Start-ups are in a nascent stage in the region. There are some great success stories and some failed ones. The Internet and Technology space is emerging in the Middle East and North Africa Region. However most of these startups need investment in their later stages.
Arabreneur is a pan-Arab initiative that seeks to create an ecosystem for young Arab entrepreneurs and fill the investment gap. We were delighted to interview it’s co-Founder Radi El Fassed to know more about this initiative.
The Interview
What is Arabreneur?
Arabreneur is a program developed by MENA Apps L.L.C., a leading private accelerator in the MENA region, which seeks to create a sustainable eco-system across the MENA region to nurture entrepreneurship in the various stages of development. Arabreneur is a not for profit Arab Entrepreneurship initiative aimed at contributing to the development and growth of a socially conscious economy and civil society in the Middle East and North Africa (MENA) region and seeks to emerge as the first full-scale regional enabler.
Arabreneur consists of 4 main pillars to create the right eco-system for entrepreneurship and deal-flow to create a Silicon Valley like infrastructure:
- Network of Universities, Incubators, Mentors & Angel Investors
- Acceleration and co-working space
- Seed & VC Fund
- Arabreneur physical and virtual regional and international network
In general, successful enterprises need a regional or international market to become successful. Arabreneur has built a regional MENA eco-system that provides all aspects for entrepreneurs to grow from an idea to successful exit. This is required not only for the entrepreneur, but also important to create a sustainable investment environment. Today, Arabreneur has facilities in Palestine, Jordan and the GCC.
How did the idea of Arabreneur come to life?
The Arab spring, also known as the Facebook/Twitter revolution, has ushered in an era of unprecedented opportunity and great potential for economic and civil society development throughout the MENA region. The Arab youth of the region are aware of their collective potential, having witnessed first-hand the people power that they wield and can effectively harness through their use of social media. They are ripe with hope for a brighter future for themselves and their countries, emerging as a young, engaged, socially conscious, and extremely tech-savvy segment of the population.
This dynamic demographic is both innovative and highly educated, and is actively looking to redefine the region’s technology and social spaces. Around 50% of the current MENA population is below 24 years old and to create a future perspective, these youth have to be provided with opportunities to sustain their livelihoods.
Unemployment rates for the non-oil producing economies of MENA average 20%, among the highest in the world. Unemployment for those under 25 is over 40%, with serious economic/social exclusion and brain drain implications. In addition to that, even in some oil rich countries, the government employs more than 95% of the national workforce. It is therefore that over the next ten years, the MENA region must create over 50 million new jobs to maintain the same unemployment figures. This employment cannot come from traditional companies or government jobs. The real growth can only be realized by creating new companies that will embrace the current regional economic growth opportunities. Entrepreneurship is therefore an important source of job creation that will help the youth of the region to focus their efforts in rebuilding the region’s economy and turn them from job seekers to job creators.
Additionally, the ICT sector in the MENA region today is growing dramatically and creating major opportunities to create an e-economy. With more than 150 Million Arabic broadband connections in the region and a 26% growth year over year, e-commerce and online services market is growing from 8 Billion USD to more than 20 Billion USD in the next 3 years. Moreover, more than 50 Million Facebook accounts are active in the region with the GCC countries showing one of the highest smartphone penetrations worldwide. On the other hand, the content and applications to drive this e-economy for the Arabic speaking region in specific is lacking behind which portrays an enormous opportunity for high growth entrepreneurs to create their companies and create a significant amount of jobs.
In order to encourage and support the Youth of the MENA region to engage in the creation of SMEs and innovative startups, Arabreneur was created in Ramallah in 2013.
What services does Arabreneur provide?
Arabreneur’s aim is to engage young entrepreneurs in their development and provide them with facilities to use their creativity and time to develop startup companies that will provide them economic and social growth. The entrepreneurs will find facilities, mentors, and working spaces in various locations in Palestine where they get support in the setup of their own company.
The Arabreneur program in Palestine contains the following elements:
- Arabreneur has partnership agreements with universities, incubators, VC Funds, and private sector companies to create a strong eco-system in Palestine. In addition, Arabreneur’s regional and international network allows easy access to Jordan, GCC, Europe, USA, Canada, and Australia.
- Arabreneur has partnered with StartupBootcamp to conduct bootcamps to provide intensive training to entrepreneurs on the basics of company establishment, Financing, Marketing, Business plans, and Investor pitching.
- Arabreneur has established the Arabreneur Venture Fund that will invest in companies that graduate from incubation and are ready to start selling their products. Carefully selected companies will get investments between 50k USD and 150k USD based on the company status and needs.
- Arabreneur established and furnished a physical space in Ramallah to function as a co-working and acceleration space for advanced entrepreneurs. The facility will be managed by an Accelerator manager and highly qualified and carefully selected mentors will provide specialized support to the entrepreneurs as required.
- In order to support the entrepreneurs with mentorship and guidance, Arabreneur manages a highly qualified network of mentors for every field of the business world and will provide mentorship workshops and guidance to the mentors and mentees. In addition, Arabreneur has partnerships with many companies and organizations to provide further mentorship like PriceWaterhouseCoopers, Startup Bootcamp, Seedstars World, and others.
- Arabreneur is building a Palestinian Angel investors network to guarantee a sustainable entrepreneurial eco-system. Arabreneur mobilizes this angel network and provide them with the right support like workshops, international experts, etc.
What startups / projects has Arabreneur supported since its launch to date?
So far, Arabreneur invested in 7 startups.
The ones that received the investment in the first round are:
- “Aidbits”: an online data management platform for the non-profit sector to monitor activities, indicators and track beneficiaries;
- “Fariqak”: MENA’s first online fantasy game based on international football leagues;
- “LiveTop”: a social education platform facilitating communication between educators and students to share knowledge, with over 50 thousand paid subscribers;
- “Karaz”: an online platform providing advice and consultation to newly wedded couples.
As for the ones that received the investment in the second round are, those are:
- ‘Sooshef’: an online platform that allows aspiring chefs to find and customize recipes based on the ingredients they have;
- ‘Jobreneur’: a cloud-based platform that offers talent pool in the MENA region with access to online consultancy assignments in international markets;
- ‘Imagry’: a mobile image recognition platform that enables users to search through images that are hyperlinked to the vendors’ online portals.
Arabreneur invests between 50 and 150k USD per startup, provides co-working space in Ramallah and Jordan, and provides mentorship & networking services to grow these companies to be ready for VC investment.
How does Arabreneur generate revenue?
Arabreneur Fund invests in startups against an equity.
Who are the competitors to Arabreneur?
Arabreneur has an extensive network in the MENA region as well as international markets. I would not like to call our eco-system players competition. In entrepreneurship, it is all about cooperation and joint efforts.
What challenges did Arabreneur face prior to launching?
It is a bit early to evaluate that. We launched 6 months ago. When we launched, most people said that there are no investable companies in Palestine. I think we countered that by the 7 investments we have done in just 6 months. Our startups were featured as top startups at Arabnet Dubai 2014.
What are the future plans for Arabreneur?
We are planning to expand Arabreneur across the MENA region and create a network of accelerators.
Which markets in the Arab world, according to Arabreneur, is leading on Entrepreneurship?
Based on statistics, Jordan is leading the entrepreneurship scene. Post the Maktoob buy-out by Yahoo, over 70 investments have been done. However, Egypt, Dubai, and Palestine are growing very fast.
What are the challenges / opportunities for Entrepreneurs in the Arab world?
The opportunities are big. The market for online businesses is growing fast. Here some facts on the MENA region:
- 450 Million Arabic speakers in the MENA region our of which 70% are below the age of 35,
- Internet penetration growing by 26% per year,
- Arabic language fastest growing online,
- Social media density highest in MENA (50M Facebook users),
- E-Commerce growth of 300% to 16B USD in 2016,
- Highest Smartphone penetration worldwide in GCC,
As for obstacles, the biggest one being access to finance for startups to grow.
