Jan 12 - 18, 2003



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, USA.

PAGE: 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.

PAGE: How may companies/entrepreneurs have joined you as partners?

SHOAIB: TMT 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.

PAGE: Is there a dearth of entrepreneurship or lack of venture capital in the country?

SHOAIB: There 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 successful.

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 lines.



PAGE: Why this facility has been confined to telecommunication, media and technology?

SHOAIB: The 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 potential.

PAGE: How do you support your partners in day to day management?

SHOAIB: TMT Ventures provides the following services to its portfolio companies: 1) Marketing network, 2) Business strategy consultation, 3) Help in hiring key management employees, 4) 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.

PAGE: Though may be brief, what has been the experience so far?

SHOAIB: Quite 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.