Photo from MAKE Business Hub in Dubai
The uprisings in the Middle East have created an increased awareness among the youth in the region that they need to shape their own future. © http://makebusinesshub.com/
Photo from MAKE Business Hub in Dubai
Last updated: April 29, 2013

New times for entrepreneurs in the Middle East

Banner Icon The uprisings in the Middle East have created an increased awareness among the youth in the region that they need to shape their own future, writes Rana Wasfy.

Spring, the season when trees flourish and flowers blossom has been recently associated with something nearly similar, yet holistically different than the season we all know.

“Arab Spring” is the most remarkable feature of the century thus far. It marked a turning point, not only to the Arab world, but also to the entire world. While at the beginning, it was mostly associated with freedom and social justice, the thorns of that spring started tearing apart the pretty picture with recurring signs of chaotic aggression and unrest. It’s not all bad, though.

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Together with the transformation of the Arab world emerged a special focus of the youth on productivity and a need for self-actualization, which could not have been nurtured through the traditional means of employment, given the economic slowdown and political instability, which negatively affected the scope of companies’ operations.

In the face of such an obstacle, youth have found means to unleash their potential through what the Kauffman Foundation described as “not everything when it comes to job creation, but the only thing” – start-ups. Schumpeter, the very influential economist, viewed entrepreneurs as the third factor of production next to land and labor and as the economic agents for innovation and growth.

In the Middle East, entrepreneurs face numerous challenges when starting up a business, including the complex legal framework in most Arab states, difficulty of access to capital and lack of women participation in entrepreneurial activities. For instance, according to the World Bank’s report on Egypt’s Economy Profile of 2013, Egypt was the 26st most favorable country to start a business, yet it considerably fell behind when it came to ease of doing business (109th), and resolving insolvency (139th).

Despite the not-so-shocking facts, according to a report issued by Dubai Internet City and Frost & Sullivan, from 2005 to 2011, the number of startups in the MENA region has grown eight folds. The cause of such a notable increase is attributed to increased government support, academic attention to entrepreneurship and innovation in universities, and funding.

A World Bank factsheet on Doing Business in the Middle East reported that in 2011, 47% of the economies in the MENA region embarked on regulatory reforms to facilitate the process of starting a business.

Most notably, the past couple of years have witnessed significant growth in the number of incubators (alternately called accelerators), which are crucial for transforming crude ideas into a well-functioning and productive business. The top 10 list for incubators in the MENA region prepared by Wamda, an entrepreneur-empowering platform, included Oasis500, Meydan, Plug & Play, Egypt, Tahrir2, Seequnce, Berytech, SeedStartup, Tenmou & Flat6Labs, to name only a few.

These incubators follow the footsteps of Y Combinator, a leading startup funding company. Each year, they admit a specific number of entrepreneurs, and provide them with access to mentors, advice, professional training sessions, funding and office space for a period of time in exchange for a portion of the startup’s equity.

An inspiring example of the startups which emerged from the incubators is Fekra2, a tech-startup which started off with Flat6Labs in 2012, as an innovation intermediary – actually, the first of its kind in the MENA region – resolving complex problems in a novel way; basically posting business and government problems as a competition, for diverse contestants to resolve them, in exchange for a reward presented to the best solution.

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“Flat6Labs accelerated the pace of our start-up process and provided us with timely and valuable access to highly experienced mentors, who provided us with priceless advice and solutions to problems we encountered along the way,” Sabrine Assem, founder and CEO of Fekra2, said.

Launched in June 2011 by Sawari Ventures and the American University in Cairo, Flat6Labs was established with a mission to (in their own words) provide Egyptian technology visionaries with the opportunity to bring their visions to life in an environment that ensures that they learn what they need to make it on their own.

Flat6Labs admits 5-7 startups four times a year, and provides them with access to office space, mentorship, guidance, and sessions on various topics to empower them and pave the way for a successful business to spring into life. After 3 months, teams “graduate,” and a demo day is held for the teams to present their business ideas for prospective investors.

Interestingly, most of the incubators opening up in the Middle East nowadays, like Flat6Labs, are focused on tech-startups.

“Tech startups are trending, so that’s where the money goes,” Sabrine said, “which is one of the reasons why entrepreneurship is more of a male career choice in the Middle East – technology-based careers are not likely to be chosen by girls.”

The other reason is “due to societal restrictions; entrepreneurship and starting up a business requires working to late hours and through weekends (sometimes), which does not conform with the Middle Eastern culture and traditions,” she said.

According to the Global Entrepreneurial Monitor, in the Middle East, men are 2.8 times more likely than women to start up a business, whereas in Sub-Saharan Africa, men and women are equally likely to start businesses.

Nonetheless, times are changing, and so is the Middle East. Sabrine Assem, together with Noha Askar, Noha Mahmoud and Aya Rizk, were the first all-females team to join Flat6Labs’ program, and hopefully more will follow.

“We need to share more success stories about women entrepreneurs to inspire others to take the leap,” Sabrine concluded.

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Rana Wasfy
Rana Wasfy is studying Economics and Finance in the German University in Cairo. You can read her blog here www.ranawasfy.tumblr.com
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