11 Factors That Highlight The Maturing Of The MENA Entrepreneurial Ecosystem
You're reading Entrepreneur Middle East, an international franchise of Entrepreneur Media.
When I joined the entrepreneurial scene in the UAE in the summer of 2014, Entrepreneur Middle East had just started out in Dubai, and the conversation about the MENA region’s startup ecosystem, at the time, was in its nascent stages. Most of the coverage about entrepreneurship in the region was limited to sharing the origin stories of various startups and their unique selling points, which was, in itself, an indication of how the region’s entrepreneurial ecosystem was struggling to develop.
However, just three years down the line, a lot has changed. As Essa Al- Zaabi, Senior Vice President, Institutional Support Sector, at the Dubai Chamber of Commerce and Industry, said, in his address at Entrepreneur Middle East’s 2017 Enterprise Agility Forum, presented by du: “Dubai has become a leading hub for startups and entrepreneurs, who want to expand their footprint in the GCC, Middle East and North Africa.” He also noted how the UAE (and indeed, the wider MENA region) has also seen an increase in the number of funds, accelerators, competitions and training programs that cater to the startup and SME community.
Having said that, perhaps one of the biggest improvements that I’ve seen recently has been in the quality of the conversation that we’re having about entrepreneurship in the MENA region. Once upon a time, I think there was a genuine belief in the region that if we just copy-pasted different successful elements and mentalities from Western startup ecosystems (like Silicon Valley), then we would automatically create a successful ecosystem in the MENA region.
If only it were that easy- unfortunately, it’s not, and this was confirmed by the candid experiences that were shared by the speakers at the 2017 Enterprise Agility Forum. Throughout the various discussions at the event moderated by Aby Sam Thomas, Editor in Chief, Entrepreneur Middle East, and Fida Chaaban, Chief Communications Officer, KBW Investments, all of the speakers seemed to share a common theme when it came to their insights on the ecosystem: firstly, they were unconventional, secondly, they were nuanced, and, lastly, they were localized.
Not only do these three qualities indicate that our entrepreneurs (and ecosystem stakeholders) are becoming more experienced, it also demonstrates how they’re becoming more introspective. And perhaps, more importantly, it shows how our ecosystem is finally finding the confidence to develop, and begin to share its own body of entrepreneurial wisdom and knowledge, which is shaped by stakeholders from the region to empower a new generation of entrepreneurs in the region. Here are 11 points that prove the increasing maturity of the MENA region’s startup ecosystem.
1. We’re starting to understand that money isn’t the only important element of success
According to Hans Henrik Christensen, Director, Dubai Technology Entrepreneur Centre, “Out of 810 startups in [DTEC], only 2% manage to get VC money.” Lucy Chow, Director of Women’s Angel Investment Network (WAIN) added that there’s no doubt that “we need capital in the region.” This is true especially at the seed stage, since many entrepreneurs in the MENA region still struggle to secure investments in the early stages of their businesses. However, is funding (or having the access to funding) the only thing that guarantees success?
Not by a long shot. Anyone who is an entrepreneur knows that there’s much more to success than having money. While being able to receive investment from corporates, angel investors and VCs is an essential part to helping entrepreneurs grow and scale their startups, there are also other things that these stakeholders can give entrepreneurs that are just as valuable- if not more. For instance, when asked what corporates in particular could do to enable young entrepreneurs to become successful, Nabra Al Busaidi, Executive Director of Young Arab Leaders, said that “corporates should provide startups with the access to larger markets and industry-specific mentoring.”
Imagine if young entrepreneurs in the MENA region could have access to funding, their target market and the knowledge that they would need to unlock the full potential of their startups? They would be unstoppable. While it’s true that the MENA startup ecosystem has a long way to go as far as access to funding is concerned, it’s a sign of maturity that our ecosystem’s stakeholders are starting to understand that funding isn’t the only key to success. Now, they understand that funding is only one part of a comprehensive “success package,” which truly aims to activate the full potential of entrepreneurship in the region.
2. We’re decentralizing and democratizing the idea of organizational success
There used to be a time when the business scene was dominated by large companies and larger-than-life CEOs who supposedly embodied the idea of materialistic success, which so many of us were taught to pursue growing up. However, with the increasing rates of internet penetration and the decreasing costs of smart technology globally, young people (especially millennials) are no longer happy to accept the status quo. Many of them don’t feel happy or successful with what they currently do, because they feel that they should be able to do better with all the opportunities that the current age has to offer them.
In the MENA region, the youth also believe, like Hany Fahmy Aly, Executive Vice President – Enterprise Business at du, that the “world cannot be dominated by one or two global platforms,” and that “there’s a need for platforms that cater to the region.” Essentially, young people in the MENA are tired of feeling like unsuccessful outsiders in their own economic systems, and now they’re trying to change that. How, you ask? By trying to replace our society’s traditional idea of success with a more nuanced and equitable one that allows more companies and individuals to “win.”
Whether they’re using their coding skills to build apps, or their wallets to support companies that are sociallyconscious, young people are working hard to constructively acquire more of the “success pie.” Luckily, this socio-economic shift hasn’t gone unnoticed by the MENA region’s business ecosystem. In Fahmy Aly’s keynote address at the 2017 Enterprise Agility Forum, he demonstrated this shift by highlighting how important it is for startups to define their values, to uphold them, and further empower their team to be the best that they can be.
But what was truly powerful about Aly’s keynote address was the concluding remark: explore where all that can take you. This is an acknowledgement of the very simple fact that success is no longer linear. So, if we want more young people and startups to succeed in these unstable economic times, then our ecosystem has to continue “stabilizing” the idea of success by spreading the responsibilities, risks, and benefits to more stakeholders in our communities.
3. We’re trying to streamline the entrepreneurial experience and implement smart solutions
As I mentioned before, after several years of experience in the world of entrepreneurship, the MENA region’s startup stakeholders are already making some crucial realizations about our ecosystem. First of all, they’ve realized that having all of the ingredients to create a successful startup ecosystem is useless if the different stakeholders don’t communicate and collaborate with each other. That’s why initiatives like the Dubai Chamber-powered Dubai Startup Hub is important, because it’s a platform that brings together startups, investors, trainers, government entities, and development programs, enabling them to work together on removing the obstacles that inhibit the growth of the UAE startup ecosystem.
Ecosystem stakeholders have also realized that it’s not enough to introduce incentives for entrepreneurs to establish startups in the MENA region- now, they realize that the financial institutions in the region also need to be encouraged to play an active role in building up the region’s startup ecosystem. As Haytham Yousef Kamhiyah, CEO of Emirates Development Bank, said during the forum, “Banks, by definition, are risk averse, [so they] have to be incentivized to fund and support SMEs.”
But Ashraf Zeitoon, Founding Partner and Chief Ideation Officer at Diplomacy Labs, also noted that it’s not enough to tell banks that they need to invest in SMEs. “It’s [also] about providing infrastructure” for such frameworks that will give banks the confidence to invest further in this sector, because “given the increased regulation and the associated investment, banks are becoming more reluctant to open accounts for startups.”
Keeping all of that in mind, one thing become abundantly clear: if we want to unleash the full potential of the MENA region’s startup ecosystem, then we have to start focusing on incentivizing all of the stakeholders in the financial sector to get on the same page. And this means that we also need to invest in creating the right legal frameworks, which will help them work in the same literal and metaphoric spaces that entrepreneurs do.
4. We’re questioning the narratives and buzzwords that define our startup ecosystem
It’s no secret that many people in the MENA region’s startup ecosystem keep themselves tuned into the latest entrepreneurial buzzwords, and then pepper them into their professional bios whenever possible. Now, don’t get me wrong: I’m not saying that using certain buzzwords on occasion is bad, because we can’t deny that, for example, the Internet of Things is a new field that’s changing many industries and reimagining our relationship with the world, literally.
If you work in this field or you’re passionate about it, then it’s perfectly acceptable for you to use this term wherever possible. What’s not acceptable is when you mindlessly, unimaginatively, and repeatedly use such words to grab attention in a networking situation- or even in your LinkedIn profile. We get it, you can follow a hashtag, and you understand the basics of SEO. But what’s the point of being “found” on the internet if you lose all of your credibility in the process?
Thankfully, these days, there’s an increasing amount of skepticism about mainstream (usually Western) entrepreneurial narratives in the MENA region, and there’s a growing number of people who are becoming less inclined to blindly accept them. In fact, people like Sabah Al-Binali, an active investor and entrepreneurial leader in the MENA startup ecosystem, who knows exactly what it means to pitch, fund, grow and invest in the region, is speaking out against these popular narratives.
A perfect example of this is the idea of “passion.” While almost every motivational startup post on Instagram will tell you that being passionate is the be-all and end-all of entrepreneurship, Al-Binali believes that “if you’re passionate about something, you can’t make commercial decisions.” And that’s a problem that I’m sure that many entrepreneurs have faced when trying to take their entrepreneurial brain child to the next level.
So, then, the question becomes: what other mainstream narratives are restricting our ecosystem’s growth, and what are we doing to counteract them? It’s time that more people in the MENA startup ecosystem start questioning these narratives, so we can start finding better ones to motivate our entrepreneurs.
5. We’re trying to clearly articulate the expectations of the stakeholders in our ecosystem
As startups, angel investors, VCs, and governments in the MENA gain more experience in the realm of entrepreneurship, it seems that they’re still trying to refine what they want and expect as individual stakeholders in our ecosystem. However, I don’t think that the region’s startup ecosystem will be able to develop into a more mature, stronger one, until these stakeholders are able to share their unspoken desires and expectations with each other.
That being said, even when our startup stakeholders try to articulate their desires and expectations of each other, I don’t think they’re completely forthcoming. Therefore, a lot of time and energy is wasted in one stakeholder trying to figure out what the other really wants. While it can’t be denied that there’s a substantial learning curve for all of the stakeholders in the MENA region’s startup ecosystem, the only way that we can reduce this curve is by continuing to promote transparency as a key value in our entrepreneurial culture. During the 2017 Enterprise Agility Forum, WAIN’s Lucy Chow demonstrated this transparency when she explained how WAIN looks at startup founders first, and then expects them to research their angel investors to see if they can get some kind of mentorship or valuable knowledge from them, in addition to any potential funding.
Having said that, just because an angel investor or a VC, for example, shares a certain expectation or suggests a certain course of action it doesn’t mean that an entrepreneur has to follow it every time. As Rashid Sultan, angel investor and the founder of the Kuwait-based Savour Ventures, billed as the Middle East’s first food vertical accelerator, it’s important to “listen to your investors, even if you don’t necessarily take their advice,” because this dialogue allows you to understand what they’re thinking, and it also gives you an opportunity to articulate your own thoughts and goals. At the end of the day, our ecosystem’s stakeholders don’t always have to agree, but they must engage in more dialogue, so that they can co-create successful businesses together.
6. We’re developing better investor relations and pitching etiquette in our ecosystem
If you talk to any entrepreneur in the MENA region the first thing they’ll tell you is that there’s “no money in the region.” Indeed, during the forum, Khalid Shadid, founder and CEO of Reserveout, emphasized that “it’s hard to find funding for novel startup models in the MENA, especially in tech,” and so, he advised his peers in the ecosystem to not hesitate to look for money around the world to fund their businesses. That being said, while there are unique regulatory obstacles in the region, and less diversity when it comes to the source of funds in the MENA (as compared to the US and Europe), make no mistake; there’s still a lot of money in the region.
In fact, during the Agility Forum, a very interesting point was highlighted that I guarantee you very few entrepreneurs think about. According to Sabah Al-Binali, entrepreneurs shouldn’t just focus on telling investors what they want as a startup, they should also take a moment to ask investors what they’re looking for in a startup they want to invest in- or even what kind of startups they like to invest in.
Now, this would seem like common sense, but alas, common sense isn’t as common as you might think. For MENA-based entrepreneurs who struggle to find funding, the solution to securing more funding (in their mind) might be to follow the “pray and spray” method. However, not only does this approach come off as being sloppy, it also comes off as being inconsiderate to investors, because it reflects a lack of research or a general lack of common courtesy.
Basically, having a good product or service idea doesn’t entitle you to an investor’s money- no matter how much you might think it does. In fact, one question that Savour Ventures’ Rashid Sultan feels that startups aren’t asking themselves enough is: “What am I doing for investors?” If entrepreneurs were able to answer this question, then their investment pitches might look very different.
As Diplomacy Labs’ Ashraf Zeitoon highlighted during the forum, “we have to acknowledge that VCs [in the MENA region] are startups themselves,” and consequently, we need to give them more time to adjust to the realities of the ecosystem. Until then, startups, angel investors, and VCs need to continue co-creating investment etiquettes that empower entrepreneurs to convince more of the region’s risk-averse to invest in startups and the ecosystem as well.
7. We’re recognizing the qualities that actually make entrepreneurs and startups successful
One of the biggest problems I have with the global culture of entrepreneurship is the idealized perceptions it promotes about what it means to be an entrepreneur, or a successful one at that. For some reason, everything about entrepreneurship is overtly glamorized. The title, the culture, even the struggle is sensationalized.
But what most people who have tried to do “their own thing” will tell you is that it’s simply not as great as it’s cracked up to be. It’s definitely not a popularity contest- or, at least, it shouldn’t be. After all, if you’re looking for some kind of validation for yourself, they are much easier (and cheaper) ways of getting it than entrepreneurship.
If you really want to be a successful entrepreneur in the MENA region (or anywhere else for that matter), you have to be ready to do the work and most of the time you have to do it without any appreciation or praise. You also have to develop a thick skin, because like Samer Hamadeh, founder of Aegis Hospitality, said during the forum, until people are “paying you to give you their opinion of you, you don’t [have to] pay attention to them.” If you want to be successful in the world of entrepreneurship, you simply cannot afford to “be afraid to get your hands dirty” to get your startup on track.
The interesting thing about business is that you don’t have to have that entrepreneurial je ne sais quoi to be successful, all you have to be able to do is to see an opportunity when it presents itself. As a writer, semantics are everything to me, which is why Hamadeh’s statement, “I don’t call myself an entrepreneur, I am an opportunist,” was so intriguing to me.
Why was it intriguing, you ask? Because it cuts to the chase. Entrepreneurship shouldn’t be about finding a platform to develop your cult of personality. It’s about identifying an opportunity and fulfilling it in a profitable way. Whether you do that out of a sense of social responsibility or greed is beside the point. But, I would hope that it’s done with a good intention in mind.
Like any trend, only time will tell which entrepreneurs are truly committed to doing whatever it takes to succeed in the MENA region’s startup ecosystem. According to Fida Chaaban, if you want to be a successful entrepreneur, you have to be receptive to constructive criticism, because not everything works, and you have to listen to the people around you to know what to fix. You also have to be prepared to pivot your business model at any point, because if you don’t fix it, your business might not survive. Thankfully, more entrepreneurs in the region are realizing that now, which means that we’re finally moving in the right direction.
8. We’re revisiting the stereotypical ideas of failure in the MENA region
Globally, the traditional idea of success has always been a very linear one. Regardless of whether we’re talking about professional success or personal success, global societies have always expected young people to achieve the same milestones in the same way, more or less. But, in the disruptive economic times of the 21st century, “linear living” is going the way of the dinosaurs, and our communities have to be willing to accept the non-linear styles of thinking and living that we need in order to thrive in this day and age.
Many Arab communities struggle to understand the value of “non-linear living” and entrepreneurship, because they provide very little security and even less glory. After all, how can your parents brag about you to the neighbors if they don’t know what you’re doing, and if you’re doing it well? But, more importantly, I believe that communities in the MENA region dislike entrepreneurship, because in this sector you’re more likely to fail than succeed, and we simply don’t like failure.
Unfortunately, as an ecosystem, we don’t talk about failure candidly enough, and if you spend enough time on social media, you start to believe that giving up isn’t an option for “real entrepreneurs.” But perhaps knowing when to give up is the only thing that makes a true entrepreneur.
In the MENA region’s startup ecosystem (and our societies in general) it can be really difficult to give up, because by doing so, entrepreneurs feel like they’re doing exactly what everyone expected them to do: fail. However, if you want to succeed in the entrepreneurial world of the Wild Wild East, then you’re going to have to pick your battles. The fact of the matter is, as Hans Henrik Christensen wisely said during the forum, “sometimes things won’t work out, and it’s okay to step away,” but you need to do it “before it wears you out, and kills your spirit.”
As a region with the largest youth population in the world (and the region with the highest youth unemployment rate), not only is it in our moral obligation to encourage more young people to engage in positive economic activity, it’s also in our economic benefit to help them fail fast and cheap.
Although it’s a difficult lesson to learn, more and more young entrepreneurs in the region are starting to understand that having the courage to end a venture is just as important as having the courage to start one in the first place.
9. We’re starting to look to our own entrepreneurial success stories for inspiration
As I’ve said many times before, being an entrepreneur in the MENA region isn’t easy. Especially when entrepreneurs feel the need to draw inspiration from the experience of startups based in the US and Europe, which have very different regulatory frameworks, funding landscapes, talent pools, so on and so forth. Leading most entrepreneurs in the region to ask themselves the same question: how much of this advice can I actually implement in the day-to-day operation of my startup?
Now, I’m not saying that parallels can’t be drawn to help entrepreneurs in the region come up with actionable advice. But as any polyglot will tell you, some ideas just don’t translate in another language, and the same goes for entrepreneurship. Fortunately, we don’t have to look outside of our ecosystem for advice as much anymore, because we have two startup unicorns of our own- Careem and Souq.
Not only are these unicorns important to our ecosystem, because they share MENA-specific advice that entrepreneurs in the region can relate to, they also serve as institutions of hope in what can feel like a desolate startup landscape at times.
In addition to that, these unicorns have also whet the appetite of national and international investors, and created hype around the MENA region’s startup ecosystem, which is essential, because investments and exits are crucial to the growth of the funding ecosystem in the region. That being said, that’s not the only way that these unicorns are creating waves. Careem’s investment in the Egyptian transportation startup Swvl also shows that our unicorns can lead the way when it comes to investing in the abundance of talented people in our region.
When asked what key questions MENA-based entrepreneurs need to ask themselves to expand globally, Zach Finkelstein, Vice President of Corporate Development at Careem, urged the entrepreneurs in the crowd to ask themselves the following questions: how are you going to beat the competition, and what will it take for you to grow? Two questions that have undoubtedly changed Careem and our ecosystem by association.
However, just because you’re not a unicorn doesn’t mean that you cannot inspire. Each one of us has the ability to inspire someone else to be better, by always trying to strive for excellence in our personal, professional and community lives.
Zach Finkelstein, VP – Corporate Development, Careem
10. We’re learning how to create more value for our region’s economies by spending wisely
During the forum, Reda El Chaar, founder and Executive Chairman of Access Power, noted how his team was able to build a multi-million dollar renewable energy company by disrupting the utility sector (a traditionally non-innovative sector) in just six years. An achievement that makes him believe that entrepreneurs don’t need to “worry about the money,” as long as they “[they] have a good idea.”
Is that true? Not entirely, but not for the reasons that you might be thinking- at this juncture, I could discuss how there’s a frustrating lack of funding in the MENA region, but we already know this, so there’s no need to beat a dead horse.
Instead, I’ll talk about how startups in our ecosystem need to become better stewards of their money- whether they have it yet, or not. Unfortunately, I think there’s an erroneous belief amongst entrepreneurs, in general, that makes them think that just because they’re not gearing up for an IPO, that they can’t spend their time, energy or resources thinking about their “social footprint.”
Surprise, surprise: I don’t agree with this belief. Startups in the MENA region need to start thinking about how they’re spending their money, where they’re spending their money, and how they can optimize their expenditure to make sure that more people are being empowered in their value chains.
Imagine if every startup tried to create a quota in their company of how many people or how much work was outsourced to individuals with special needs, single mothers or micro-entrepreneurs living in the MENA region with the requisite skillsets? Not only would these startups be providing someone (who might otherwise have difficulty entering the labor market) a job, they would also be giving them a sense of self-confidence and financial independence. This is in addition to creating a great buzz around their startups, and recruiting organic brand ambassadors for their products and services in the future.
Isn’t that both impactful and fiscally responsible? Actually, it’s fiscally responsible in two ways. Firstly, it’s maximizing the use of the funding available to the startups. Secondly, it’s providing a livable wage to someone who’s qualified, yet unable to find work.
Undoubtedly, there are already many startups in the region that outsource their tech and marketing needs to countries like Jordan or Egypt in the MENA region, but it’s time that more entrepreneurs started thinking about how they can strategically outsource their needs to empower those in need.
11. We’re learning that nothing should distract our entrepreneurs from their ultimate vision
The fastest way that a startup can lose its agility (one of its biggest competitive advantages) is by doing something that most of us do way too often: overthink. As Aya Sadder, Incubator Manager at Intelak, said, during the forum: “If you have a big vision, it doesn’t matter how you get there,” it only matters “that you get moving.” However, so many entrepreneurs in the MENA region lose sight of this because they spend so much time and energy trying to achieve their vision in a logical order, or rather, the order they conceived it in at the beginning of their startup journey.
However, sometimes the logical order isn’t always the best order to pursue success, especially when it comes to prototyping and beta-testing startup products and services. According to Sabah Al-Binali, when it comes to your offering, “there’s good, fast, and cheap. You can do two out of three, and the best is fast and cheap. As long as what you’re offering is better than what’s in the market, do it.” While this advice might seem counter-intuitive to most entrepreneurs, it’s the best way to validate your idea, refine your offering, and test the appetite of your market before you sink your entire life savings into a potentially disastrous venture.
Having said that, the desire to follow a business plan to a tee isn’t the only thing that will distract an entrepreneur from hustling their way to their ultimate vision. Well-meaning investors who feel the need to put entrepreneurs back on the right track, because they’ve made a reckless decision may be another reason why entrepreneurs lose confidence in themselves, and the unconventional decisions that they have to make in order to achieve success.
When it comes to running a startup, there are only two details that really matter. They’re the two elements that can break or make a startup: the people you select to be on your team, and the investors that you choose to fund and mentor your startup.
As an entrepreneur, when you’re looking for partners in your venture, you need to look for people who have the courage to break with the linear thinking that so many of us have been raised to use in our personal and professional lives.
You need people that understand that opportunities won’t always look like opportunities and failure doesn’t always come from taking the path least traveled. But most of all, you need people who will help you trust your instincts, so your startup can always stay agile.