Startup Boom in the Middle East



The correct answer is Sabq.org as reported by the Effectiveness Measure, which has a MENA office in Dubia. The GCC region (Gulf Cooperation Council) represents 46 million of the 91 million unique web browsers established in the MENA region, according to the Effectiveness Measure report.

This week PITAPOLICY welcomes returning contributor, Ramy Ghaly, to comment on the technology ecosystem. His previous post may be found here: Technology Series Part 1 & Part 2.

Arab Startup Boom Awakens
By: Ramy Ghaly

The Arab world’s political scene shifted along with its young-tech-entrepreneur’s scene. Some optimists describe it with the combined effects as the revolution of social media networks of Facebook and Twitter. However, Businessweek and others argue that this is an oversimplification. Activists diverge on this opinion as well. Either way: social media networks have impacted the Arab youth; estimated 60 percent of the Middle East and North Africa region are under 30 years old. The Arab youth in MENA region (has 60 percent of the world’s oil reserve) are also fed up with the privileged few who have monopolized job opportunities, which have triggered another kind of a revolution; a technological commerce trend. Technological commerce includes the boom of startups and entrepreneurship in the Arab region.

With an estimated forecast of 150 million internet users in 2015, a new generation of entrepreneurs started emerging. A generation that is hungry for knowledge, similar to the renaissance era after the dark ages in Europe; and, a passion for technology that is driving growth to leave their mark in this new industry in the Middle East and North Africa region. Although 70 million Arabs currently use the internet, the content available for them in Arabic is still minuscule compared to the other languages; estimated at 1% of the global internet content. However, Arabic accounts for the 7th largest language spoken in the world which triggered an investment opportunity to develop applications and content in Arabic for a market that is proving to be profitable with sustainable growth going forward.

The investment climate in startups looks promising in the Arab world. There was an estimated $30 million over the period of two years (2010-2011). However, more than 70% of venture capital investments have been executed in 2011 (mainly in the technology sector); therefore, will lead to more investment growth in the next 5 years.

Here are some highlights of the investment environment in technology and internet startups in the Middle East and North Africa region:

(Note: These facts were extracted and aggregated using ctrl, a semantic search engine that does semantic analysis on news like text documents. A product made possible by the Research and Development Team of Pragmatech. For more information, please visit the website at – http://www.pragma-tech.com
65 investments have been carried out in internet and technology startups by 22 companies specialized in financing and funding startups in different phases.)

The total value of investment pumped into these companies is estimated at 30 million dollars.
Jordan attracted the largest number of investments with 30 startups followed by UAE with 11 startups and then Egypt with 9 startups.

UAE startups have attracted the largest amount of investments with an overall estimate of 11 million dollars which accounted for 47 percent of the total investment flow. It was followed by Jordanian startups at 9 million dollars Saudi Arabia startups have attracted only 583,000 dollars.

The number of jobs created by these investments is estimated at 450 jobs. This number is likely to increase if these companies continue to grow and attract further investments.

Oasis 500 was ranked first in terms of the number of companies it invested in during the study with 20 companies, followed by Plug & Play Egypt with 6 companies. This clearly shows the importance of incubators in building the eco-system of the industry

Intel Capital pumped the biggest amount of investment with an estimate of 3,250,000 dollars, followed by Twofour 54 of Abu Dhabi with an estimate of 2,210,000 dollars investment

One of the most prominent events that occurred during the first half of this year was the entry of two world companies to invest in two companies from United Arab Emirates. The American based group buying website ‘Livingsocial’ acquired ‘GoNabit’. Also the classified website ‘Dubizzle’ got an investment from a South African company called ‘Naspers’ through its investment arm MIH. These two investments can be considered as an encouraging initiative to draw the attention of foreign companies to invest in the internet industry in the Arab world.

Group buying websites got the highest level of interest from investors, as nearly 10 Million Dollars were pumped in the sector out of 30 million dollars, the total investment amount.

With such enthusiasm in the Arab Technology Industry, one can say to the world that the Arabs made their mark in 2011; year of the protester according to Time Magazine. A year of uprising surprised the whole world where no global figure has anticipated being that profound of historical change. One can ask, what is next? According to Muhammad M. Mansour , Sr. Marketing Manager at N2V, claims in a notable post stating that 2011 was the year of entrepreneurship in MENA. This statement makes the MENA region ahead of other economies where they have started to see the impact of entrepreneurship influencing to name 2012 the year of the entrepreneur. Having said that, 2012 was kicked off with entrepreneurial fun event in Beirut sponsored by SUMU – startup meet-up in Arabia where entrepreneurs meet, connect, and share their experience while having fun doing it. Mansour ended by saying: “the impact of investing is still in its infancy, but growing, and that the long-term potential of this new asset class is encouraging. It’s clear that the Arab Spring has ignited new starts for 2012. And, I believe, the more benchmarking we can do for the ecosystem in MENA, the more developed it’s going to become”.

Ramy Ghaly is a Marketing Strategist with more than ten years in international markets experience. He held professional and managerial positions in various global markets in industries ranging from retail, wholesale, consumer goods, and technology. He is interested in social media developments, next generation search technologies, semantic search engines, and text analytics. Needless to say, strategies in geopolitics, Middle Eastern Studies, and environmental factors that affect global business growth are general interests to always monitor and encourage writing about. He can be reached at ramy.ghaly@pragma-tech.com. Follow Ramy on Twitter: @ConsultRamy.


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