Risk: Hooked on the Start-up Buzz
Serialpreneur and venture capitalist Dany Farha’s entrepreneurial journey began two decades ago and has seen him venture into various sectors, reaping significant financial rewards.
Risk-taking is key for successful elite entrepreneurs. However, for start-up founders, is it a case of once a risk-taker, always a risk-taker?
No stranger to risk, Dubai-based Farha, now CEO of BECO Capital, co-founded and then exited Bayt.com, the Middle East's number one jobs site. Prior to that, he also launched and subsequently sold out Butlers, the UAE's largest commercial laundry company, and Intercat, a major catering business.
"Has my risk profile changed at all? I want to say no, but I don't think I'd be entirely truthful. It probably has evolved over time because I have three children and lots of responsibilities. I've also built a lot and the concept of preservation kicks in at some stage, which is different from wealth creation," says Farha.
"When starting from zero or very little, it's all about wealth creation because there's nothing to preserve. Then it's a bit of a see-saw as you start building and create something meaningful."
BECO's investments include Propertyfinder.ae, which has become the UAE's dominant real estate portal, and Careem, a ride-hailing service and Uber rival that now operates in more than 40 cities in Africa and Asia. Farha says he still gets the same buzz from working with start-ups as he did when his career was in its infancy.
"I think I've changed with age but I hope it's just a little bit. I'm very happy to take risk, both financial and in terms of time," he says. "Time can be a big factor too, in some cases it can be a greater investment than financial capital. With BECO, I've committed all of my time and quite a bit of financial resources."
However, according to the findings of BNP Paribas 2017 Entrepreneur Report, which interviewed 2,650 elite entrepreneurs worldwide, most of the world’s most successful prefer a more cautious approach.
On average, 15% of their wealth is tied up in their own companies, with a further 20% held in privately-owned businesses – either through private equity or angel investments. The remainder is widely spread across cash, property, stocks, bonds and socially responsible investments.
BECO's Farha says his entrepreneurial peers have mostly taken this approach, but he has opted for a different path.
"I'm not balanced, but skewed towards technology in my own portfolio. That’s a personal preference," he adds. "As people become wealthier, they look at asset allocation - that’s the advice their private bankers and analysts give them."
“As people become wealthier they look at asset allocation.”
Dany Farha, co-founder and chief executive of BECO Capital
Entrepreneurs' risk appetite can be divided into two parts; the risk necessary for their own businesses to thrive and the risk attached to their outside investments. While appetite for the latter type may diminish over the years, the thrill of the unknown that entrepreneurship affords seems tough to give up.
As business consultant Deborah Mills-Scofield from the Harvard Business Review puts it: "The risk of not pursuing that passion, of not fulfilling that purpose, of having lived a life of stuff without also living a life of significance, is the greatest risk of all."