All Tech Considered
2:04 pm
Mon April 23, 2012

Arab Tech Startups Try To Seize The Moment

Originally published on Mon April 23, 2012 4:39 pm

Social networking sites have been at the vanguard of the Arab uprisings over the past year. Egyptians used online pages to organize protests, and Syrian activists have posted frequent YouTube videos showing government forces shelling civilian areas.

The same growing Arab online awareness that made the Internet part of the pro-democracy movements has also created a mini-revolution for Arab technological business.

Due to regulation, limited infrastructure and governments wary of the Internet, the Middle East has not been the easiest place to launch a tech startup.

Omar Christidis founded ArabNet in 2010 to address what he said was a lack of communication among Arab tech entrepreneurs.

"People were not talking to each other, from Egypt from Saudi from Syria, and there were no real online places where you could find out what was going on," he said.

Summit In Lebanon

ArabNet has been hosting a "digital summit" to showcase new ideas and create a networking space for techies. This year, it was held at the Habtoor Hotel just outside Beirut, Lebanon.

Young men and women wearing the unofficial tech entrepreneur uniform – button-down shirt, no tie, jeans, and a blazer – gathered around Christidis and chatted eagerly with investors from Gulf states wearing white robes and head scarves.

There is an enormous opportunity for growth in homegrown digital startups in the Arab world, Christidis explained.

"When we started the conference in 2010 there were about 35 million users [in Arab countries], today there are over 70 million users of the Internet."

Abraham Kamarck, an American working for a tech firm based in Qatar, said ArabNet is "the hot place right now" to meet other techies and investors in the Middle East.

Kamarck is optimistic about the future of the Middle East tech industry. Since tech investors look at the long picture, he said, even a country like Egypt – whose economy has cratered since last year's revolution – is still fertile ground for venture capital firms.

"If you look at the demographics of the youth, if you look at the Internet penetration and the mobile penetration, it's a very attractive market in that sense from a growth standpoint," Kamarck said.

An Incubator Finds Strong Demand

Hany al-Sonbaty, co-founder of a Cairo venture capital firm called Sawari Ventures, agrees.

His firm set up a tech business incubator called Flat6Labs with the hope of making it easier for young entrepreneurs to start tech businesses in Egypt.

Flat6 received 60 applications for just seven spots. The accepted firms got around $12,000 and 12 weeks to hire a staff, start a company, and secure investors.

When Egypt's former president, Hosni Mubarak, stepped down in February 2011 in the face of an uprising, the company held a meeting to discuss the upheaval, but saw no reason to change its plans.

Now in its second cycle, Flat6 is humming with the clicks of keyboards and excited conversation. Carved out of an ornate old apartment building beside the Nile River, the incubator is intended to be like a second home for the entrepreneurs, who may find that long days at the keyboard turn into a night of sleeping on one of the bright red and white couches.

A Range Of Ideas

The company ideas are diverse.

One in the current Flat6 class is Nefham. Founders Hashem Aly and Mostafa Farahat hope to set up an online video learning database for Egyptian students.

Another, GyroLabs, sees a future for interactive television in the Middle East. Ahmad Fathalla's company is trying to develop apps for smart televisions.

AskNative, founded by Abdelmoniem Ragab and Seif Sallam, is developing a mobile phone application that uses Twitter, online translation, and crowd sourcing to connect tourists with locals to answer questions while traveling.

Sonbaty says, "there's a big difference between somebody who's clever at doing a product and somebody who's running a company. This is where they learn it."

Egyptians are uncertain about what their country's future holds. But Sonbaty sees one way the revolution changed this class of entrepreneurial techies.

"It emboldened them," he said. "Some of them said, 'You know what? Let's just do this.'"

Copyright 2013 NPR. To see more, visit http://www.npr.org/.

Transcript

MELISSA BLOCK, HOST:

The past year has been one of political upheaval across the Middle East, fueled in part by the spread of information on Twitter and Facebook. So one year after the revolutions began, we're going to check in now on how business is changing for the Arab world tech industry. From Beirut, Tim Fitzsimons reports.

TIM FITZSIMONS, BYLINE: The Habtoor Hotel is packed with hundreds of people wearing the unofficial tech entrepreneur uniform: open shirt, no tie, jeans and a blazer. And the conversation sounds like the sort you'd overhear while having lunch at a swanky cafe in the heart of Silicon Valley, except there's a lot more Arabic.

OMAR CHRISTIDIS: We are at the ArabNet Digital Summit, the largest gathering for the Arab Web and mobile industry.

FITZSIMONS: That's Omar Christidis, founder and CEO of ArabNet. The revolutions got a lot of people logged into Twitter and Facebook, but ArabNet started chipping away at the Middle East's digital disconnect years before the Arab Spring uprisings.

CHRISTIDIS: People were not talking to each other from Egypt, from Saudi, from Syria, and there were no real online places where you can find information about what's going on.

FITZSIMONS: This, Omar says, didn't reflect the potential for tech growth in the Middle East.

CHRISTIDIS: Internet is booming in the region. When we started the conference in 2010, there were about 35 million users. Today, there are over 70 million users of the Internet.

FITZSIMONS: On the other side of the hall, past eager conversations between young entrepreneurs and white robe-clad investors from Gulf states is Abraham Kamarck, an American working for a tech firm in Qatar.

ABRAHAM KAMARCK: ArabNet is the place to meet other entrepreneurs and investors in the Arab world at this point. It's the hot place right now.

FITZSIMONS: He isn't worried about the political upheavals sweeping the region. If anything, Kamarck says, the long-term nature of tech investment means now is as good a time as ever to invest in a place like, say, Egypt.

KAMARCK: You would be taking that type of long-term nature and that type of bet in Cairo at this point. If you look at the demographics of the youth, if you look at the Internet penetration and the mobile penetration, it's a very attractive market.

FITZSIMONS: Fast-forward to Egypt. Beside the River Nile, just outside Cairo, is a stately old apartment building. Behind door number six is a tech business incubator called Flat6Labs. Tonight, about 20 young men are milling around, eating from buckets of Kentucky Fried Chicken. They're all pretty lucky to be here; over 60 companies applied for just seven spots at Flat6. The selected firms get about $12,000 and 12 weeks to hire a staff, start a company and find investors. Their proposals range from apps to help tourists connect with locals to an online video-learning database for Egyptian students. During their three-month stint, they refine their business pitches with the help of each other and outside eyes, which is what they're up to tonight.

HANY AL-SONBATY: And the beauty of this is that we're using Twitter. There's a big difference between somebody who's clever at doing a product and somebody who's running a company. This is where they learn it.

FITZSIMONS: That's Hany al-Sonbaty. He's the co-founder of the venture capital firm that set up Flat6Labs. He says the whole point of Flat6 is to make it easier to start tech businesses in Egypt. Things are going well now, but the journey hasn't been totally smooth. Sonbaty's company was just getting ready to set Flat6 in motion...

AL-SONBATY: ...and then the revolution happened.

FITZSIMONS: And so he met with his partner to figure out what to do next.

AL-SONBATY: It was a very short conversation, and there wasn't any compelling reason why not to proceed.

FITZSIMONS: Today, Egypt's economy may still be struggling, but for Flat6 grads, things are going well. Several companies from the last class are already generating revenue. No one is really sure what's going to happen in Egypt's political and economic future, but Sonbaty sees one way the revolution impacted the entrepreneurial spirit of the country's young techies.

AL-SONBATY: It emboldened them to follow their ideas, and they have no shadow of a doubt that some of them said, you know what, let's just do this.

FITZSIMONS: For NPR News, I'm Tim Fitzsimons. Transcript provided by NPR, Copyright NPR.