Arab Tech Startups Try To Seize The Moment

The political changes brought about by the Arab Spring have raised hopes among high-tech entrepreneurs that this will translate into an improved  business climate. Here, budding entrepreneurs work at Oasis 500, a seed investment firm in Amman, Jordan, on Nov. 2, 2011. i i

The political changes brought about by the Arab Spring have raised hopes among high-tech entrepreneurs that this will translate into an improved business climate. Here, budding entrepreneurs work at Oasis 500, a seed investment firm in Amman, Jordan, on Nov. 2, 2011. Muhammad Hamed/Reuters/Landov hide caption

itoggle caption Muhammad Hamed/Reuters/Landov
The political changes brought about by the Arab Spring have raised hopes among high-tech entrepreneurs that this will translate into an improved  business climate. Here, budding entrepreneurs work at Oasis 500, a seed investment firm in Amman, Jordan, on Nov. 2, 2011.

The political changes brought about by the Arab Spring have raised hopes among high-tech entrepreneurs that this will translate into an improved business climate. Here, budding entrepreneurs work at Oasis 500, a seed investment firm in Amman, Jordan, on Nov. 2, 2011.

Muhammad Hamed/Reuters/Landov

Social networking sites have been at the vanguard of the Arab uprisings over the past year. Egyptians used online pages to organize protests, and Syrian activists have posted frequent YouTube videos showing government forces shelling civilian areas.

The same growing Arab online awareness that made the Internet part of the pro-democracy movements has also created a mini-revolution for Arab technological business.

Due to regulation, limited infrastructure and governments wary of the Internet, the Middle East has not been the easiest place to launch a tech startup.

Omar Christidis founded ArabNet in 2010 to address what he said was a lack of communication among Arab tech entrepreneurs.

"People were not talking to each other, from Egypt from Saudi from Syria, and there were no real online places where you could find out what was going on," he said.

Summit In Lebanon

ArabNet has been hosting a "digital summit" to showcase new ideas and create a networking space for techies. This year, it was held at the Habtoor Hotel just outside Beirut, Lebanon.

Young men and women wearing the unofficial tech entrepreneur uniform – button-down shirt, no tie, jeans, and a blazer – gathered around Christidis and chatted eagerly with investors from Gulf states wearing white robes and head scarves.

There is an enormous opportunity for growth in homegrown digital startups in the Arab world, Christidis explained.

"When we started the conference in 2010 there were about 35 million users [in Arab countries], today there are over 70 million users of the Internet."

Abraham Kamarck, an American working for a tech firm based in Qatar, said ArabNet is "the hot place right now" to meet other techies and investors in the Middle East.

Kamarck is optimistic about the future of the Middle East tech industry. Since tech investors look at the long picture, he said, even a country like Egypt – whose economy has cratered since last year's revolution – is still fertile ground for venture capital firms.

"If you look at the demographics of the youth, if you look at the Internet penetration and the mobile penetration, it's a very attractive market in that sense from a growth standpoint," Kamarck said.

An Incubator Finds Strong Demand

Hany al-Sonbaty, co-founder of a Cairo venture capital firm called Sawari Ventures, agrees.

His firm set up a tech business incubator called Flat6Labs with the hope of making it easier for young entrepreneurs to start tech businesses in Egypt.

Flat6 received 60 applications for just seven spots. The accepted firms got around $12,000 and 12 weeks to hire a staff, start a company, and secure investors.

When Egypt's former president, Hosni Mubarak, stepped down in February 2011 in the face of an uprising, the company held a meeting to discuss the upheaval, but saw no reason to change its plans.

Now in its second cycle, Flat6 is humming with the clicks of keyboards and excited conversation. Carved out of an ornate old apartment building beside the Nile River, the incubator is intended to be like a second home for the entrepreneurs, who may find that long days at the keyboard turn into a night of sleeping on one of the bright red and white couches.

A Range Of Ideas

The company ideas are diverse.

One in the current Flat6 class is Nefham. Founders Hashem Aly and Mostafa Farahat hope to set up an online video learning database for Egyptian students.

Another, GyroLabs, sees a future for interactive television in the Middle East. Ahmad Fathalla's company is trying to develop apps for smart televisions.

AskNative, founded by Abdelmoniem Ragab and Seif Sallam, is developing a mobile phone application that uses Twitter, online translation, and crowd sourcing to connect tourists with locals to answer questions while traveling.

Sonbaty says, "there's a big difference between somebody who's clever at doing a product and somebody who's running a company. This is where they learn it."

Egyptians are uncertain about what their country's future holds. But Sonbaty sees one way the revolution changed this class of entrepreneurial techies.

"It emboldened them," he said. "Some of them said, 'You know what? Let's just do this.'"

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