Startups in the middle east

There’s a vibrant scene of startups that is starting to emerge in Lebanon and the Middle East in general, and this fact is naturally good news for the present and future of the region on both the economic and social levels. But one can’t help but noticing the fact that this entrepreneurial activity is still constrained to a large extent in one aspect: “online services”.

I wanted to talk about this issue after reading a tweet that mentioned the remark by which “Fadi Ghandour” has closed his keynote at the arabnet conference. (Fadi Ghandour is the founder of Aramex and a prominent figure in the Middle Eastern entrepreneurial scene). He was trying to stress the importance of the internet and how much essential it has become by saying: “instead of megawatts, you want megabytes!”

I totally understand how much essential internet has become and I guess we all agree on that, however I couldn’t understand this contrast between megawatts and megabytes, two quantities that belong to two worlds that are not in conflict with each other, and I don’t think that there are situations which necessitate a tradeoff between investments in electrical power and connectivity and internet, in reality the near future will further weave an interdependence between them with the advent of smart grids.

I didn’t have the chance to completely hear the keynote of Fadi Ghandour, so I can’t be sure about what he meant exactly by this comparison or what he exactly meant by megawatts and I’m not writing this post as a reply to what he said; this is just an attempt, to shed some light on “the startup” issue in the ME region and to give my personal opinion on it.

We have this habit in our region to follow the trend, and as a result we’re always lagging behind the trend setters for at least a couple of years, the time needed to figure out what is trending worldwide. And up till now that is how things are going in the Middle Eastern startup scene, we are trying to repeat success stories on the web that happened in the world by trying to tailor some solutions or services appropriately to fit our social and cultural environment. But I guess it’s about time that things move ahead, we need to start thinking in a more independent and creative way to create and deliver novel solutions that are not constrained to online services.

My disagreement about axing “megawatts” comes from my belief that the energy sector is where the next boom will be taking place. Renewable energies, energy storage and development of fuel cells, the electric X, whether X is a car or anything that depends today on fossil fuel, in addition to the developing mechanisms that aim to improve the low efficiency of energy conversion at the electrical power plants are very active fields that should not be ignored. And we have the smart grid, which will be rolling out in the future to provide a tighter and smarter grip on power generation, distribution and consumption.

So megawatts are a serious issue for the future, and people around the world are trying to bring in the next solutions to feed the hunger for power supply while in our region no one even thinks about it just because it’s not the trend yet. I would like to stress here on how much important it is to see the fertile ground for startups that this sector is, just Google “energy startup” to see how much effort is put in it, megawatts are very important and we want them too.

The second issue after the energy sector that I would like to talk about is the communications infrastructure, internet is not only about software products and online services it’s about the network and the infrastructure too, we see the bit rates growing from 56 kbps all the way up to 300 Mbps with FTTH, we see generations of cellular networks coming 2G, 3G, 4G and how much do we have to do with this development, nothing. To bring in the Megabytes, we need startups working in this field providing new technologies and services to improve the connectivity in the region and to lower its price. Startups have always played an important role in this field providing technologies that have driven this continuous available bit rate growth, we have world class experts and specialists in this field but they’re outside the Middle East for two simple reasons, lack of vision in the region (and the follow the trend mentality) and lack of funds. This brings me to the third issue I would like to talk about, technology investments in the Middle East and venture capitalism.

The third issue is funding and venture capitalism in our region, I believe that conferences such as the Arabnet should start to think about inviting important investors to be in direct touch with the technical and startup scene in the region. Funding is still scarce because investors are more interested in financial products and do not know about the existence of these investment opportunities. But it’s about time that they notice the importance of this field especially now that dictators have been toppled with social networks as the main tool of communication. Venture capitalists and angel investors exist around the world, searching to find the next investment opportunity while in the middle east which is one of the richest regions of the world, investors are more interested in western governments’ treasury bonds! This has to stop and it’s up to the young people and the digital sector community to approach them and lure them in.

So at the end I believe that we need startups we need growth, but we need to open our eyes to all the opportunities beyond online services. Energy, digital infrastructure, and online services are all important fields for investment and development and we need to put an important amount of energy on drawing the region’s capitals to fund this nascent startup scene.