changing developments in the technology sector, preparing and delivering training is a constant exercise. The key focus training areas for incubators should however be business basics (from the perspective of a technologist). For any one startup this task can be overwhelming, which is why the incubator needs to operate this as a shared function. Within business training, development and support on the sales and marketing side is probably the key missing element. This can take the form of, for example, buying-houses in the textile industry. These buying-houses serve as unified sales units for textile delivery (stitching units). These allow new businesses to focus on smaller functions, expanding overtime across function.

A strong networking component is required. Pakistan remains a country where normative influences are strongest. The incubator needs to provide a forum for entrepreneurs to connect to each other, investors, educators and resources. These can provide essential reinfocement, guidance and vision required to operate successful business models.

Finally, successful models need to focus addressing social psychological gaps with entrepreneurial archetypes. In particular, there is a need to raise levels of self-efficacy and ownership and correct how risk is perceived. This is probably the least understood and most neglected portion of any organization’s implementation strategy. Managing people, their motivations and their emotional is probably the most impotant thing an entreprenuer/manager has to contend with after financing and sales.

In the next part, I will discuss our efforts at establishing our incubator in Lahore, with the hope that it sparks discussion and the opportunity to talk to like-minded people who can give us insight on the initiative.

100_0136Muhammad Omer is a simple guy with a new found fascination of entrepreneurship and the process of building entrepreneurs.  A graduate from the Ghulam Ishaq Khan Institute and Linkoping Tekniska holgen in Sweden, he’s probably suffering from a mid-life crisis since he recently left a decent career in a Pakistani Software house to start a technology incubation center. His areas of interest include cultivation of social entrepreneurship, creativity, and self esteem in the people of Pakistan.

No Responses to “Establishing Technology Incubators in Pakistan: Part 1/2”

  1. Usman Javed says:

    Most problems in Pakistan exist in the rural areas of the country. While I applaud your efforts at seeding entrepreneurship in the country, I wonder whether an directed effort should be made to leave the cocoon of cities like Lahore, Islamabad, and Karachi. I expect, at least initially, social entrepreneurship, where folks have a ‘double bottom line’ may be needed to demonstrate that ‘monetizable’ opportunity exists here.

    Rather than fund NGOs, creating a financial incentive for local social entrepreneurs may be the best way to go. Aid agencies and governments should really focus on these.

    • Omer says:

      I agree completely. I actually covered some of this in the second part of the article. Setting up in smaller cities is definitely in our plans. We have scouted a few places (e.g. in Gilgit). The idea is to stabilize and base in Lahore and then expand into those areas. For the moment we are still struggling to stabilize the sales side. Once that is steady, we want to send out trainers to these places and setup delivery. Then onwards upstream to do sales there and then make them independent. We want to make sure we dont try to run before we know how to walk.

  2. Majid Farid says:

    We launched and IT incubator back in 2000. At that time Pakistani IT markets wasn’t ready for it and then the IT recession hit.

    Here is the link to few slides

    http://www.altafkhan.com/ppt/incubating-global-ebiz-in-pakistan.ppt

    • Muhammad Omer says:

      Nice. This sort of fits into what I meant when I said incubators need to shy away from acting only like venture capitalists. I’d love to hear details on what you tried though. momer_at_alliedc.com

  3. Asad Awan says:

    Omer, Thanks for the great article.

    Pakistan (and other developing countries) are in a great position to lead innovation given the lower cost of technology development and first hand understanding of the issues faced by most of the world population, which lives in developing countries. Dire necessity, given the right environment (e.g., incubation), could serve as the best stimulation for innovation that we require to make a change and improve peoples lives.

  4. Zeeshan-ul-hassan Usmani says:

    Thanks Omer for writing this article. Would you please share your contact email address?

    I have one question, Do you believe that Incubation Centers can be established in a university in Pakistan? Where university provides the basic facilities and environment for new companies and companies can move-out once they start making some good money etc

    And how you see the role of Software Technology Parks (like the one in Lahore) for closing this gap of incubators?

    Regards

    • Muhammad Omer says:

      my address is momer_at_alliedc.com (not sure if there is a better way of sharing it).
      My critique on university incubators is that even in an ideal world, these incubators tend to be overwhelmed by academics that run it. Globally, they tend to focus on monitization of new research but in Pakistan, universities arent really discovering very much either. Most professors teaching entreprenuership have never started a company, so in a Pakistani context its maybe not that great an idea. That said, people like Umer Saif are doing a great job (though he’s recently moved his incubator out of LUMS). The second issue I see with university hosted incubation models is ofc that you need a university. These arent necessarily available everywhere. One of our focus areas is to develop self-funded models that a few educated people can adopt without having to convince a vice chancellor.

      STP sounds promising. I think the government should do more of this, but the government is always overwhelmed in Pakistan and it doesnt sound like something scalable. The one in Lahore hasnt started operation yet but last i checked with a friend in PITB, the rates were prohibitive for startups.

  5. Mujahid Ali says:

    We are also working on univerity industry portal by Lahore Chamber of commerce and industry.We are also working on mechanism on transfer of technologies by Universities.We have the same purpose .Let us work together.
    For more information kindly visit on http://www.uip.lcci.org.pk

    or contact at mujahid@irp.edu.pk +92321 369 2874

    University industry portal provides platform to share your innovative research technologies

  6. [...] Editors: This is the second part of “Establishing Technology Incubators in Pakistan.” The first part can be read here. [...]

  7. Wajhi says:

    Thanks for writing such a great article.

    I really hope and wish your initiative would start revolution of Entrepreneurship production

  8. Ishaq says:

    The most successful incubator I know of is the one Dr. Umar Saif established. Example for all of us to emulate .. http://www.saifcenter.com

  9. Umair says:

    thanks for the article. I m thinking of opening one myself

  10. Jamil Ahmed says:

    Muhammed, you are on the right track. You will meet more detractors than encouragers, I would classify myself as the latter. But, if you are not prepared to give up, then you cannot fail in your mission. I am based in Leeds, UK and believe me, even with all the resources, there is a lot to do here for different communities including the Pakistani community. Keep up the good work.

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