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The aim of this paper is to present and demonstrate the main challenges and obstacles facing Telematics companies entering the market in Bahrain. Telematics is part of Information and communication technologies ICT which plays a major role in the economic development of countries. However, there are many obstacles and challenges facing new businesses that venture into the small market of Bahrain; e.g. the small market size, competition and lack of financing channels e.g. venture capital.