In the Mideast, entrepreneurs flourishSeptember 7, 2012: 10:43 AM ET
Many areas in the Middle East are still reeling from the uprisings last year, but investors and entrepreneurs see nothing but opportunity.
By Christopher Schroeder
FORTUNE -- There's nothing new about ambitious start-ups duking it out for the recognition and money that comes with winning a prestigious start-up competition. What might be surprising is that two of the largest such competitions this year were hosted in the Middle East solely for Middle East entrepreneurs. And their sponsors, MIT and Google, are among the most vaulted names in global technology.
In a region dominated by instability and uncertainty, any investor might ask, "Why now?"
"In fact the time is ripe now," notes Wael Fakharany, Google's Regional Manager for Egypt and North Africa, and founder of Ebda2 (Arabic for "Beginning"), Google's first regional competition focused on Egypt entrepreneurs. "There are many unsettled places in the world showing remarkable innovation today." He points to the basic demographics of Egypt: More than 17 million enrolled students, over 2.3 million Egyptians working in the technology sector, over 35 million people actively using the Internet and over 90 million mobile users. "We believe that one of the next waves of impact and growth will emerge from this part of the world," he says.
This confirms the momentum that Hala Fadel, a Paris and Beirut-based global investor and founder of the MIT Enterprise Forum of the Pan-Arab Region, has seen in there recently. This year's MIT Business Plan Competition, done in partnership with the Saudi corporate social responsibility effort Abdul Latif al Jameel Community Initiative and covering all of the Middle East, is her fifth. "During 2006, our first year, we expected 200 applications from around the Middle East, but received over 1,500," she says. "This year over 4,500 teams of three people or more competed – that means over 13,000 potential entrepreneurs." She added that nearly half of the teams this year included women. "We even received over 100 applications – get this – from Syria!"
MIT pitches ranged from addressing local and regional needs to aspirants looking to compete with world-class global technology start-ups. First place, along with a $50,000 prize, went to Butterfleye, which has created a smart goggle for swimmers that monitors their heart rate and tracks their fitness.
Winner of the $10,000 second-place prize, Qabila Media Productions, took off when its crowd-sources video services went viral during the Egyptian uprising. Third place Silgenix, also from Egypt, created an integrated circuit design company specializing in increasing the battery lifetime of portable electronic devices. Other finalists created regional social networks, eCommerce platforms, online education courses, capabilities to increase internet connection speeds and reliability among others. Competitors came from every corner of the region, from Saudi Arabia to Palestine.
More than 4,200 entrepreneurs competed in Google's Egypt-focused Ebda2, culled down to twenty finalists over nine months of multiple rounds of training, mentoring and judging. To create awareness, Ebda2 and Google staff chartered a bus and travelled throughout the country on a road show to gather participants and to offer training. Visiting twelve universities in twelve cities as widely diverse as the large urban centers of Cairo and Alexandria to the smaller cities such as Tanta, Fayoum, Port Said, they met more than 1,500 entrepreneurs with ideas in areas ranging from consumer internet to health care.
The winner of $200,000, Bey2ollak, is a six-person team taking on one of the most vexing problems in Egypt – traffic. It offers a crowd-sourced traffic information service and mobile app to track all major roads in Cairo and Alexandria. "I could not believe my eyes as I spent a day meeting with the finalists," says Mohammed Gawdat, Vice President of Google (GOOG) in Southern and Eastern Europe, Middle East and Africa. "The passion, the energy, freedom of expression, thought leadership and the healthy disregard for the impossible blew me away. I felt as if I were spending the day with Googlers."
Do these competitions matter? "We believe that the Internet is a net contributor to the economy in the region and in Egypt," notes Fakharany, "But it is also the best kept secret. We spent $200,000 in this one, but we are committed to spend another $2.3 m over the next couple of years. The face of Egypt can be changed through technology."
Fadel believes that a connectedness created in gatherings like these help foster further innovation, just as it does in the U.S. "Being an entrepreneur is, by definition a lonely thing," she says. "The odds of failure are great. One cannot underestimate the importance of mental support to startups when participating because they realize that they are not the only ones working hard in this region when they see others like them doing the same and succeeding."
Both Fadel and Fakharany believe we are in the earliest days of this startup boom in the Middle East. Global and local institutions, in fact, have been hosting hundreds of competitions throughout the region, and more will come. "Success breeds success," says Fadel. "It's just basic math."
Christopher M. Schroeder @cmschroed is a Washington, D.C. and New York-based entrepreneur, venture investor and former CEO of the online content and social platform start-up healthcentral.com, which he sold last January. He is writing a book about tech start-ups in the Middle East due Spring 2013.