It’s no longer news that the Middle East has seen a surge in technology activity across the region. It’s almost important to remember though that the Middle East is not a homogeneous region (far from it!); technology innovation and adaption is taking place at different speeds and starting from different points across the region. So when we saw this piece in The Financial Times about the strengths and weakness of the Jordanian tech market, we were intrigued with its analysis at the country level, rather than the usual regional level.
As the author deftly notes, Jordan has carved out a niche “as a centre of IT, outsourcing and ‘Arabisation’, the translation and cultural adjustment of English-langauge media and web content.” That’s certainly something we see at WOMENA: over 10% of the companies we’ve looked at are currently based in Jordan with many more startups with Jordanian founders based out of Dubai or, on rare occasions, out of another MENA country. For a country of 6 million people in a region of 300 million plus people, that’s a phenomenal rate and attests to the level of entrepreneurship in Jordan.
Why have so many startups emerged from Jordan? There are multiple reasons and as the author alludes a well-educated population and supportive government are key among them. We think other key reasons are:
The network effects from Maktoob’s acquisition by Yahoo! (which we discussed here) and its hugely positive impact on Jordanian entrepreneurship
It’s geographic position right in the heart of the Middle East with good transport links
The lack of other opportunities in the country, as it has so few natural resources, push people to innovating on their own accord; its human resources are its most valuable and important resources
So what can Jordan do to make sure it remains a MENA tech hub? These are a few of our thoughts:
Make sure Jordan keeps on producing great startups for one! Jordan has built a reputation for impressive innovation and entrepreneurship and when the quality drops questions will begin to be asked
Increase investment in technology education from primary school all the way up to university
Break down the barriers for women to become entrepreneurs; there are some great female Jordanian entrepreneurs but they are outnumbered by men
What do you think? What can Jordan do to continue punching above its weight in MENA technology innovation?
There has been an explosion in entrepreneurship in the Middle East in the last five years and this has corresponded with an increase in the number of organisations supporting entrepreneurship. These include incubators, coworking spaces, accelerators and angel groups like WOMENA.
At WOMENA, we’ve been trying to track this growth to ensure that we know as much as possible going on in the region. To that end, we’ve created a document for Middle East-based entrepreneurs listing a variety of resources across the region. It’s very much a work in progress and there are still a lot of resources to add.
We wanted to get your thoughts though: is it useful? How can we make it more useful? What else should we include? Would you rather the resources are broken down by country than by type? We always love to hear from you so add a comment below or email us!
Maktoob was the Middle East’s first big entrepreneur success story. After Samih Toukan and Hussam Khoury grinded away to make the company a success (read Christopher Schroeder’s excellent book – Startup Rising: The Entrepreneurial Revolution Remaking the Middle East – for a full story), they sold the company to Yahoo! for $170 million in 2009.
At WOMENA, we knew the Maktoob story well but what we didn’t know was how significant the multiplier effect on the wider ecosystem was after its acquisition. Until, that is, we came across Endevour’s fascinating report: “Multiplying Impact: Amman’s High-Growth ICT Industry”.
As the image above succinctly shows, there was a significant network effect in Jordan and across the wider Middle East following Maktoob’s sale. Toukan setup Souq.com that is the Middle East’s first unicorn and has seen strong growth across the region. Some of the other well known startups that can be directly attributed to Maktoob include Nibras, Arabia Weather, Khodarji, Sukar, Marka VIP and Jabbar Internet Group.
It shows how powerful the entrepreneurship ecosystem is. If one company can have such a significant multiplier effect, imagine what the multiplier effect is of the thousands of startups that have since emerged? What’s even more exciting is that this is only the beginning! The Middle East is very much in the early stages of its entrepreneurship development and the next few years will undoubtedly be exciting.
As we are all well aware, entrepreneurship in the Middle East has exploded in recent years and becoming an important source of growth and employment in the region. Evaluating quantitatively entrepreneurship is difficult though and Bayt, the Middle East’s leading recruiting platform, has released several studies and surveys about entrepreneurship in recent years.
In November, Bayt published the results of one of their most comprehensive surveys into entrepreneurship the Middle East has seen. Bayt’s Entrepreneurship in the Middle East Survey 2015 set out to see what the state of entrepreneurship is in the Middle East and there were some very revealing findings. The clear result of all the data is that more and more people in the Middle East are interested in entrepreneurship and are looking to become entrepreneurs themselves.
Here are Bayt’s main takeaways from the results:
- Given a choice, 64% of respondents would prefer to have their own business
- The top advice respondents would give to aspiring entrepreneurs would be to not be afraid of failure (38%)
- Almost half of respondents (48%) do not have any preference when it comes to the best time to set up a business
- 7 in 10 respondents think that entrepreneurs are ‘profit-driven’
- 97% of respondents know at least one successful entrepreneur in their country of residence
To see the full results, click here.
It’s an exciting time to be working in the Middle East entrepreneurship ecosystem. 10 years ago uttering the world ‘startup’ may have been met with a quizzical look. Today, there’s a real buzz and excitement from all those working in entrepreneurship (and many outside too) and the explosion in the number of startups is evidence of this.
While the increase in the number of startups across the Middle East has been very welcome, how has this translated to exits? The first ‘big’ exit, and arguably the catalyst for the growth in entrepreneurship in the Middle East, was the sale of Maktoob, the first bilingual Arabic and English email provider, to Yahoo! for $164m in 2009.
It was not until this year that this acquisition was matched in financial terms. First, Rocket Internet acquired Kuwait’s Talabat, the online food delivery service, for $170m in February. Only a few months later though, this was blown out of the water in terms of size with Delivery Hero’s acquisition of Turkey’s Yemeksepti, another online food delivery service. While you may not have heard of Yemeksepti, you are probably a lot more likely to know the name under which it operates in the GCC: Foodonclick.
In the preceding years, there were numerous smaller acquisitions in a variety of sectors, including (but not limited to):
- Tiger Global Management bought Cobone, a daily deals website, for around $40 million
- Thomson Reuters bought Zawya, the business information portal, for an estimated $40 million
- PAYFORT acquired White Payments, an online payments solution, for an undisclosed amount
- SAS Holding acquired Glowork, a Saudi company that connects women with jobs, for $16 million
- OLX bought Dubizzle, the classified listings website, for an undisclosed amount
- Japan’s Cookpad bought Shahiya, an Arabic recipe website, for $13.5 million
What’s interesting to see as well is the number of late-stage startups acquiring other early-stage startups to further expand. For example, Careem acquired Taxiii in Morocco and Souq acquired Sukar. Exits have not been limited to global investment management firms, private equity firms or the like. If anything, Middle East based firms have been more active than non-MENA firms with startup acquisition.
We’re also seeing an increasing number of large and later stage rounds in the region. Just last month, Careem, the car-hailing app, raised a $60 million Series C round. Fetchr was the recipient of New Enterprise Associates’ first investment in the Middle East as part of its $11 million Series A round and last year Souq raised a $75 million round.
So what does this mean for MENA? Well it proves that the entrepreneurship path can lead to big rewards for founders, their employees and investors. There’s a clear uptick in both exits and large rounds across the Middle East and we only see that trend continuing. For angel investors, the trend is particularly welcome news. With greater exit opportunities for startups, the chance of seeing a return on their investment increases.
As we discussed at length recently in our Why MENA blogpost, the MENA region is a very exciting area to be working with a lot of potential. That was only reinforced for us at our recent visit to the Web Summit where we spoke to numerous investors and entrepreneurs from around the world.
That’s not to say the entrepreneurship ecosystem is perfect – far from it! Funding is a serious issue for startups to overcome and we think Hasan Haider, the Founder of Tenmou and Venture Partner at 500 Startups, hit the nail on the head with this fantastic blog post. We encourage you to read it to get an idea of what needs to be done to improve the funding ecosystem in MENA.
If you want to explore the funding ecosystem in the Middle East, we encourage you to sign up for the 500 Startups’ Premoney conference on 9th December in Bahrain. Bringing together investors from around the Middle East and the world, the conference will delve into the issues the region faces and how to solve them.
The Middle East. Such a misunderstood and misrepresented area of the world. For outsiders, the Middle East often conjures up images of explosions, unstable countries, and conservative communities. However, what global headlines often miss are incredible stories and examples of innovative initiatives and entrepreneurs rising across the region. If you’re looking for some good news coming out of the region, an excellent place to start is Baraka Bits, a relatively new startup that highlights good news from the Middle East.
In recent times, investment analysts and investors have
So why should you become an angel investor in the Middle East? There are many answers to this question but this blog post will focus on entrepreneurship.
A Huge, Untapped Market
The Middle East is huge. Stretching all the way from Morocco to the Gulf, the Middle East encompasses a very large area and population. What constitutes the Middle East is a contentious subject but there are at least 350 million people in an area as expansive as the United States. With so many people, most of whom speak the same language, entrepreneurs have a large market right on their doorstep. Consider this statistic: 5% of the world’s population is Arab but only 1% of online content is in Arabic.
A Growing Market
Every year, the population of the Middle East increases by 7 million people and the total population will almost double by 2050. This translates to millions of young people entering a job market with serious issues of underemployment and unemployment. To plug this employment shortfall, startups and SMEs have a significant role to play in creating jobs and opportunities for young people.
Social Media Engagement
The Middle East has some of the highest levels of social media engagement in the world with a technology savvy generation entering the workforce today. Smartphone penetration is above the global average and social media is widely considered to have played a role in the Arab Spring. On some measures, the Middle East is world leading: Saudi Arabia is a vociferous consumer of YouTube content with the highest per capita consumption in the world and second only to the United States in absolute terms.
Strategic Geographic Location
The Middle East has a very strategic location in the centre of both the developed (Europe) and developing (Asia and Africa) worlds. It quite literally connects the worlds together. Already some of the world’s leading airlines – Emirates, Etihad and Qatar Airways – have tapped into the Gulf’s geographic significance, boosted by the simple fact that 90% of the world’s population is within an eight-hour flight of the Gulf. Entrepreneurs too can tap into the region’s geographic significance and are within easy reach of new markets. If you’re an entrepreneur in Silicon Valley and have to meet potential customers outside of North America, chances are you have a long flight ahead of you. There is no such problem for MENA-based entrepreneurs.
So what does this mean for angel investors?
When you consider all of these facets of the Middle East, it is clear that there is a massive opportunity for angel investors. Angel investors have already seen multimillion dollar exits with more to come. Internet giant Yahoo bought Maktoob for $165 million in 2009 and Rocket Internet Group acquired Talabat for $170 million in 2015. The leading e-commerce site in the region – Souq.com – is rumoured to have entered the famed unicorn territory with a valuation of over $1 billion. It is not a question of if the Middle East has a multimillion dollar startup waiting in the wings but when?