“I decided I was not made for a 9-5 job. It’s time to do something different and lead a different life” states Junaid Joosani, serial entrepreneur and Founder of Frekis – a smart lock system that seeks to transform the way we share micro-mobility, both within households and for commercial use. Frekis launched its smart lock in February this year, but Junaid’s entrepreneurial journey did not start here. Since arriving in Sweden in 2006 for a Master’s Degree in Electrical Engineering at KTH, Junaid has founded multiple startups in the information and technology sector including e-commerce platform SellNu, digital payment system ATZ Pay, and secure content and communication sharing platform Immerch.
In creating Frekis, Junaid has paired his interests and expertise in the QR payment industry with his ambition to create social and environmental impact within the public transport sector. “Public transport taking you from point A to B within a 3-5 km radius should really be replaced with bikes”, he says. The foundation of Frekis derives from 3 core elements: Environment, Reusability and promoting a Sharing Economy. Expertise and passion for creating social impact aside, Junaid’s experience in the startup scene has not been without its challenges. Junaid comments on the financial barriers faced when seeking investment as an immigrant entrepreneur, particularly when a business no longer qualifies for early-stage investment. However, these early stages can be the most challenging when starting up a new business.
Companies that are less than one year old are considered to be startups by the Swedish Migration Agency, and, as such, undergo a much more comprehensive and rigorous review. With more highly educated immigrants entering the competitive startup industry, there needs to be a greater effort to offer on-going, financial support and business advice, rather than simply financing the early stages of business development. Entrepreneurs with a foreign background possess great human capital in terms of education and expertise but lack the important entrepreneurial resource of social capital. For some, setting up and maintaining a business in Sweden may be unfamiliar, particularly when grappling with a new society and bureaucratic system that may present administrative hurdles relating to language, tax and business registration.
The need for more support is surprising given 36% of the startups in Stockholm County were led by persons born outside of Sweden, contributing to the 95,0000 immigrant-owned businesses that employ 300,000 people nationally. Despite this, businesses owned by foreign-born entrepreneurs often lack key resources, leaving them disproportionately vulnerable to administrative burdens that limit profitability and growth compared to native-born Swedish business owners. Junaid reflects on the difficulties he has faced as an immigrant entrepreneur: “I have approached 230 investors with my ideas, and have faced rejections. Frekis was rejected 3 times by Almi”. Despite these rejections, Junaid highlights this is what characterizes an entrepreneur: “You need the failures to build up your strength. If you’re getting constant rejections it is easy to give up. This is the difference between normal people and an entrepreneur”.
Sweden is renowned for its progress in tech, innovation and startups, with over 96% of the 1.2 million companies in Sweden being small and medium-sized operations (SMEs). This reflects the role of Sweden as an innovation-driven economy (Global Entrepreneurship Monitor, 2016), offering greater potential for innovative entrepreneurial activity. As of 2020, 69% of SMEs wish to expand their business (number of sales, number of employees), whereby companies led by people with a foreign background want to grow to a greater extent than those led with a Swedish background. According to Tillväxtverket, one explanation of this is that the number of smaller companies are increasing at a faster rate than medium and larger sized companies in Sweden.
Regardless of company capacity, the percentage of business leaders with a foreign background increased from 14% to 18% between 2006-2016. With it becoming more common to start and run a business today, the possibility of developing and growing a business does not seem an impossible dream. More commonly found in young entrepreneurs with a foreign background, the willingness to grow is marked by a desire to employ more people. This ambition is surprising given it is those entrepreneurs with a foreign background who are more likely to face major obstacles relating to access to loans and credit compared to companies led by those with a Swedish background.
If a significant proportion of startups are founded, developed and expanded by people with a foreign background, why do challenges for immigrant entrepreneurship remain?
Junaid outlines one of the biggest barriers as a foreign-born entrepreneur was obtaining large financial investment in order to lift the business concept off the ground. Seeking significant investment comes easier to those with Swedish nationality and citizenship as they are able to bypass administrative hurdles that non-EU immigrants may encounter such as work permits and visas. Junaid touches upon discrimination towards foreignerswithin the startup industry, and links this to his personal experiences of setting up an enterprise:
“White people get big investments quicker and so have not encountered as much failure within the investment system”
When asked about his resilience in facing rejection and experiencing discrimination, Junaid highlights that investment alone is not a measure of success. “The only way you can be successful is if you have encountered hardship and done your proper homework”. Junaid’s words highlight an issue that extends beyond the administrative/bureaucratic level of formalising a business. Immigrant entrepreneurs are more likely to encounter systemic challenges when seeking large scale investment.
While securing investment in the early stages of a business venture can be vital, it does not ensure longer-term survival. Opportunities for financial support are needed later on during the expansion and profitability stages when a business is likely to experience a greater proportion of business growth. For foreign-born entrepreneurs, these stages may be make-or-break when it comes to longer-term business survival, especially as they are disproportionately more likely to face administrative barriers than their native-Swedish counterparts. Given the awareness of this challenge, why are investors failing to consider immigrant entrepreneurs for investment? With such a high proportion of foreign-born entrepreneurs contributing to Sweden’s thriving startup scene, there is a lack of representation and cultural competency within the investment industry. Greater diversification of knowledge within startup investments should be reflected with better representation of foreign-born persons with expertise in the startup industry and investment services.
Resilience and knowledge of the startup industry are things which Junaid has built-up over the years and are what have made him successful with his most recent venture. Since May 2020, Frekis has seen over 300 smart lock purchases in Sweden alone, created partnerships with on-demand bike service Mioo, released Frekis SDK an app providing anyone the chance to build their own asset or ride-sharing app, and the launch of a new IShare lock, allowing any physical assets to be shared or rented.
As Frekis expands its international market to countries like Germany, France, Spain, UK, Romania, USA, Israel, Australia, Brazil and India, and to other mobility sectors (i.e. cars, heavy vehicle transport), for Junaid it is essential for the company to maintain its central vision of creating positive social impact for its customers. By tapping into online marketplaces such as Cdon, Tradera, Amazon (EU and AUS), Frekis has the potential to transfer its climate-conscious vision to a global scale. With the aim of selling 10,000 locks by the end of 2020, the future of Frekis, and the emphasis on social impact more broadly, Junaid says, “in a post-pandemic world, we need to focus on the local community and encourage collaboration between individuals, housing societies, local groups and organisations”.
Want to learn more about Frekis and how to download the app? Visit frekis.com. You can also follow them on social media to get the latest news:
Facebook frekisrental
LinkedIn linkedin.com/company/frekis
AUTHOR
Caitlin Metcalfe-Bliss is a Community Host at Impact Hub Stockholm. With an interest in migration and social change, she is interested in exploring how social enterprises encourage integration and inclusion for newly arrived migrants.