Is the Startup Ecosystem in the Middle East Ready for Silicon Valley?

Lara Chaaya, Sep 09 2013

Between the news of violence and severe clashes rummaging the Middle East, you hear stories of successful entrepreneurs making it through the sad turmoil and securing investment for their ventures, which reflects their persistence to create a better future for the region. Nima Adelkhani is an entrepreneur based in the US, and his faith in the potential of entrepreneurs in the Middle East compelled him to step forward and support them by launching PITME - Progress in Technology Middle East.

As eloquently stated on their website, PITME aims to “turbo-charge the Middle Eastern startup ecosystem by providing access to Silicon Valley resources.” The idea dawned on Nima after spending the last couple of years meeting and networking with entrepreneurs across different companies in the region.

“I met about 2000 entrepreneurs in the Middle East last year alone. They are all climbing the same mountain with different flags, different cultures, and different mentalities. They don’t want to do anything other than build companies, code, and meet other entrepreneurs. They want to build change and opportunity,” says Nima.  

The Embryonic Stage of PITME

Initially, Nima was interested in micro-vesting entrepreneurs in the Middle East. He joined the Founder Institute as Head of Business Development (www.funded.com) and, with the help of two other entrepreneurs, launched 400 companies worldwide across 17 cities. “It was a very good learning experience to see all of these companies launch and meet all those mentors,” states Nima.

Almost a year ago, Nima heard about ArabNet Beirut, and he was surprised that such a conference is taking place in the Middle East. “At that point, you didn’t hear about startups from the Middle East,” clarified Nima.

His curiosity was picked and he wanted to know what was going on up-close. So, he quit his job, booked a flight, and travelled to Amman, where he met Fady Ghandour and Usama Fayad. Then, he went to Dubai for Startup Weekend to participate in the event as judge. He ended up doing office hours for 67 teams in a row.

“It was really inspiring to see that there were so many educated people who wanted to create this opportunity to change,” exclaims Nima.

His journey then took him to Beirut, where he met ArabNet CEO, Omar Christidis, and Elie Khoury, and Walid Hanna, and others. His travels made him realize three things. One, raising a venture fund is not something he wants to do. Two, the ecosystem was not ready; and three, a venture fund would not bring the most value as far as changing the environment.

So, he ended up helping individual companies get connected with Silicon Valley. And this experience revealed sad insights.

The Huge Gap between the Middle Eastern Startup Ecosystem and Silicon Valley Investors

Nima discovered that investors in Silicon Valley were not ready to work with startups in the Middle East.

“In 80% of the cases, investors simply didn’t want to invest in non-US companies; in 10% of the cases, they agreed only if the entrepreneur was replaced with another CEO; and in the remaining 10% of the cases, the entrepreneur didn’t know how to build the relationship with foreign investors and how to really move the conversation forward,” reveals Nima. He pointed out that the number of companies that have gotten investment from the US in the last couple of years goes down to less than 10.

The solution, according to Nima, relied in educating the entrepreneurs and the ecosystem. Nima and his team partly materialized the solution into Technology in a Tent, which comprises over 100 interviews with international thought-leaders, investors, and experts.


Launching PITME Labs

PITME aims to help startups in the Middle East showcase themselves and their ideas at Silicon Valley. PITME Labs places up-and-coming startups in contact with over 100 mentors, including product managers from Twitter, CTOs from big companies, and many other technical people who will help enrolled companies improve their overall product quality.

“I think this is going to be the first step in accelerating innovation because we want to create that knowledge transfer,” says Nima.

The program costs $10,000, which includes everything—accommodation in Silicon Valley, transportation, meals, event tickets, and coworking space—except flight costs. PITME Labs don’t ask for equity.

PITME Labs has launched last week, and they are now accepting applications.

Only companies that are already established can be admitted to the program. When explaining the rationale behind this prerequisite, Nima says: “The biggest problem in the region is not getting started. The gap is in the growth stage; in securing A-round investments.”

PITME Labs aims to equip companies with the necessary know-how to meet potential investors, advisors, board members, and clients.

Nima added that working with companies who have already received seed investment will help us evaluate if their customer proposition is correct, if their billion system is feasible, etc. “These are the little components that make companies grow faster and bigger when they are optimized,” says Nima.

The Ambassador Program Copilots PITME Labs

To be able to expand their reach into the MENA region, Nima’s team launched the Ambassador Program, where at least one devoted entrepreneur in each city will represent PITME Labs, stretching from Morocco all the way to Saudi Arabia and Kuwait, will represent PITME Labs. If you are interested in becoming an ambassador, click here

Innovation and Opportunity in the Startup Ecosystem in the Middle East

“A lot of people want investment to come from Silicon Valley. But I don’t think this is the solution,” sates Nima. “The solution is already there: there is a lot of opportunity in the Middle East, and most of these opportunities are at a much faster growth rate than other places in the world.”

Nima believes that through economic development and creating jobs and help people creat their dream companies, the region will reach stability.

When discussing the status of innovation in the region versus that in the US, Nima said: “To me innovation is about change and improvement. Entrepreneurship in the US is very capitalistic: it is about billion dollar exists and fundable companies. Entrepreneurship in the Middle East is about building something to feed the family and change the world. I see entrepreneurship in the Middle East organic and humble.”

According to Nima, when you are providing a service that is valuable to the people, and that is creating wealth, then you are innovating. “You don’t need to reinvent the wheel. You need to catch up first. Catching up means there’s multiple, multiple billion dollar opportunities in the Middle East that have not been tapped into. All these other things towards becoming really innovative, as viewed in the US, will happen once the ecosystem and the infrastructure are well developed.”

“In short, I think innovation is about change and opportunity and making a difference and creating value. Entrepreneurs in the MENA have been in a disconnected system, and they haven’t thought as big, but they are definitely on the right track,” concluded Nima.

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