SHOAIB UMAR is
Chief Executive of TMT Venture Capital. He returned from Hong Kong in
February 2002 to join the company. He brings with him global outlook and
exposure gained as Regional Internet/e-commerce analyst for CLSA
Emerging Markets based in Hong Kong. He has eight years of regional
research experience in telecommunication, utilities and Internet sectors
working for top tiered brokerage firms. Before his transfer to Hong
Kong, Umar was heading CLSA Pakistan research. Umar is an MBA from
Institute of Business Administration (IBA), Karachi. He obtained the CFA
charter in 1999 from Association for Investment Management and Research,
TMT Ventures is a novel concept. What are its salient features?
SHOAIB UMAR: TMT
Ventures is a venture capital firm, which specializes in incubating
companies. It manages Telecom Media and Technology start-ups and turns
them into successful companies. Although, venture capital (VC) is a
well-known phenomenon around the world it is a novel concept in
Pakistan. Even in India annual VC investment is approaching a billion
dollars. Our company is a joint venture between two well-reputed
financial institutions — AKD Securities and Pakistan Kuwait Investment
Company. TMT Ventures not only provides physical housing to its
portfolio companies but also manages their accounts, finance, audit and
administrative issues in a centralized manner.
How may companies/entrepreneurs have joined you as partners?
Ventures is currently managing six companies on behalf of TMT-PKIC
Incubation Fund. Four of these are technology companies while two are in
media business. 2B Technologies, yEvolve, ApplicationXS, Post Amazers,
AniLogix and RFM Loyalty are the six companies we have invested in.
Is there a dearth of entrepreneurship or lack of venture capital in the
is certainly lack of availability of institutional risk capital in the
country. Typically an entrepreneur with an idea would go to his family,
friends or a Seth for money. There is hardly any discipline in this
process. Even if he gets the required money there is no further help in
terms of dealing with the initial start-up problems, product or service
issues, marketing hurdles, growth and eventually sale of the business.
The benefit of having a venture capital industry is that the process of
obtaining money is more disciplined. Professionals at the VC company
perform extensive due diligence during which they analyze the worth of
the idea and management capability to deliver, and after funding engage
with the entrepreneur extensively to hand-hold and to make sure he is
It is difficult to say if there is a dearth of
entrepreneurship in the country, but it seems so in non-traditional or
knowledge businesses. Engineers, scientists, others who understand the
technology and discover an unfulfilled market are the ones who have to
decide to go for a start-up. These are the people that need a VC, and
vice versa. Recently I have seen some signs of activity among this class
of professionals in Pakistan. People have started to think along these
Why this facility has been confined to telecommunication, media and
first reason being that VC is more appropriate for high value-added and
high technology areas. Secondly, our expertise lies in these three
sectors more than other sectors. But most important, these are perhaps
the most promising growth sectors in Pakistan. Current low base
(under-penetration), deregulation drive, trend towards automation,
improving purchasing power and increasing awareness about new
information, communication and entertainment tools are the reasons that
convince us of Pakistan's tremendous Telecommunication Media Technology
How do you support your partners in day to day management?
Ventures provides the following services to its portfolio companies: 1)
Marketing network, 2)
Business strategy consultation, 3)
Help in hiring key management
Provision of infrastructure at Cyberport, 5)
Centralized administrative, accounts, tax and legal support, 6)
Corporate governance and 7)
Equity ownership for core team. We realize that without the absolute and
total commitment of management teams, our portfolio companies have
little chance of success.
may be brief, what has been the experience so far?
positive. I wish more people would come into this field. Some of our
companies have done remarkably well within three years of operations.
Post Amazers, the animation company, has signed up with a top 15
Hollywood animation companies to jointly work on projects.
2BTechnologies is a market leader for call centre products with an
impressive blue chip client base. ApplicationXS is the only company in
Pakistan that has developed and deployed the first online trading
solution. RFM Loyalty is the pioneer in smart card services in Pakistan.
All these success stories have been created in the last three years for
a relatively small amount of investment. Our six companies employ over
170 people in total, and these are mostly high-end jobs. Personally, it
is a very satisfying experience for me and I expect 2004 to be an even
more exciting year.