Financing challenges and sources for startups and SMEs in Qatar

Entrepreneurial Finance in Qatar:
New and Traditional Types and Sources of Financing for Start-up and SME Businesses

Research Plan
Introduction
Start-up companies are freshly established firms or entrepreneurial ventures that are in the stage of development as well as market research. More often than not, but not necessarily, these companies are linked to high-tech projects for the reason that their products are largely software, which can be effortlessly created and mimicked. Furthermore, technology-focused projects naturally have the highest potential for growth (Klacmer Calopa, Horvat, and Lalic, 2014). According to Aspelund, Berg-Utby and Skjevdal (2015), the development of newfangled, technology-based firms instigates a wide range of positive effects in economic development. Nonetheless, research points toward the limited likelihood of survival for new organizations as a whole and for technology-oriented firms in particular. Qatar is one of the nations presently experiencing a significant increase in SMEs and startups.
Lending through banks is considered to be the most common source of external finance for numerous small and medium entities (SMEs) and entrepreneurs, which are more often than not significantly dependent on straight debt to satisfy their start-up, cash flow and investment necessities. Despite the fact that it is normally employed by small businesses, nonetheless, traditional source of finance from the bank poses quite a number of challenges to SMEs and might be deemed unsuitable at particular phases in the life cycle of the firm. Specifically, debt financing seems to be unsuited for newfangled, innovating and rapidly growing companies, which bear a profile of higher risk return (Cusmano, 2015). Taking this into consideration, there ends up being a gap in financing, which more often than not becomes a growth capital gap. Significant amounts of funds may be necessitated to fund projects with high growth opportunities, whereas the correlated profit patterns are usually hard to project. These financing restraints can be particularly severe in the instance of start-ups or entrepreneurial small businesses that are dependent on intangibles in their business model, owing to the reason that they are largely firm-specific and challenging to utilize as indemnity or security in traditional debt associations (Cusmano, 2015).
A research study conducted by Robb and Robinson (2014) sought to examine the capital structure decisions of new firms and established that such firms largely depend on external debt sources. Numerous startups obtain debt that is financed through the personal balance sheets of the entrepreneur, efficaciously giving rise to the entrepreneur levered equity claims within the startups. This actuality is forceful to several controls, encompassing credit control. The dependence on external debt buttresses the significance of credit markets for the success and achievement of nascent business activity. Robb and Robinson (2014) asset that the conception that startups are usually dependent on the beneficence of an unfastened coalition of family and friends appear misleading. However, it is imperative to note that informal investors are significant for the small number of firms that depend on external equity at their start-up. Approximately 80 percent to 90 percent of most firms’ startup capital is comprised of equivalent parts of owner equity and bank debt.

Objectives/Significance
This project examine entrepreneurial finance in Qatar and specifically lays emphasis on new and traditional kinds and sources of financing for star-up and SME businesses. This project is of great significance owing to the reason that financial constraints play a pivotal role as obstacles to startup projects. According to Robb and Robinson (2014), it is noted that there is a greater likelihood that the wealthy become entrepreneurs, which has given rise to a major conclusion that financing constraints are significant impediments to business startup activity. The role of the entrepreneurial firms and startups as an engine and drive for economic growth has generated significant attention in recent decades. Specifically, start-ups and SME businesses are deemed to contribute inexplicably to innovation, the creation of jobs, as well as wealth in a larger economy. Bearing this in mind, cultivating the development and success of start-ups and SME businesses has become a key objective in the nation. Therefore, this project is pivotal to ascertaining the financial constraints faced by start-ups and SME businesses situated in Qatar owing to funding gaps and determining the most ideal sourcing of funding between traditional and new types of sources. This is imperative owing to the reason that SMEs and startups play a substantial role in the growth of the economy.

Methodology
This project purposes to examine new and traditional types and sources of financing and how they impact star-ups and SME businesses. Generally, research may be undertaken either through the interpretivist paradigm or the positivist paradigm (Bryman, 2008). This research study will employ the positivist philosophy. The inclination to this approach is owing to the reason that it would be simple to gain access to information from participants and because they would provide understanding into the understanding and experience of funding and how it impacts every phase in the life cycle of the firm. The research design that will be employed for this particular design is the quantitative design. This research design was considered to be appropriate as it is purposed to assess correlation amongst variables. In accordance to Saunders et al. (2015), quantitative research can be defined as a formal, objective, methodical practice in which the researchers can employ numerical data to obtain data as well as facts regarding a particular phenomenon being investigated. Taking this into consideration, questionnaires were considered to be the most ideal research instruments for this study. In delineation, a questionnaire takes into account a research instrument that gathers information in a substantial sample and is unbiased in the translation of research objectives into distinguishing questions, and solutions for every question. The advantage of utilizing a questionnaire in comparison to other research instruments is that the data can be collected from major samples devoid of any opportunity of prejudice owing to the fact that the respondent fills such a questionnaire in private and devoid of any intrusion (Creswell, 2014). Questionnaires provide the researcher with in-depth data on a wide range of factors. Questionnaires permit greater consistency in the manner questions are asked, guaranteeing greater compatibility in the responses.
The research sample included in the study will be drawn from individuals working in start-ups and SMEs or who are entrepreneurs in Qatar. In total, 50 individuals will be randomly selected to participate in the research study. The analysis of the data gathered will be performed using Statistical Package for the Social Sciences (SPSS) version 20. Lastly, bearing in mind that this study will involve the participation of human beings, it is imperative to observe ethical considerations. Studies that consist of human participation demand the observance to ethical considerations. Preceding any inclusion in the research study, the participants will be requested to provide both verbal and written consent. Preceding being included in the research study, both verbal and written consent was obtained from each participant. In addition, to make certain that participants in this study were not placed at risk and that the research in its entirety had respect for susceptible populaces, a letter of introduction was dispensed to the individuals who participated in the study. In addition, the participants will be notified of the volunteering nature of the participation in the study and also the right to stop being a participant at any given point. What is more, any information that will be provided by the participants is guaranteed to be treated with significant privacy confidentiality.

Role of the undergraduate researchers
The undergraduate students will play a key role in the project. Imperatively, they will play a great part in project planning and undertaking research tasks and activities. It is important to point out that the success of this project will largely lie on the richness and extensiveness of the research undertaken. In addition, planning the project will be key in order to ensure that all phases of the project are undertaken expeditiously and done in a comprehensive manner. The undergraduate students also play the role of writing progress reports, making presentations and aiding in the development of new tools and using specific equipment and instrumentation such as surveys and data analysis tools such as SPSS.

Summary of anticipated benefit of the project in creating a research culture in Qatar
This project will be of great benefit not only to students but also to Qatar as a whole. Specifically, while tackling this project, the student will be able to gain more insight on matters relating to entrepreneurial finance. The students will delve deeper into understanding the new sources of financing and their importance to SMEs and startups including asset-based financing, crowd funding and hybrid instruments such as convertible debt and warrants and mezzanine finance. Furthermore, this will raise awareness amongst students on the significance of SMEs, entrepreneurship and startups in diversification, and the manner in which they play a key role in contributing to the economic growth of the nation. On the other hand, progressively more startups and SMEs are developing in Qatar. However, more often than not, these entities end up experiencing failure owing to the financial constraints that they face in the different phase of the firm life cycle. This forms the basis of the significance of this project. Entrepreneurship plays a fundamental role in fashioning and developing a diversified economy in combination with the growing role of SME’s in the nation in agreement with Qatar National Vision 2030. The broadening and branching out role of SMEs and Start-ups come to be more imperative under the prevailing economic state of affairs where oil and gas prices have plummeted significantly (Komalasari, 2016).

Timeline/Milestones
The following timescale Gantt chart delineates the different activities of the project displayed against the time due: Oct: Determining the area of research and the research topic Oct: Articulating the research objectives and research questions Nov: Outlining the research approach, research design, and the research methods to be used Nov: Undertaking the research proposal for the project Dec: Ascertaining authorization to progress Dec: Undertaking the research literature review Jan: Undertaking the research methodology Jan: Collecting the essential data Feb: Conducting the analysis of the data collection Feb: Results, discussion and conclusion Mar: Providing the initial draft Mar: Providing the revised draft Apr: Providing the ultimate draft May: Project due date Mentoring and supervisory plan
Entrepreneurship is a pivotal aspect in the growth and development of an economy in the present day. Furthermore, progressively more young individuals are inclined towards entrepreneurship and startups not only to advance the level of innovation but also owing to the reason that this facilitates the creation of additional jobs in the economy. We believe that by partaking in this project, there will be additional insight into the most ideal ways for startup and SME businesses to cope with financial restraints and limitations and success in each phase of their life cycle. As a result, we need to ascertain which of the financing types and approaches are most suitable for startups and SME businesses in Qatar, and therefore we request your approval to begin working on this meaningful project under your guidance and supervision.

References
Cusmano, L. (2015). New Approaches to SME and Entrepreneurship Financing: Broadening the Range of Instruments.OECD. Retrieved 10 October, 2018 from: https://www.oecd.org/cfe/smes/New-Approaches-SME-full-report.pdf
Creswell, J., 2014. Research design: qualitative, quantitative, and mixed methods approach. 4th ed. London: SAGE.
Saunders, M., Lewis, P., & Thornhill, A. (2009). Research methods for business students. New York: Pearson education.
Klamer Alopa, M., Horvat, J., & Lali?, M. (2014). Analysis of financing sources for start-up companies. Management: journal of contemporary management issues, 19(2), 19-44.
Robb, A. M., & Robinson, D. T. (2014). The capital structure decisions of new firms. The Review of Financial Studies, 27(1), 153-179.
Bryman, A., 2008. Social research methods. 3rd ed. Buckingham: Open University Press.
Komalasari, S. D. (2016). Role of Regulations in promoting growth of SMES and start-ups in Qatar. Retrieved 10 October, 2018 from: https://qspace.qu.edu.qa/bitstream/handle/10576/5374/OGSApprovedProject_ShintaKomalasari.pdf?sequence=1&isAllowed=y

Suggested Study Questions: How do entrepreneurs choose between sources of finance? What are the different advantages and disadvantages of each source? How do they influence future performance of Entrepreneurs in Qatar? What type of performance impacts arise from each funding source? How do they interact? How do the level of innovation in the Entrepreneurship influence on sourcing of finance? How do the level of Entrepreneurship life cycle influence on sourcing of finance? Hypotheses and Figure 1 illustrates the proposed relations:
Hypotheses: H1: Types and sources of financing are positively related to the Entrepreneurship performance in the context of Qatar H2: level of innovation in the Entrepreneurship positively related to types and sources of financing H3: The Entrepreneurship Life Cycle Stage positively related to types and sources of financing Proposed Model: