Sharif El-Badawi, TechWadi Head Mentor and 500 Startups Partner, is a serial entrepreneur and technology executive.
Optimistic about the startup ecosystem in the MENA region, Sharif believes in the talent and potential of young entrepreneurs and shares with them his tips about overcoming challenges, mentorship programs and fundraising opportunities. Read on!
What do you think of the startup ecosystem in the MENA region?
The startup ecosystem in the MENA region is one of tremendous opportunity and value potential. As a whole, the region is a large, fairly untapped market that is ripe with talent and potentially huge capital resources. The startups within it vary widely in sophistication and strength – like they do in any ecosystem. Broken down, each country starting with Egypt, Jordan and Lebanon, then later including Kuwait, Saudi Arabia, UAE and now an awakening that is spreading fiercely through the GCC and North Africa, we have a lot of different sub-ecosystems. And we have to look at it this way because the only way we get all the attributes mentioned above is when we address the entire 500M+ Arabic speaking population of the region. It’s capital and purchasing power initially more skewed to GCC as oil prices drop and diversification towards technology and innovation continues to grow, and it’s talent (mainly engineering, product related to startups) initially concentrated in North Africa and the Levant. This is and and will continue to change quickly.
- Funding will become more evenly available across countries in the region
- Talent will grow organically from within up and coming countries, as we see happening in Saudi Arabia, Tunisia, Qatar, Bahrain and Oman
- and from founders moving to more advantageous cities from neighboring countries through better startup visa programs such as in the UAE
- Every country will have a burgeoning startup culture, flush wish co-working spaces, accelerators, incubators, competitions, demo days, startup events, angel groups, local VCs, and corporate innovation initiatives
- Governments will be forced to make sweeping changes to survive in the new world
- Education will again take a front seat, particularly in STEM fields
What do you think are the greatest challenges facing entrepreneurs in the region?
The challenges facing MENA region entrepreneurs mostly stem from its nascence as an ecosystem. Entrepreneurs will get better, investors will become more available and governments will become more friendly to both. As we continue to create valuable companies, interest from acquirers or opportunities to go public will also increase. It’s just a matter of time…(and a lot of work in training, education, culture, bridging, access and capital) before the current challenges will be a non-issue and we’ll have new challenges and opportunities to take on. At the basic level today though, we need to address the following:
- Talent: Entrepreneurs need to step up their game relative to the global scale, even if they’re only focused regionally
- Market: A more supportive environment in terms of infrastructure, ease of doing business, financing, banking and credit card usage
- Funding: More investors of all kinds, at every stage – more angels, more seed VCs, more Series A-C VCs and more corporate VCs
What venture seed funds, like 500 startups, are searching in early stage ventures?
There are new angel investors, angel groups, seed accelerators and seed funds standing up every day in the region. Putting these structures into motion takes time, often being done for the first time, in an environment that isn’t wired for it. The good news is that we’re in the middle of this transformation and things are changing fast. In the spirit of entrepreneurship, private and public sector institutions are forming new investment vehicles and drafting new laws for governing them, and founders are finding ways to get their business off the ground and growing, despite their environments. A15, Endure Capital, BECO Capital, Arzan VC, Raed Ventures, Dash Ventures and Sadara Ventures, just to name a few, have been active at the seed stage (Wamda and MEVP, while largest and most active may be moving upstream). Accelerator funds such as Flat6Labs, Oasis500, Turn8, Speed and TwoFour54 are also active at the seed stage by nature of their programs and a good resource for startups to start their journeys. Foreign seed funds like 500 Startups, Founder’s Institute, Seedstars, Techstars, Y Combinator and others are increasingly active in the region, bringing in know-how, increased awareness, networking and funding. For our 500 Startups MENA Fund, we plan to invest in around 40-50 new startups a year across the region and diaspora. We hope this will not only significantly impact the Series Seed crunch, but also encourage other investors to increase their deal flow in/to the region.
Any advice for entrepreneurs, who are looking for funding opportunities?
Fundraising is hard. Be diligent and patient. Read everything you can find on the topic from reputable sources and plan for it to take a lot longer than expected. Build the things that matter most first and raise a tranche of capital at each major milestone. These milestones typically derisk one key area of the business and tell investors you’re worth a certain amount, makes them compelled to invest their money and keeps you from giving up too much of your company too early for too little. Your friends and family will invest in your idea because they know you. Angels will invest in your idea because they believe in the idea and think you can pull it off. Accelerators will accept you because you’ve brought the team and product to life and they believe their support can propel you to the next level and make you ready for seed funding. Seed funds will invest in your product because you’ve derisked your idea, team and just enough of the product to show that there is some market fit that they can generate revenue from. And finally Series A investors will invest when you have a repeatable business model and strong unit economics in a large market that can be scaled up.
How can TechWadi help entrepreneurs in the region? Do you encourage startups to participate in mentorship programs?
TechWadi is a non-profit organization with a wide network across the region and Silicon Valley that serves as a community of expert mentors, investors and operators that want to help boost the chances of success for entrepreneurs. We can help by bringing entrepreneurs to Silicon Valley to learn from the best and meet new people to further their startups. We also run programs with partners in the region where we fly in experts from the US to train and share their experiences on the ground. I firmly believe in the power of mentorship and the incredible benefit it brings to the MENA region where most entrepreneurs are first timers and can greatly benefit from the experience and knowledge of others.
Could Dubai be the Silicon Valley of the MENA? Do we have the entrepreneurial mindset? (Taking risk, accepting failure…)
Dubai is certainly worth talking about as a beacon for the startup ecosystem. The government is keenly planning a future of tech and innovation that is intrinsic to everything it does. Dubai is a shining example of top down reform to improve regulatory obstacles and devoutly support investment, technology and a Silicon Valley mindset. Dubai stands out, perhaps quite the opposite of other startup hubs in MENA, as an example where the infrastructure/regulatory environment is not the problem. While founders in Dubai generally over index on business know-how, leadership and management, finding engineering, product and design talent on founding teams is more rare. So much so that the valuation arbitrage or acute founder pain point to compel them to start a company, that might be available in other MENA countries, is more scarce. In a sense, it almost looks too much like Silicon Valley today, with entrepreneurs often riding the bandwagon and inflating valuations, and much less like Silicon Valley 20-30 years ago where entrepreneurs were solving pain points, had more grit, and drove towards profitability.