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Internet and Mobile Trends in the Middle East  

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It’s no secret that Internet penetration has increased dramatically in the Middle East in recent years. More and more people are coming online and it helps explain the growth of tech entrepreneurship in the region. But what are the trends and patterns in Internet and mobile usage in the region? What do they mean now and how will they shape the future?

How do we answer those questions? Data. At WOMENA we love data and think it’s a very useful tool to measure a lot of different things so when we came across the excellent “The Arab World Online 2014: Trends in Internet and Mobile Usage in the Arab Region” report from The Mohammed bin Rashid School of Government we were intrigued. It’s a great read and we highly recommend it. The report is over a year old now but we still think the report is relevant to understanding the trends and patterns in 2016.

The statistics are likely to have changed somewhat with more users but they still show the magnitude of the opportunity for startups and investors in the Middle East. Here though are some key facts and findings from the report:

  • There are more than 135 million individuals using the Internet in 22 Arab countries (about 36% of the population)
  • Total users has been growing 20% annually
  • The mobile penetration rate is 110%
  • There are 71 million active social media users

So what do these statistics mean for the Middle East? It points to the massive opportunities available in the Middle East for startups and investors alike. There’s clearly a market for companies to emerge meeting the needs of these Internet users. It will take time for the market to mature but it’s an exciting time to be involved. We expect to see continued growth in 2016 with more startups and success stories emerging across the region from Morocco to the UAE. Watch this space!

The Multiplier Effect from Maktoob’s Acquisition  

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Maktoob was the Middle East’s first big entrepreneur success story. After Samih Toukan and Hussam Khoury grinded away to make the company a success (read Christopher Schroeder’s excellent book – Startup Rising: The Entrepreneurial Revolution Remaking the Middle East – for a full story), they sold the company to Yahoo! for $170 million in 2009.

At WOMENA, we knew the Maktoob story well but what we didn’t know was how significant the multiplier effect on the wider ecosystem was after its acquisition. Until, that is, we came across Endevour’s fascinating report: “Multiplying Impact: Amman’s High-Growth ICT Industry”.

As the image above succinctly shows, there was a significant network effect in Jordan and across the wider Middle East following Maktoob’s sale. Toukan setup Souq.com that is the Middle East’s first unicorn and has seen strong growth across the region. Some of the other well known startups that can be directly attributed to Maktoob include Nibras, Arabia Weather, Khodarji, Sukar, Marka VIP and Jabbar Internet Group.

It shows how powerful the entrepreneurship ecosystem is. If one company can have such a significant multiplier effect, imagine what the multiplier effect is of the thousands of startups that have since emerged? What’s even more exciting is that this is only the beginning! The Middle East is very much in the early stages of its entrepreneurship development and the next few years will undoubtedly be exciting.

Bayt’s Entrepreneurship in the Middle East Survey  

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As we are all well aware, entrepreneurship in the Middle East has exploded in recent years and becoming an important source of growth and employment in the region. Evaluating quantitatively entrepreneurship is difficult though and Bayt, the Middle East’s leading recruiting platform, has released several studies and surveys about entrepreneurship in recent years.

In November, Bayt published the results of one of their most comprehensive surveys into entrepreneurship the Middle East has seen. Bayt’s Entrepreneurship in the Middle East Survey 2015 set out to see what the state of entrepreneurship is in the Middle East and there were some very revealing findings. The clear result of all the data is that more and more people in the Middle East are interested in entrepreneurship and are looking to become entrepreneurs themselves.

Here are Bayt’s main takeaways from the results:

  • Given a choice, 64% of respondents would prefer to have their own business
  • The top advice respondents would give to aspiring entrepreneurs would be to not be afraid of failure (38%)
  • Almost half of respondents (48%) do not have any preference when it comes to the best time to set up a business
  • 7 in 10 respondents think that entrepreneurs are ‘profit-driven’
  • 97% of respondents know at least one successful entrepreneur in their country of residence

To see the full results, click here.

MENA Exits  

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It’s an exciting time to be working in the Middle East entrepreneurship ecosystem. 10 years ago uttering the world ‘startup’ may have been met with a quizzical look. Today, there’s a real buzz and excitement from all those working in entrepreneurship (and many outside too) and the explosion in the number of startups is evidence of this.

While the increase in the number of startups across the Middle East has been very welcome, how has this translated to exits? The first ‘big’ exit, and arguably the catalyst for the growth in entrepreneurship in the Middle East, was the sale of Maktoob, the first bilingual Arabic and English email provider, to Yahoo! for $164m in 2009.

It was not until this year that this acquisition was matched in financial terms. First, Rocket Internet acquired Kuwait’s Talabat, the online food delivery service, for $170m in February. Only a few months later though, this was blown out of the water in terms of size with Delivery Hero’s acquisition of Turkey’s Yemeksepti, another online food delivery service. While you may not have heard of Yemeksepti, you are probably a lot more likely to know the name under which it operates in the GCC: Foodonclick.

In the preceding years, there were numerous smaller acquisitions in a variety of sectors, including (but not limited to):

  • Tiger Global Management bought Cobone, a daily deals website, for around $40 million
  • Thomson Reuters bought Zawya, the business information portal, for an estimated $40 million
  • PAYFORT acquired White Payments, an online payments solution, for an undisclosed amount
  • SAS Holding acquired Glowork, a Saudi company that connects women with jobs, for $16 million
  • OLX bought Dubizzle, the classified listings website, for an undisclosed amount
  • Japan’s Cookpad bought Shahiya, an Arabic recipe website, for $13.5 million

What’s interesting to see as well is the number of late-stage startups acquiring other early-stage startups to further expand. For example, Careem acquired Taxiii in Morocco and Souq acquired Sukar. Exits have not been limited to global investment management firms, private equity firms or the like. If anything, Middle East based firms have been more active than non-MENA firms with startup acquisition.

We’re also seeing an increasing number of large and later stage rounds in the region. Just last month, Careem, the car-hailing app, raised a $60 million Series C round. Fetchr was the recipient of New Enterprise Associates’ first investment in the Middle East as part of its $11 million Series A round and last year Souq raised a $75 million round.  

So what does this mean for MENA? Well it proves that the entrepreneurship path can lead to big rewards for founders, their employees and investors. There’s a clear uptick in both exits and large rounds across the Middle East and we only see that trend continuing. For angel investors, the trend is particularly welcome news. With greater exit opportunities for startups, the chance of seeing a return on their investment increases.

The MENA Funding Ecosystem  

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As we discussed at length recently in our Why MENA blogpost, the MENA region is a very exciting area to be working with a lot of potential. That was only reinforced for us at our recent visit to the Web Summit where we spoke to numerous investors and entrepreneurs from around the world.

That’s not to say the entrepreneurship ecosystem is perfect – far from it! Funding is a serious issue for startups to overcome and we think Hasan Haider, the Founder of Tenmou and Venture Partner at 500 Startups, hit the nail on the head with this fantastic blog post. We encourage you to read it to get an idea of what needs to be done to improve the funding ecosystem in MENA.

If you want to explore the funding ecosystem in the Middle East, we encourage you to sign up for the 500 Startups’ Premoney conference on 9th December in Bahrain. Bringing together investors from around the Middle East and the world, the conference will delve into the issues the region faces and how to solve them.

Excellent graphic from BECO Capital  

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We recently came across this fantastic graphic from BECO Capital and had to share it! We love the periodic table theme – takes us back to high school chemistry lessons! Make sure you expand the image to see the whole image!

The table covers every form of investor out in the Middle East and really gives you a great perspective of the explosion in investment and entrepreneurship. From angel groups like WOMENA to venture capital firms like BECO Capital, there is so much going on and it’s hard to keep up. Hopefully this graphic will give people a perspective and introduce them to a few new organisations working in the Middle East. We certainly learned of a few new names!

PS. Thanks for the shoutout BECO Capital!

Introducing Our Middle East Partners: N-Z  

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Following on from our earlier blog post, below is the second post in introducing our partners in the Middle East.

Progress in Technology Middle East connects connecting entrepreneurs with Silicon Valley resources. PITME has developed an excellent network of partners in Silicon Valley to support Middle East based entrepreneurs

Startup MENA runs a series of networking events and workshops for startups across the Middle East, which can be found on our events calendar. Startup MENA has branches in Tunisia, Egypt and the GCC

TechWadi is the leading non-profit organisation dedicated to building bridges between Silicon Valley and the Middle East. Dr. Ossama Hassanein heads up TechWadi and is a big supporter of WOMENA. WOMENA is also an ecosystem partner of TechWadi

Turn8 is a partnership between DP World and i360 Accelerator and is a leading startup accelerator based in Dubai. Turn8 launched in 2012 and has accelerated some of the top startups in the region including our own portfolio company Melltoo

Venture Capital 4 Africa (also known as VC4Africa) is an online community of entrepreneurs and investors dedicated to promoting entrepreneurship in Africa. This should be your first port of call to learn more about the startup ecosystem in Africa

Wamda is a platform of programs and networks across the Middle East that aims to accelerate entrepreneurship ecosystems across the Middle East. With programmes like Mix’n’Mentor and their grassroots content, Wamda has supported the development of startups across the region

Weyakum is dedicated to empowering young Emiratis with critical work skills to further their professional development and is led by Ameera Amir

Our Partnership with TechWadi  

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Over the next few months, we will be highlighting some of our partnerships with excellent organisations dedicated to promoting entrepreneurship in the Middle East. Our first partner feature will be on TechWadi, a organisation on the other side of the world in Silicon Valley but a partner that has done so much for entrepreneurship in the Middle East. Chaired by Dr. Ossama Hassanein, Chairman of Rising Tide Fund, TechWadi is the Arab Diaspora network of Silicon Valley, bringing together the experts and leaders in Tech to help entrepreneurs in MENA thrive and grow in Silicon Valley.

TechWadi has built a network of strategic mentors, experts and investors from numerous backgrounds to support Middle East-based entrepreneurs. Assigned mentors coach entrepreneurs in business practices; counsel on business expansion opportunities; provide access to strategic partners, investors, or clients; and act as a sounding-board for new ideas and challenges. TechWadi is hoping to double their number of members in 2015, focusing on the untapped resource of GCC female angel investors, an area where WOMENA is supporting TechWadi.

TechWadi launched their Sprint Acceleration Program this year which is a 3 month acceleration program that targets tech companies in the Middle East looking for growth in the US. Coaches work with companies on setting milestones that they aim to achieve in the US and customize a program to help them achieve these milestones. As well as all the benefits that come with being in the global heart of entrepreneurship, TechWadi provides the startups with coaching, mentorship, positioning for fundraising and cloud services to the tune of $100,000.

The program aims at bringing 8-10 startups to Silicon Valley in 2015. It truly is an extraordinary opportunity for Middle East-based startups and WOMENA would certainly encourage any entrepreneurs to consider applying for this year’s program. You can access the application here.

We are thrilled to be partnered with TechWadi and are excited for future collaboration with them. If you’re interested in becoming involved with TechWadi, make sure you apply for membership or sponsorship! Our two co-founders – Chantalle Dumonceaux and Elissa Freiha – are both TechWadi members and can speak to the value of a TechWadi membership.

Elissa Featured in Arabian Business 100 Most Powerful Arab Women  

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Earlier in March, Arabian Business released the highly anticipated “100 Most Powerful Arab Women 2015”. This is an annual publication and really shows the excellent female talent across the Middle East. We were honoured that Arabian Business selected Cofounder Elissa Freiha as number 77 on this year’s list amidst so many incredible women.

It’s hard to know where to begin at extolling the achievements of so many incredible women. From Her Excellency Sheikha Lubna Al Qasimi to the Saudi businesswoman Lubna Olayan, their achievements are endless and have had a huge and lasting impact on the region. It is exciting to see so many women involved in such a broad range of industries in the Middle East and we are looking forward to seeing what these women, and the millions of other women in the region, do over the next year.

Women Empowered Through Business in the Middle East  

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On February 26, Al Iktissad Wal Aamal Group and Al Hasnaa Magazine hosted the 7th New Arab Women Forum (NAWF) in Beirut, Lebanon. Themed “Empowerment through Entrepreneurship and Innovation,” the event focused on women entrepreneurs and how they can help foster economic growth and employment in the region.

The event brought together regional leaders to discuss such topics as challenges faced by women, personal experiences and advice, which proved to be an insightful and motivational discussion for attendees.

For us here at WOMENA, some of the biggest takeaways from this event were the following statistics  revealed by panelists:

  • 60% of Zoomal’s projects are started by women, because “in my opinion women have better communication skills and determination”- Abdalla Absi, Lebanon, Zoomal
  • 30% of startups founded by women have more than 50 employees, and 15% have less than 10 employees. – Rana Salhab, Lebanon, Deloitte.
  • 100 billion dollars in Saudi banks [are] owned by women – Rana Salhab, Deloitte
  • Around 1700 entrepreneurs applied to Oasis500 programs, an equal percentage of which were men and women. – Youssef Hamidaddin, CEO Oasis500 Jordan
  • 38% of women are researchers in science and tech in MENA, versus 30% in Europe. – Bettina Bastian, Professor of Management and Entrepreneurship, American University of Beirut

For more information about how you can contribute to economic growth and employment as a woman angel investor, please contact us and follow us on Twitter and Instagram to keep up-to-date with WOMENA!

Adapted from Wamda.