Far or near, doesn’t matter where you look, it has arrived and is here to stay. New breeds of entrepreneurs are embracing the realities of a new economy.
It wasn’t long before this epic was going to catch wave in the MENA region. A global entrepreneurial revolution is underway. Nader Sabry Managing partner at McGill Consulting Group says, “We saw it coming, it was near but how close. We weren’t sure until our Business Confidence Index results for 2012 Q3 were in”.
The YouGov McGill Consulting Group Business Confidence Index is a decision and policy-making tool designed to help senior level executives see what’s coming next. In Q3 of 2012, the index showed the single largest surge in confidence among any sector. That being the technology sector. Where did this come from and why? The answer was simple. Nader Sabry stated, “There are three main drivers at play here. First, continued poor job market performance, second, low barrier to entry into many sectors via technology, and third people seeking grassroots financial independence”. This is no longer a Silicon Valley thing only.
THE WORKFORCE VS. THE ENTREPRENEURIAL-FORCE
Through a recent study conducted by McGill Consulting Group in business model design, 36% of the +21 million employees of the fortune 100 are going to become entrepreneurs in the next 3 years. Whether by inspiration or involuntary circumstances they collectively will represent $190 billion in seed startup investment to fuel their own businesses.
This phenomena isn’t strictly isolated to fortune 500’s, but it is across the board at all levels of the economy and globally. Several people in some shape or form will become an entrepreneur or be part of an entrepreneurial organization in the next 5 years.
A GRASSROOTS UPRISING
Several NGOs, governmental and standalone private initiatives have moved from institutional style support to grassroots development. The startup weekend organization a global non-profit initiative that uproots ideas and converts them into viable businesses in 54 hours has spread like wildfire in the MENA region. Keith Armstrong regional director for startup weekend says, “an increased number of Startup Weekend events in the region has contributed to more people attempting to build technology based businesses.”
A typical event attracts between 100 to 200 entrepreneurs over a weekend and drives an inspirational force to create new companies. Such initiatives bring people of all walks of life to bring their inspiring ideas addressing some very critical challenges.
WHERE THE RUBBER MEETS THE ROAD
Entrepreneurs are using several tools to accelerate, magnify and reach their objectives. Social media is part of an array of free or low-cost tools helping them succeed. Numerous entrepreneurs admit to logging in during class or at work to develop their ideas because it’s so easy to do so.
One of the major players in making this happen is LinkedIn. In Q3 of 2012, LinkedIn the largest online professional networking portal with more than 187 million members took the strategic decision of setting up in the Middle East. They saw the need for social media tools as a business capability.
“Social media today is about building meaningful connections,” Ali Matar, Head of LinkedIn Middle East & North Africa points out. “Networking on a global scale is important for all professionals including entrepreneurs, who are embracing platforms like LinkedIn to find talent, generate leads and market their products and services. Our mission is to make professionals productive and successful.”
Entrepreneurs are pushing the bounds of creativity by using these types of tools to transform their ideas into viable businesses.
AN ECOSYSTEM HARD AT WORK
MENA startups are taking advantage of digital growth patterns. Consumers in the region are spending two times more time online than watching TV. They also trust the Internet as a source for creditable information.
Regional startups are capitalizing on limited local content. They are localizing, offerings and user experiences. However, logistics and money collection are a challenge because of expensive payment gateways and cross-border logistics solutions.
Online prospects are bright. In 2012 e-commerce hit $3 Billion, expecting to reach $15 Billion by 2015. Companies like Namshi, MarkaVIP and souq.com have secured millions in funding anticipating an intensive surge in ecommerce usage patterns.
Within the past 24 months incubators, conferences and competitions have flourished. 2012 alone the following took place:
- ArabNet in Beirut and Riyadh,
- Wamda Mix n’Mentor in Amman, Beirut and Dubai
- Tech talks/hackathons (Amman Tech Tuesdays, NYU hackathon
- MIT Arab Competition,
- Google’s ebda2,
- Du’s “The Entrepreneur” TV show
A spillover effect is taking place. Successful entrepreneurs like Fadi Ghandour of Aramex and the likes of have setup their own funds. With an acute sense of commercialization and vision they are applying their talent to other startups. More of such funds are popping up and are actively seeking and seeding.
Beyond that, tech giants like Google who’s DNA is rooted in entrepreneurship are investing heavily in the regions ecosystem. Shant Oknayan Head of Operations, MENA at Google stated “we support the ecosystem by, building an ecosystem of developers, business owners and entrepreneurs with tools to create online businesses, services and applications”. He added, “our efforts are spread wide and deep within the ecosystem not just from a technology front but also with much needed business support”.
With the support of tech giants like Google, and veteran regional entrepreneurs setting up venture capital funds a new and exciting emergence is taking place.
INSPIRATIONAL EXAMPLES OF HOPE FOR OTHER YOUNG TYCOONS
A number of regional tech startups have gone global. They are a Testament to the regions ability to produce innovative companies. Some examples are:
- Butterfleye (winner of the 2012 MIT Enterprise Arab Business Plan Competition),
- Dermandar (creator of an app with over 2 million downloads), and
Award winning 23-year-old Iba Masood the CEO and co-found of Gradberry.com said, “finding a job was so challenging for me and my fellow graduates I decide to get in to the business of helping them out”. Gradberry.com the Middle Easts first career portal for fresh graduates today has helped students get placements and has employers like IBM, Namshi, and Akzonobel actively recruiting fresh talent.
Like other astute entrepreneurs Masood found a specific but relevant problem, put in place a scalable model and seeded it herself. She added, “I believe that entrepreneurship is heading in the direction of micro-businesses, whereby many people will be running one-person businesses that serve niches in the market”
Entrepreneurship is contiguous as Syed Ahmad a co-founder at Gradberry.com points out “I have seen many people quit their jobs and pursue entrepreneurship, after we took the plunge”. Many young current and newly graduated students are actively pursuing their own ventures. Some of them have indicated that although it’s not what their parents, teachers and career coaches have told them they instinctively know that this is where their futures will be.
Mostafa Hashem the founder of Forsetna.com, another aspiring young entrepreneur from Egypt has also contributed to employment. He joined the Entrepreneurial-force out of frustration in his mainstream career. Mostafa said, “I experienced serious limitations to how big I could grow and how fast you can get things done. The multinational I worked for could not cope with my ambitions”.
Bureaucracy, corporate politics, and not embracing new ideas are some of the main factors in driving young p4rofessionals to venture out on their own. Mostafa has five other friends who shortly followed his example.
THE ROAD AHEAD
Entrepreneurs, and investors share a common gap. As much as they need one another for the ecosystem to work, entrepreneurs continue to find alternatives. Entrepreneurs in the region have turned towards business plan competitions to raise funds from winning first or runner-up cash prizes. Even in some cases some student have put together mini-funds with campus colleagues to seed their ideas. A few social groups that meet up frequently have also popped up to support professionals who want to enter the entrepreneurial-force.
Nader Sabry of McGill Consulting Group adds, “The technology sector is the only sector in the world besides finance that touches every other industry. In fact, technology is the underpinning driver of systemic change across several key industries”. The technology sector has a relatively low barrier of entry giving startups a natural advantage. At the same time there are startups entering other industries using technology as part of their business model. This unleashes their competitiveness through innovative product and service offerings.
Overarching issues that will continue to present challenges ahead for the startup ecosystem within the MENA region are:
- Ingrained fear of failure: The social stigma of failure is too strong. It prevents innovation and risk-taking. A of leap-faith isn’t something encouraged socially.
- Barrier to exit: The ecosystem is yet to see a stream of exits. Deal flow is low, regulatory barriers to high and policies are too soft in supporting startups.
- Defragmented capabilities: The alignment of business and technical skills is still limited. Finding regional talent with competitive global skills is tough.
Entrepreneurs will have to continue finding creative alternatives to fueling their ideas. As more funding sources appear on the scene, they are realizing that money isn’t everything. Beyond capital requirements, they will need to think about the following approaches:
- Partnerships with suppliers and other collaborators,
- Customer integration, and
- Design relevant, targeted and simple value propositions.
They need to think about how to build ambassadors to advocate their offerings, and reach influencers by planting many small seeds. Not an easy job, but that’s what it takes.