An overview of tech in MENA


An overview of tech in MENA

Tiffany Obser

MAY 9, 2017

Technology always creates a common denominator.

1. Demographics and consumption

The conditions in MENA are extreme from the weather to the spectrum of resources. The statistics are confounding; in the last century, the population growth and the rate of urbanisation has skyrocketed. The discovery of oil in the 1930’s set in motion a state of constant and rapid change across the region. This change persists today though individuals have never been more capable of creating change and impact in MENA. The vast technological tools at their disposal have made everyone stakeholders, capable of implementing, sharing, and scaling ideas. This is critical in MENA where 60% of the population is under the age of 25 years old. This contingent is wired and connected with record-setting social media consumption; Saudi Arabia boasts the highest Twitter usage per capita while 14.5 million hours of video viewing on YouTube ranks the Arab World first globally. It is becoming commonplace to see more new online businesses than offline businesses.Exponential population growth across the region has drawn attention to the dependence on oil and the necessity to create a knowledge economy. At the turn of the century, governments across the GCC and North Africa initiated multi-billion dollar projects to diversify their economies, yet there weren’t compelling results. Even doomsday reports about the looming end of oil that surfaced in 2015 did not motivate people to action. Then something astonishing happened: the price of oil dropped and eventually plummeted. Fast-forward 12 months and necessity has forced everyone to action. Now entrepreneurship isn’t just a buzzword, it is the status quo.

2. Incentivizing entrepreneurship

Entrepreneurship has become compulsory; Kuwait has a $6.6 billion entrepreneurship fund and Lebanon’s $450 million initiative specifically targets startups. Every government is asking themselves: What am I doing? What should I be doing? Am I doing enough for entrepreneurship? The huge push across the region is palpable as more MENA startups are making it to the global stage: RIEGO, 2nd place in Seedstars Beirut competition was a finalist at Slush, Raye7, a 2nd place winner from Cairo placed 2nd at the Mobile World Congress, and our Amman winner MindRockets was a finalist in a global accelerator K-Startup Grand Challenge in Seoul, Korea with leading technology giants. These success stories correlate with the tremendous amount of private and public initiatives; startup needs are increasingly being met, from media to mentorship and financing.We commenced our tour in Egypt where GREEK Campus and RiseUp have put the country at the center of the startup ecosystem. As the most populous country in the region, startups have a large market to address and entrepreneurship has great potential to create jobs and solve high impact problems. Egyptian entrepreneurs are confronting large structural issues. Our 2015 winner SolarizeEgypt is tackling the energy deficit, taking consumers off the grid with solar power, which is critical at a moment when the country’s subsidies will be removed. Raye7, our runner up for 2016, is tackling the crippling traffic in Cairo with a ride-sharing app that accommodates cultural norms. Seedstars also hosted a Seedspace Global FinTech Week with Flat6Labs at the launch of the first Barclays Fintech Accelerator. With 90% of Egyptians unbanked, nearly 80 million people, we are eager to see the repercussions of these initiatives on the financial sector.Tunisia is also a bright spot on the MENA startup map. The diaspora is very active and returning to Tunis after the Arab Spring to build the ecosystem in different capacities by mentoring, establishing funds, and setting up coworking spaces and accelerators. Founders Institute, Enpact, Cogite, and Flat6labs are just a handful of examples but the feeling of goodwill on the ground is palpable. For a small country that is a melting pot of Arab and French culture, they are strategically located to take advantage of their geographic and cultural access to Africa, the Middle East, and Europe.The UAE has emerged as an international startup capital, attracting entrepreneurial expats from around the world in the same way as Startup Chile without paying the $100 thousand sticker price per startup. The entrepreneurs pitching at Seedstars Dubai came from as far away as Chile, Italy, and Scotland to take advantage of the abundance of government initiatives and accelerators. Where the government invested billions in building glass towers and malls to rival Asia and the Guinness World Record, they are now investing their resources to build entrepreneurs with the same gusto. The ease of doing business indicators have entrepreneurs flocking from neighboring countries to register their companies and the regulatory environment is one area where the UAE really excels. The private sector is also getting on the bandwagon, from accelerators like TURN8 and magnates like Mohamed Alabbar, the Founder of Emaar Properties, the largest real estate conglomerate in MENA, who is launching a $1bn ecommerce platform to create more homegrown tech giants. The population of startups, investors, and startup exits are all on the rise.Jordan built the first MENA incubator in 1993 and their early efforts laid the groundwork for a varied and established startup ecosystem. The country has no natural resources, putting the focus resolutely on human resources. Queen Rania has established several initiatives to support women and social entrepreneurs. Fadi Ghandour, the pioneering founder of MENA’s most successful startup Aramex, has also played an integral role in building the ecosystem, supporting founders and social entrepreneurs. For the population size, Jordan has an extraordinary talent pool of resourceful and global thinkers working with scalable ideas.Stay ahead of the curve.As an incubator of educators and investors in developing markets, we sit at the forefront of innovation and we make it our mission to share these developments with you across the digital landscape.

3. The Silicon Gulf

The self-described Silicon Gulf has no shortage of resources. Bahrain and the neighbouring GCC countries are jumping leaps and bounds as the result of the cumulative efforts of public and private agencies. Bahrain has a wide range of fundraising options and of agencies dedicated to financing and angel investing. Kuwait initiated a $6.6 billion National Fund for Small and Medium Enterprise Development and Saudi Arabia has established a mind-blowing $100 billion tech investment fund with Japanese telecom firm Softbank while King Abdullah University of Technology and 9/10th accelerator were established partly as resources for native entrepreneurs, especially the 100,000 students who return from studying abroad every year. Where copy-paste clones and science projects dominated the startup pool five years ago, now there is a pipeline of startups. Qatar has already ranked as the first GCC country to successfully transfer to a Knowledge Economy. It may sound contradictory, but the abundant resources actually actually raise the opportunity costs for entrepreneurs, as GCC nationals are entitled to employment, education, and health care. The guaranteed 6-figure starting salaries in some GCC countries can discourage citizens from wanting to pursue riskier ventures like startups.Lebanon has traditionally been a banking and media hub. With the startup media heavyweights Wamda and Arabnet based in Beirut, the startup scene is bolstered by great press coverage, an influx of startup personalities, and a constant circuit of events and conferences. Entrepreneurship is in the Lebanese DNA; across the region you can find Lebanese running businesses, from SME founders to C-level executives who exploit entrepreneurial opportunities. There is also an incredibly diverse profile of entrepreneurs in Lebanon from PhD Students and young mothers to drone-tinkerers and bankers. There is also an emphasis on internationalization as programs like UK Lebanon Tech Hub help bring Lebanese startups to new markets. The growing startup ecosystem can partially be attributed to the revolutionaryCircular 331 government policy to incentivize commercial banks to back entrepreneurship, which guarantees 75% of the value of each investment towards accelerator, tech startups, incubators, and venture capital firms.Turkey is a very advanced ecosystem, at the crossroads of Europe and MENA, they really benefit from the overlap of talents and perspectives and have cultivated an entrepreneurial mindset that is uniquely their own. Turkey has a tremendous amount of support from the private and public sector, demonstrating their investment might with a bona fide investor population. There are 500 certified angel investors in the country and you can easily find European investors and investors from the Levant. The government also provides 50k for students, equity-free, and hubs like T-Jump. Recently there have been several large Series B rounds like Parachute and big exits, which is always the benchmark for success. Algeria possesses one of the youngest startup ecosystems, which also makes them the best candidate for leapfrogging.Algeria has recently adopted e-payment systems, completely bypassing credit cards with technologies that are at the forefront. On the one hand, the regulatory environment is very strict, making it hard to bring resources across borders, but on the other hand, it is a blue ocean. Once the necessary approvals are obtained, pioneering startups face little competition. Progressive ministers have also made entrepreneurship their personal prerogative, bolstering support for early-stage startups. They are supporting accelerators and telecoms likeDjezzy, which have been extremely active to take the startup scene quickly from zero to one. With a population of 30 million people, Algeria presents an extremely large and largely untapped market.

4. Technology as the common denominator

Entrepreneurship is the 21st century diplomacy with the cross-cultural exchange of ideas and values. There is no better way to ensure the negotiation of beliefs then with the meeting of entrepreneurial minds. The majority of entrepreneurs in the MENA region have intermittently lived or worked abroad at some point in their careers. They have witnessed cumulative tech conferences, read the same blogs, and were judged by the same rigorous standards of international pitching events. The MENA startup community transcends national identities and boundaries to probe new approaches, exchange ideas, and bring forth the most distinctive work. The mindset of the startup scene in Cairo, Beirut, Amman, and Dubai is indistinguishable from the mentality of entrepreneurs in Berlin, London, and New York.Disclaimer: Seedstars encourages freedom of speech and the expression of diverse views. The views of columnists published on Seedstars are therefore their own and do not necessarily represent the views of Seedstars.

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