Off To A Good Start: Techstars Dubai At the newly-launched Techstars Dubai much can be learned about the passion and the hustle of founding a startup.
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This article was co-written with Pamella De Leon, Startup Section Editor, Entrepreneur Middle East
In recent years, Dubai has emerged as an innovation-dense city, slowly but surely setting itself on the radar of the holy trinity of the world's highest profile startup accelerator programs, i.e. Y Combinator, Techstars, and 500 Startups. Indeed, Techstars became the first US accelerator and venture capital fund to establish an office in the UAE last year. However, when it comes to Techstars Dubai, there are many more firsts.
To start with, it is the first investment by an Emirati family into an accelerator program focused on early-stage startup founders. GINCO Group of Companies is a Dubai-based full service general contracting firm that has been firmly established in the country's construction sector, since its foundation back in 1975 by Gheyath Mohammad Gheyath. More recently, GINCO launched GINCO Investments to support and nurture local entrepreneurial talent, as well as potentially power the rise of new industries. With such intentions, it was a perfect partner for Techstars' vertical program, which is typically operated in partnership with large corporations- in joining Techstars' Corporate Innovation Partnerships program, GINCO has joined the ranks of institutions like Sony, Barclays, and Amazon.
"Our partnership with GINCO is key to our success here in the UAE, and they have been phenomenal," says Vijay Tirathrai, Managing Director, Techstars Dubai. "Leveraging on their decades of experience in the construction and engineering field, they have provided technical expertise, and supported pilot projects for our founders. In addition, they have helped our founders to fast track the right connections in both the government and the private sector. This relationship has been nearly two years in the making and we have a shared vision to nurture innovation through technology startups. Furthermore, GINCO helps Techstars expand our mentor network, and our external recognition of cohort."
As a worldwide network, Techstars' mentorship-driven accelerator programs offer support to entrepreneurs throughout their lifelong journey, "from inspiration to an IPO." To date, 1,207 companies have become part of its portfolio, and have jointly received US$4.7 billion of total funding- and 88% are still active or have been acquired. In addition to Techstars startup programs (Techstars Startup Digest, Techstars Startup Weekend, and Techstars Startup Week), another crucial pillar of Techstars' strength is its venture capital arm, Techstars Ventures, with $265 million under management. "This year, Techstars will have close to 40 accelerator programs worldwide," Tirathrai explains. "There are essentially two types of programs: corporate innovation programs whose objective is to disrupt certain industry verticals, which is done with leading corporate partners for respective industries, and city programs that tend to be generic and agnostic of any particular industry or verticals. Our Dubai accelerator is agnostic; however, we do have a slant for a smart cities theme."
Techstars is known for putting a strong emphasis on collaboration with and within the local community. In Dubai, that is further strengthened by Techstars Dubai being a founding member of Area 2071, a Dubai government initiative aimed at spearheading innovation. "It's a great time to start a business in the Middle East, because of its young demographics being hungry for rapid change, its growing mobile penetration enabling small businesses to reach a wider audience, its readiness to adopt technology, and to disrupt traditional business models, and the reforms of the regulatory frameworks to facilitate the use of fintech, AI, blockchain applications, IoT, and so on," Tirathrai says. "Furthermore, heightened awareness of the success of tech startups and acquisitions in the region has seen increased investors' appetite, both by angel investors and venture capitalists."Edmond Husseini and Taline Vahanian, co-founders, Felix. Source: Techstars Dubai.
As long-time residents of Dubai, Taline Vahanian and Edmond Husseini, co-founders of Felix, a fullservice digital insurance broker, echo the same sentiment. They are building a region-specific solution, hoping to increase customer service standards in this industry in the Middle East. Since its beta launch in September last year, Felix has enjoyed 20% monthon- month growth, while the co-founders consider their biggest successes so far to be setting up partnerships with the top eight auto insurance companies in the UAE, and crossing AED1 million in premium sales very quickly. "This region has the lowest insurance penetration in the world, and we think that it is because the distribution of insurance has been done in a very archaic way," Husseini says. "We think that the internet is a great opportunity to change that, because it gives you reach, allows you to talk to millions of people easily, and to educate them. We are trying to change the way insurance is perceived here, and change the way it is bought. Felix is a digital insurance platform, and by having an account with Felix, you deal with us, our customer support team is at your disposal whenever you need it. You don't need to deal with the lousy customer support of your insurance company, we fight your battles for you. You deal with us, you're talking to the same group of people all the time, the interface is consistent, the customer experience is consistent. We worked very, very hard on that, and that's what we're good at. We handle all of the frustration of the back end of the insurance company, because we deal with them every day anyway. So, we know how to get stuff done with them."
When asked why they decided to enroll in the Techstars Dubai program, Husseini replies, "I think it is by far the most prestigious accelerator to have set foot in Dubai. With previous businesses I've been involved in, I've been in touch with other accelerators, but the Techstars experience is on a completely different level. It is about their pool of mentors, but also the funding- $120,000 is a lot of money for a small business. That's pretty serious, that shows commitment. Other accelerators give you $20,000 or $30,000, and take a lot more equity. Also, the overall business environment for startups here is certainly improving. We didn't have initiatives like Area 2071 five or seven years ago when I was starting my first business. In those days, they treated anybody and everybody in the same way. Now there are incentives to set up small technology businesses. I still think that we can do better, as a country. It's not always easy, but it's going to get easier."
For its inaugural class which runs from January to mid-April, wrapping up with a demo day, Techstars Dubai has selected 10 earlystage companies, offering a $100,000 convertible note and $20,000 in exchange for 6% common stock to each of them. In addition to benefiting from Area 2071's strategic location at Emirates Towers, the enrolled companies get over 400 perks worth $1 million from ecosystem partners. Tirathrai explains that applicants go through a vigorous selection process with several rounds of interviews, being evaluated on the founders' experiences and credibility, the product, the use of technology, the relevant addressable market, and the timing of the product-market fit. "There is overwhelming focus on the founder's ability to execute ideas," he notes.
The curriculum of the Techstars Dubai program does not differ from its other programs globally, while the mentor pool is a combination of both local and global mentors. Tirathrai explains, "Techstars Accelerator program is a mentor-driven program. In addition to a large pool of quality mentors in the region and globally, founders get access to potential channel partners, enterprise customers, investors, and alumni founders through our global networks. At the beginning, the founders focus on getting extensive perceptive and insights from a wide pool of mentors representing different domain expertise. Through this mentoring process, they will generally either augment their business approach, or pivot completely. In the middle of the program, the focus is on execution by building their product and carrying out their strategy in order to gain more traction faster. Towards the end of the program, the focus tends to be on helping founders raise funds and getting access to qualified investors. I believe that Techstars is unique compared to other accelerators in that we have a financial "skin-in-the game,' and our "founders-first' mentality."
Benjamin Balazs, founder, Soluki. Source: Techstars Dubai.
The availability of local experts is vital for those building localized solutions, such as Benjamin Balazs, founder of Soluki, a browser-based application that enables Arabic speakers to build business-driver websites without previous coding experience. Having lived in Dubai for seven years, Balazas realized that micro entrepreneurs across the Arab world needed additional support to develop their digital presence. "We realized that local businesses should have websites, but the problem was that they had never had a chance to set up a website easily, as they always had to hire a freelancer to build it for them, and the catch is that the half of the population here don't speak good English," he says. "It's a huge language barrier, and because of that many of them don't even know what the domain name is, and thus can't even imagine that they can build a website for themselves. That's how we come into the picture because we have built a solution that has a proper Arabic user interface." Since its launch in the summer of 2017, more than 15,000 people signed up for Soluki, with conversion rates being extremely high in Morocco and Egypt.
Balazs adds, "They are looking for use cases, such as how to sell more and how to benefit from a website. Because of that, we are working hard on integrating Soluki with payment gateways because getting paid online is a huge problem in countries such as Saudi Arabia. In Saudi Arabia, 70% of e-commerce orders are cash on delivery. The fundamental problem with that is that there is a 30% return rate, leading to the waste of a lot of money. Also, the likes of Souq and Noon don't do business with those who don't have commercial license, while McKinsey has shown very clearly that there are millions of unofficial businesses. That is our target, the community we want to start with. For now, we are a solution for them to make more money, that is the only thing that they care about. We are really promoting ownership and privacy because on big e-commerce platforms your products and content are always surrounded by other people's products. On our platform, it's opposite. You can finally have your own space."
Globally-based founders selected for Techstars Dubai have been requested to relocate to the Emirate for the duration of the 13-week program. Among them are Debanga Raj Neog and Abi Ghafari, co-founders and co- CEOs of Nytilus, a startup developing a new generation of AR/VR helmets for industrial applications. The Nytilus co-founders had previously experienced difficulties of starting a business in a new city and without a proper support network. "I'm from India and my cofounder is from Montreal, so when we started our business in Toronto, we didn't have any good connections," Neog says.
"It is very hard to grow your business if you don't have a strong network. That was something we were lacking at the time, being new to the city. At the same time, we needed funding, because building the hardware was very expensive. Even a small prototype can cost up to $20,000. We did a research on accelerators, and Techstars Dubai was perfect for us, not just because of the funding, but because of all the construction going on here. However, before coming here, we knew nothing about this market, we had no idea. We tried to read about it, but that is very different from coming here and talking to people. One thing about Techstars is that they assign you a mentor, and the mentors we've got know a lot about the UAE. Every time we need to make a decision, we consult them."
Debanga Raj Neog, co-founder, Nytilus. Source: Techstars Dubai.
Another cohort member is Muthla Al Sayer, CEO, omniX Labs, a platform for businesses that processes and analyzes video images, thereby enabling them to build applications with image recognition capability without the need to invest in and maintain their own machine. "If I didn't enroll in Techstars, I don't believe we'd be this focused, we'd probably be kind of playing around with the product still," she says, adding that she initially did have doubts about enrolling in the program. "I was extremely skeptical, because I'm not a 20-year-old, I'm very seasoned. I talked to a couple of people who graduated from the program, and to some who were enrolled in the program at the time, and all over the world. Now, I have to say that it was the right decision, because this program really forces you to focus on what you are trying to build, and then on scaling. They throw a lot of bodies at you, in terms of the network, the mentors, and the people who are extremely capable from the industry, those who started many companies. So, you're getting a breadth of knowledge that you would never get access to. So, before enrolling, you hear these things and you want to see them in action and, in our first week, the CEO of Techstars came and met with each one of the startups, spent 20 minutes with each, and he really cared. He's the one who pushed us to work on our purpose. Then, he connected us with someone else to make sure we were actually on the right track, so that was just in our first week. Throughout the program, we've all had to submit a weekly KPI report and have one-on-ones with the advisers. Also, there is a section called "Shout Outs' which is where you thank people who have helped you, so you're thinking about this gratitude every week, it's almost like it's engraved in your mind, because it means that you can, and do get help all the time."
Muthla Alsayer of omniX Labs. Source: Techstars Dubai.
With stories like these, it's easy to see that Tirathrai has settled in well in his role as Techstars Dubai's Managing Director- a serial entrepreneur and a former CEO at Entrepreneurs Organization, he brings more than 20 years of experience, expertise and empathy which is needed when supporting high-growth entrepreneurs. "Many of our companies come from various parts of the globe and often it's the first time operating in the Middle East," he notes. "Naturally, understanding cultural nuances and pace of doing business will vary greatly. That is often challenging to be in sync with our fast pace program. Patience, perseverance and relationship building will weigh in their favor for doing business here."