A bill' would be ill

Giving entrepreneurs access to the Gold Dispenser is not the solution to our problems. (Pic by Ali Haider / Bloomberg)

At the

in Beirut this weekend,

Mohammed Johmani, founder of the O2 Network (the Dubai-based marketing company, not the UK mobile network) called for a $1 billion regional fund to support Arab entrepreneurs. "

The aspirations of young leaders in the Arab region need great encouragement and support so that they can astound the world," he said, according to a press statement. "We have the potential and the creative ideas to forge ahead globally, but we lack the trust of governments and the confidence of investors.

"

Johmani's concept seems to be that a $1 billion fund could support 1000 great entrepreneurs. The urge to call for a huge billion-dollar investment into entrepreneurs is a common one all over the region, and I have heard many people call for variations of the concept. Most common is the complaint that the trillions of dollars of Gulf sovereign wealth should be redirected into supporting local startups, rather than poured into the coffers of Western banks and investment houses.

I think a billion dollar fund for Arab entrepreneurs would be a terrible, terrible idea. Here's a few reasons why:

- A billion dollar fund would be a giant red flag attracting rent-seekers and freeloaders Right now, making money off an internet or tech company is hard work. It used to be virtually impossible, but today there is a decent sized regional market, and a fairly good crowd of venture capitalists. But put a billion dollar fund into the market and the first thing you will see is a swarm of wannabes, rent-seekers and hangers-on, the kind of people who headed to Dubai and started a property resale business in 2007.

The best tech companies are not created in an environment of abundance, and the scrappy, flexible, hard working and innovative cultures that make a startup thrive do not come from a multi-million dollar startup investment. I'd rather see 10,000 experienced businessmen become angel investors with $100K each than a billion dollar death star of a fund looming over everything.

- The size gets in the way of the purpose On a practical level, there is a reason why even the bigger venture funds in Europe, the US and Asia rarely get bigger than $250 million. The bigger a fund gets, the more work there is in administering it. The fund itself becomes the issue, not the businesses it invests in. In the Middle East, raising a billion dollars would almost certainly involve the participation of a number of government controlled banks and funds. And voila, a venture fund becomes a complex political hot potato that becomes about as effective as the Arab league.

- Money isn't the issue If you talk to a venture capitalist around the region today, you will hear that the quality of the deals (ie, startups) that they are presented with is pretty low. The average entrepreneur says it is pretty hard work to find an investor. The truth is somewhere in between, and that is pretty much where it should be. There isn't that much money, it's hard to get, and the people dishing out are hard to please.

What is lacking is cultural and systemic support for entrepreneurs: legal and financial systems that understand startups, societies that don't stigmatise failure and prioritise ownership / control, political systems that can guarantee predictable and friendly interactions with the state, and education systems that develop thinkers not followers. I'd take that ahead of a billion dollars any day of the week.