SOURCE: The Khaleej Times - The DNA of a startup
The startup industry has evolved with new dimensions of growth in the Middle East and North Africa, or Mena, region with investments scaling new heights everyday. So what makes a startup successful in the region? Investments, technology, management skills.... many factors contribute to this success of this sector.
The strong support from UAE government is testament to growth of this sector. Khaleej Times spoke to some experts and delved in to the factors that aid the growth.
The latest MAGNiTT - an online community that connects Mena entrepreneurs with stakeholders across the Mena ecosystem - data indicates 68 per cent of Mena startup founders originate from the Middle East, despite many having dual citizenship, 38 per cent of Mena's 100 startup founders are from Lebanon and Jordan with only 16 per cent of startups headquartered there. The UAE hosts 50 per cent of Mena's top funded startups, only one per cent of founders are UAE nationals.
Ammar Al Malik, managing director of Dubai Internet City, said: "There is no shortage of bright ideas in our region, but what makes all the difference in turning them into successful business ventures are the people who drive them and the environment they operate in. Creative minds need to be supported and nurtured to be able to convert their concepts into reality. This is where I believe Dubai Internet City makes a real difference: by providing in5 an entrepreneurial platform for people to connect, co-create and exchange knowledge and ideas, we have created an environment that allows businesses of all sizes to innovate and grow, propelling our societies forward."
Access to digital technology plays a crucial role in the recent growth and success of startups in the Mena, with many of the leading successful startups in the region supported by high internet penetration and mobile phone ownership in some Arab countries such as the UAE, Qatar, Lebanon, Egypt and Saudi Arabia. The massive interest of young entrepreneurs in digital technology as an ideal platform to start up a business is visible in key events in the region, such as the inaugural Tech Startup Movement which was launched at the latest version of Dubai's Gitex where more than 450 startups participated.
In the third of their series on the Mena startup ecosystem and to celebrate over 3,000 startups listed on the platform, MAGNiTT released its research on the founders of Mena's top 100 funded startups. Off the back of a record year of $870 million plus in startup investment, MAGNiTT analysed the backgrounds of the founders of Mena's most successful startups, ranked by total disclosed funding. The top 100 startups together have raised over $1.42 billion in funding and each startup has raised more than $500k individually. The 100 startups, including the likes of Careem, Souq and Fetchr, are made up of a total of 189 founders.
Philip Bahoshy, founder, MAGNiTT, said: "Entrepreneurship has multiple challenges including growing a business, raising funds and developing a strong team and culture. The data highlights that founders in the region have often come from corporate backgrounds. This indicates that the experience and knowledge provides them with the tools to tackle and overcome such issues. Such individuals are likely to have the cash to bootstrap, experience to deal with the regulatory environment and perseverance to succeed in a nascent ecosystem. While celebrating the tremendous success of the likes of Souq and Careem, both of whom have founders with a wealth of experience, our research highlights areas that can be developed and fostered through policy changes and investment to further help shape the startup ecosystem across Mena."
Research also shows that 40 per cent of startups were created by sole founders and up to 79 per cent were either sole or two founders which is higher than international comparisons where 69 per cent are made up of teams of 2 or 3 founders. In Mena, 12 per cent of successful founders are female in comparison to 15 per cent in the EU and 17 per cent in the US. On an average in Mena, founders had nine years worth of experience before starting their companies in comparison to the US unicorns that had six years.
"As a VC, we see more talented founders emerging in Mena launching successful startups. These startups are diverse, as MAGNiTT's report highlights, however there is common DNA: Experienced founders who can execute; who are committed, collaborative and are surrounded by strong teams; solve real problems in the region via tech - what we call 'disruptive localisation' at Iliad Partners; typically based in an entrepreneurial ecosystem hub such as Dubai where support is available, and have the potential to scale across Mena. It is a good time to be an entrepreneur and a VC in the region right now, and MAGNiTT has developed an excellent industry platform to surface valuable data on the ecosystem," said Christos Mastoras, founder and managing partner of Iliad Partners, a venture capital firm investing in early stage tech startups in Mena.
Nearly 500 startups opening businesses and seeking funding are spurring a new round of entrepreneurial boom across the Arab World as more young executives take on the new roles of business owners or managers, according to a new report titled 'The Future of Arab Startups: Challenges and Opportunities in a Connected World.'
Ray Dargham, STEP Group co-founder and CEO, stated: "The startup movement is very much alive across the region and is being led by a younger generation of Arabs looking for profound change in society. The release of the report proves to be both timely and strategic as it puts forward the importance of startups and the role of digital transformation in opening up huge opportunities for growth. It also significantly highlights the growing interest of government and private sector to invest in these entrepreneurs, particularly the really innovative businesses which have the potential to reach larger markets. It is a birds-eye view of what is happening on the ground."
Echoing similar positive sentiment, Nidal Abou Zaki, managing director, Orient Planet Group, said: "There is consensus among all sectors of society - government, private, and civil society - that supporting entrepreneurship is key to addressing unemployment and other social issues, which could open up huge opportunities for the youth and present modern-day solutions to the problems we face today. The report reveals how several successful regional startups are inspiring the young generation to run their own business, which is a very refreshing development in a region that has been facing many political and economic challenges."
SOURCE: The Khaleej Times - The DNA of a startup