The way forward for startups in the MENA region

It is now well known that, from the ashes of many previous crises, emerged new breeds of tenacious entrepreneurs, with novel ideas and resilient scaling businesses.

From the dust of the last global financial crisis, companies like Asana, Airbnb, Slack, Instagram, and Pinterest emerged to success and global dominance. Even Apple and Microsoft were founded at the tail end of the 1970s recession in a period marred by economic stagnation, inflation, and high unemployment.

From this current crisis and global pandemic, again, a group of dreamers will emerge to create products and services the world requires.

Many reasons lead to this recurring pattern.

First, talent is more available, opportunistic, and, with fewer, high-paying alternatives, more individuals are willing to bet on a usually risky startup. Also, competition is less likely as some ventures retrench or disappear altogether. Furthermore, ventures forged during turbulent times are more robust. Their spending is frugal, their decisions are deliberate, and their projections are realistic.

As an ecosystem, how can we work in sync to ensure it happens?

Here are some thoughts about how different stakeholders can support.

What can investors do?
During times of uncertainty, it is natural for investors to have a reduced risk appetite. However, smart ones know too well that the best investments occur when others are hesitant. Investors need to be open-minded and may have to adjust their traction benchmarks according to the macro environment and bet on teams that can fight and emerge on the other side of the crisis with the next wave of unicorns.

Some venture capital firms, like BECO Capital, are stepping up and creating early-stage programmes for startups. It’s a victory for early-stage founders who secure capital to invest in their businesses, and for the fund which secures an early glance at the most promising ideas.

On our part, AstroLabs has committed Dhs240,000 in grants to support tech entrepreneurs in establishing their ventures at a reduced-price structure at its tech hubs in Dubai and Riyadh.

How can corporates support?
A significant component of startup expenses revolves around marketing and cloud hosting/infrastructure.

These services are dominated by the largest technology companies across the world; therefore, giants such as Apple, Amazon, Google, Facebook, and Microsoft generate billions of dollars’ worth of revenue from this region.

It would be comforting to see these large, cash-rich tech companies step up and support the regional ecosystem with compelling discounts and offers. This is the time to act; and if they do, we will have real proof of their regional commitment.

Other large companies should be exploring better, cost-effective solutions sourced from new tech ventures, which would lend support to the ecosystem.

How can governments and regulators lend support?
A thriving business environment with hundreds or thousands of fast-growing companies generating employment and intellectual property, driving capability development, and producing goods and services for world export remains the ultimate goal for the ecosystem supporters and stakeholders.

Regulators need to be empathetic to founders by engaging with them, paving the way for them, lending support to their ventures, making policies and processes effective and efficient and helping attract sublime talent at a time when countries worldwide are closing down their borders on such people.

How can universities pitch in?
Universities act as catalysts to develop talent and infuse an entrepreneurial spirit, so it is vital to have their support in a bid to develop the ecosystem.

Dr. Wasseem Abaza, director, Innovation and Entrepreneurship Centre at Zayed University, shared the following perspective recently: “Universities need to commit to entrepreneurship. This means setting up systems and creating a flourishing ecosystem within the university that allows for entrepreneurship to take place and fosters student entrepreneurship development. Another step is to facilitate entrepreneurship development by easing bureaucracy. Entrepreneurs are free thinkers. They don’t operate well in overly-bureaucratic systems, which is why they are entrepreneurs, to begin with.”

AstroLabs has also announced a digital scholarship in partnership with Google For Startups, where each startup receives a grant for team training purposes, to help drive growth and success.

What should entrepreneurs and soon-to-be entrepreneurs do?
In the end, all other stakeholders can only offer support. The success of any venture inherently depends on its founders having a clear outlook of customer needs and of the product/service delivering that value. Stresses pertinent to the crisis should enable them to refocus on their primary mission – assemble a committed team of co-founders, staff, and partners. And then get on with the actual work of customer acquisition.

Startups are a vital driver of sustainable economic development in the Middle East, and we are all rooting for them.

Louis Lebbos is the founding partner at AstroLabs