During UNLOCK Blockchain Forum which took place on January 15, 16th 2019 in Dubai, a panel of experts comprising of Manmeet Singh, CIO, Emurgo, Abdulrahman Ali Alolayan, CEO &Co-Founder, Taibah Valley, Dr. Marwan Alzarouni, Founder & CEO, Dubai Blockchain Center, Sheikh Mohammed Irfan, VP Global Operations, Bloccelerate, David Drake, Founder & Chairman, LDJ Capital and Ibrahim Alkurd, Founder & President, Lavaliere Capital Management tackled investment within the Blockchain space from individual, institutional and crypto funds.
As investment in blockchain technology and associated startups develop in the MENA region and mature it is important to understand what investors in the region think about blockchain. Alolayan of Taibah valley in KSA stated, “Market maturity is crucial to investments, meaning that investing in Blockchain tech would require mature markets. This is not the case yet when it comes to Blockchain tech as most Blockchain applications that do not pertain to Fintech are still in the proof-of-concept phase.
In Saudi Arabia for example, Taiba Investment Fund, which establishes VCs, is looking into Blockchain tech and as Alolayan mentions “The fund is there but the opportunity to fund in or invest in is limited.” He is skeptical about the results of the PoCs in 2019, but hopeful that the upcoming years will bear positive results.
Irfan of Bloccelerate believes that we should not force growth or investment. He explains, “that a deep understanding of the space and allowing it to grow organically is essential before making any investment decision. In fact, many big names did not succeed within the space because they jumped on the bandwagon too early and they wanted very quick results.” Irfan considers the MENA region to be a very interesting space as it is an emerging market with a very distinct culture, and perceives a myriad of opportunities within the usage of Blockchain tech in the Islamic Market and Shariah compliance with the region.
Others have a more negative view given the failure of many ICOs, AlKurd, “STOs are just ICOs covered up, and all retail investors need to be careful what projects they put their money into.” He believes that more real world applications and understanding of the Blockchain technology are necessary to witness a healthy growth in the market, and is hopeful that it will take few years, but we will witness many real world applications.
The breakthrough that many hope for will come from institutional and family investors, as such David Drake believes family offices started investing in this space as they got into the hype, but did not have a clear understanding of its dynamics. Drake has noticed some geographical variations, where European family offices are more open to explore this space. He adds, “Family offices are still cautious about investing in the space due to the bear market and the fact that they are still awaiting directions from the US and the SEC (Securities & Exchange Commission). However, many of them are opening up the doors to this new technology, as a mechanism to liquefy their semi-liquid or illiquid assets.”
Marwan AlZarouni, a prominent blockchain investor and expert in UAE stated, “During the ICO craze, they were waiting for the ICOs to launch and then buying at the dip. This was the strategy we were advising people to adopt when it comes to the ICOs they were not sure about.”
Investment into the blockchain sector is strongly linked to the ability of startups to move forward with their product. As Alzarouni explained “Whenever the word “Blockchain” is introduced, complications occur. In our own OTC business, it took us six to eight months to open a bank account, after we actually got the license and everything was cleared. Till today, we face issues with the bank when we deal with high volumes of transactions.”
Regulations also play a major role in investing within the space. Singh comments, “Every regulator has the chance to drive this new era of finance, to drive the regulations and become the benchmark for the next phase.”
As for the future of Blockchain investment for 2019, Irfan believes that investment opportunities will reside in emerging countries, where Blockchain technology itself provides a great opportunity for economic benefits. The regulators and the government play an essential role in the prosperity of this technology. AlZarouni is also positive and sees 2019 as a good year to discover new use cases and industries that Blockchain has not reached yet. Drake of Lavalier Capital hopes that STOs (Security Token offerings) will take off around the end of 2019.
As for AlKurd, he believes that the bear market will persist throughout 2019, but the projects during this year will be of a higher caliber even if there is less money in the market.