Towards A Vibrant Startup Based IT Sector Ecosystem in The Arab World
Update: as a result of this post ArabCrunch.NET was developed and launched in private beta to help Arab startups and help the region innovate, continuing ArabCrunch Mission.
In this post I would highlight a few points that I think can help in creating a vibrant startup-based IT sector in the Arab world. This came up to me in light of my recent media citation on UAE’s based newspaper The National.
1-Entrepreneurs & Opportunities:
The amount of Arabic content online is very low, most famous websites are forums, this is somehow an opportunity, and we are seeing more and more startups in the region who are going beyond forums. On the other hand, online advertising is less than 1% of total ad spending in the region, and from recent reports and from my talks to major portals in the region, online ad spending is growing, but not at 100% growth.
Arabic Mobile 2.0 also represent an opportunity. There are few Arabic mobile apps and services, they are mostly silly stuff like ringtones and themes. Today, touch screen iPhone like, WIFI and 3G enabled mobiles are taking a big chunk of the market, for example Nokia 5800 the touch-screen, WIFI, 3G phone is the hottest selling Nokia device in Jordan, as many mobile shops are running out of stock.
Nevertheless the time is gone when start-ups can just copy successful International websites into Arabic and think that’s how the game is going to be. As many global players are localizing their services. Today: facebook, Google, Microsoft and Skype for example all have Arabic versions for most of their services and products. And any Mobile or website player can do that with a little hassle. But some Arabic specific challenges can only be done by Arabs, such as natural language processing (NLP).
However there are many services that need physical local or regional presence and some international startups cannot afford that at this time. So if you are copying them then launch your product quickly, do good marketing and create a large user base, so you can create regional barriers of entry for your International rivals.
But be aware if you are copying an international startup, it does not mean the Arab market will adopt you. A friend of mine who is a geek told me once: The Arab startup should not think I will use his website or service because he is Arabic, I’ll go to the best.
So we need more creative thinking Arab startups, we need startups that think outside the box and come with unique and great ideas that can add value to the end users. At the same time we need ideas that can stand out at the global market place. It does not have to be a break through technology; it might be a simple idea like twitter which is valued today at around $ 400 million.
However, In the web and mobile world I see Global opportunities in semantic web and Mobile 2.0
Most of the current startup projects I saw are in 3 categories: techies doing it alone, part time or full time, or out-sourcing companies is doing it on the side.
To succeed it is not enough to have a great idea, or to be a certified Zend Engineer, you need to execute good marketing & PR strategies in order to gain market share and success. So grow your team and add at least one marketing cofounder who is good, has some good connections and has good technical back ground.
2-Venture Capital and Funding
Venture Capital is a type of funding that an institutional investor offers cash for a startups in exchange for equity, it is a form of funding that is very similar to Mudaraba financing type in Islamic banking, there is no debt and if the startup meets the dust the founders do not pay a dime. VCs typically makes returns via an Initial public offering (IPO) or merger and acquisition (M&A). VCs provide different types of funding at different levels: Seed Money: Low level financing needed to prove a new idea, Startup: Early stage firms that need funding for expenses associated with marketing and product development. And other rounds of funding to grow the company.
The presence of VCs is very important as most startups cannot secure bank loans because they are too small, or in a risky business. In USA, VCs have been the major driving force behind the tech industry, companies like Yahoo and Google would not be here if there was no VC backing, not to mention that most current web startups are VC baked.
So how is the VC seen in the Region?
From my experience I can say VCs in the region are a joke; they are hard to find, and if they do exist they mostly do not invest! However the region if full of wanabe cashless VCs who offer brokering deals and some advice to few investors here and there.
nonetheless this seen is changing a bet with initiatives like Intilaq from Bayt.com, KuvCapital, ICT (growth VC) and older VCs like EFG-Hermes’s Technology Development Fund but these are not enough.
So from how to create a bigger VC industry:
“Gulf sovereign funds have invested trillions in western markets and they lost a lot of that in the current crisis,” “Why not consider the financial returns and the social capital that would come from investing and help creating a vibrant IT sector in the Arab world?”
On the other hands we have many Islamic banks in the region, why not lobby them to help allocate some of their Mudaraba funds into technology startups?
Some might argue that to create a healthy VC Industry it requires an exit window. Well if the startup idea is global and it become a hit, it can go into an IPO or M&A at a global scale. On the other hand there are some M&A deals happening in the region, look at Maktoob’s acquisitions in the last few years. Also we can have our own regional IPOs, Optimiza is a Public IT company in Jordan. And as the US IPOs window is kinda currently closed even for US based IT companies, why not all the regional stock exchanges merge into one market? I think it is politics.
So in this current VC seen, my advice to Arab Startups is that you can start from your home like me, and do it part-time or full time if you have enough funds. However at a certain point you will need a VC to grow, if you could not get funding from a regionally VC or Angel investor, go to International VCs or angle investors like what Woopra did, after you have your prototype. (Note that the US economy is really in deep recession as VC’s went down by 50% this quarter. )
Research and development (R&D)
Breakthrough technologies mostly come from R&D activities inside universities, study & research centers and companies.
R&D in the Arab world is also not visible too. So there should be national and regional funds for R&D. A $ 5 Billion regional fund can be a start. This can be done via a small cut from Oil profits and another cut from each Arab country, which would be a healthy start to finance all the needed money for R&Ds and VCs activity the region.
To be fair Qatar has dedicated 2.8 per cent of its Gross Domestic Product (GDP) to research under Qatar Foundation, currently about 1,500 million US dollars per year. That is great and applauded, however we want to see R&D in every Arab University and country.
Infrastructure:
A-It is lame that we do not get for example an affordable high speed Internet access at around 20 GB speed, which is essential for many businesses specially web based ones. Governments should work with Telecoms in the region to bring the Internet speedup and drive the costs down.
B- Governments are one the largest IT customer, but they mostly buy from Microsoft, Oracle.. etc. Few years ago a very senior executive from a well known US based vendor met with a ruler of an Arab country, that country’s official media said that: they met to foster the IT sector in the country, while the real story is that he got his company a multi million deal with that country’s government, basically a fat sale for him!
Arab governments should 1st buy from regional based IT companies if an alternative is available, and use Open-Source projects rather than property based systems, why: 1st, Open source is much cheaper, more reliable and the support is available online, and we have the regional talent. 2nd, by doing so they support the regional IT sector, 3rd, we are not under the mercy of anyone or any political problem, for example Linkedin blocked Syrian users and also Sudan. 4th, Multinational giants do not invest in R&D in the region; they only have sales and marketing offices, so why reward them with easy cash via their local agents?
I am not against Multinational companies or anyone, we need to work with them in many cases especially in certain areas, for example open source software requires hardware that are supplied by a Multinational giants. Also the Open-source community is a global community so being open to the world is a must, above all our religion teaches us to be good with everyone. Though many countries adopted open-source like Brazil, and many countries in the world favor their local companies.
Awareness:
We need to have a better awareness about Arab startups, entrepreneurship, and help techies understand the business side of the game more. This was one of the reasons why I started ArabCrunch and organized ARABCRUNCH DEMO event.
Conclusion:
“Israel” is called the 2nd Silicon Valley, a small country with Multi billion Dollars in IT exports. This did not happen by itself, there was a big government intervention in partnership with the private sector (I did around 30 page research about the ICT industry in “Israel” when I was at university). Even in USA the US government Invests billions in R&D. so government intervention is a must in the region to help us create a big IT sector that is based on entrepreneurship which is needed for our economic and national security future.
This effort should be a regional collaborative drive not everyone doing it alone, Mohammed Bin Rashid Al Maktoom Foundation is working in that direction. And this should not be between Arabs only but also all Muslim countries and any non-Muslim countries as well, who want to support the efforts. Furthermore it should be done in partnership between the governments and the private sector.
We should not to forget our history and roots, as the 1st concept of a computer was developed by a Muslim scholar. And as VC started few decades ago, the concept of Mudaraba in Islamic economics was there hundreds of year ago, even some say it was practiced by Arabs before Islam, also the concept of Non Governmental Organizations (NGOs) is in Islam before 1400 years ago called as Waqeef.
Anymore things we need to do? Leave it in a comment.
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Informative and definitely the need of the hour in this part of the world. The risk these investors will take isn’t going to turn to dust, at least not all. There is plenty of raw talent in the region that can be used to build a very MAJOR competition n the WEB sphere.
Great post Gaith.
Actually you mentioned all of things that i was thinking to say so i don’t have extra words to say, but i have to say that we’re must be more trust of Arab Startups and help them to turn their ideas because we are as Arab still need more and more of things to level up. Anyway I’m still believe in our innovators and still say:”We can make anything if we worked and support each others”.
Thanks Gaith
@Sarder @ Mohammad thank you guys
Great article Ghaith.
good piece, thanks. here is my list of key elements needed to build an innovation ecosystem. we have a few intersection points:
- Exposure & Access to Markets (global & regional)
- World-Class Venture Capital
- An Entrepreneurship Culture
- Community & Knowledge Exchange Network
- Education & Academic Research
- Supporting Infrastructure
~saed
Towards A Vibrant Startup Based IT Sector Ecosystem in The Arab World | ArabCrunch…
The amount of Arabic content online is very low, most famous websites are forums, this is somehow an opportunity, and we are seeing more and more startups in the region who are going beyond forums. On the other hand, online advertising is less than 1% …
Great post!
It’s nice to see that there are some people in the middle east who are trying to push forward the start-up initiative. Start-ups are one of the first and most vital steps in creating a healthy economy. Just take a look at China, Russia and India. All have two things in common; they are among the fastest growing countries in the world and they have start-ups… lots of them!
As Gaith mentioned, the ME region really needs to set up an infrastructure to enable entrepreneurs to take advantage of all the existing opportunities. This infrastructure is starting to emerge however it still needs time. Many entrepreneurs can’t wait that long since opportunities tend to fade away. They have great ideas but lack the experience in executing the tech side or the business side. I believe that is important to try and mentor/teach/advise some of the tech entrepreneurs.
Any quick tips for entrepreneurs who have ideas but not sure what to do next? (this might need a new post)
Gaith, you mentioned the importance of having a good team. Where’s a good place to start looking for some team members?
amir
ps sorry for the long comment guys
[...] Towards A Vibrant Startup Based IT Sector Ecosystem in The Arab World | ArabCrunch. [...]
Thank you everyone, @amir email me editor(at)arabcrunch.com with a request and some info about you and i ll try to contact you with some people i know.
Nice one @Gaith… straight to the point. I don’t think you’ve left much out. My opinion is that the first step should be creating and developing awareness to the opportunities out there… (ArabCrunch and StartUpArabia are doing a great job of that).
Then there are some deeper social aspects that we need to overcome, specifically the notion that western=better…
There are 1000s of students returning to the Arab world with degrees from the best universities… often without jobs that challenge them well enough. Governments need to do more to tap into this wealth of human resources.
Matters need to be taken into our own hands…
this is more of a grassroots play than it is a gov play. gov’s will pay attention when enough momentum is built at the social & economic levels.
ghaith – this piece hit many nails on the head and covered much of what my thinking has been over the past few months. i would like to add:
* market fragmentation: companies have to deal with issues when crossing borders and a mishmash of laws and regulations although the web minimized much of that.
* talent mobility is still not easy. visa restrictions and the like have to be lifted for a dynamic talent pool.
* online payment systems and currencies are still not in place. these need to be developed and paypal has still not become a regional solution. they even suck on their own home turf IMO.
i quite like how the discussion is going and suspect that some of the people following her may be the right ones to be talking to in this area. how about we start an online community that could possibly lead to some good ideas and angles on how to take this forward? in case there is already a good one then would you be so kind as to direct me thither?
@Saed…. agreed… unfortunately we can’t rely on all our governments… but it is promising to see some of the work in Jordan and UAE (at least from an objective point of view).
@hamad… online community sounds great. Let’s do it!
for sure! if it doesn’t exist, an online community is needed to get forward momentum on this. who’s owning? keep me in the loop.
Thanks for the reply Giath, I’ll be emailing you shortly.
Saad, Hiconomics, Hamad.. A lot of online communities for entrepreneurs exist (startupnation), however I don’t know of anything good for Arab entrepreneurs specifically. Many just go on linkedin or facebook Arab start-up groups and use that as a ‘community’ to talk about ideas. Something more formal is definitely needed. I can really see the added value of a community that’s able to link Arab entrepreneurs to each other and to investors.
guys – its nice to see the discussion continuing. regarding setting up an online community to develop this field it would be good to get your input on these issues:
* ghost communities: i can’t recall specifics but there have been a host of ‘groups’ that have been set up online that never got traction and have more or less been abandoned. we’d like to make sure we can put together something vibrant.
* participant quality: keeping spammers out is obvious but i would like to make sure it does not gravitate to politics and other non-core issues or get too personal. that said, would it be invite only? open?
* what’s out there? can you guys let us know what examples you’ve seen of arab region or arabic language focused online communities? linkedin and facebook may be some of the more obvious examples but im sure there are quite a few good ones.
the key is to make it a focused and active platform for discussion. i will be looking around at options for doing this in the meantime.
Thank you all for you thoughts, to be honest setting and Online Community has been an idea i had sometime ago, actually i’ve been working in developing such a community. It is currently under development,anyone knows PHP let me know.
Mean while keep posting how you would like it to be, and you can join ArabCrunch Groups on Linkedin Group http://bit.ly/OqGsA
Facebook Group: http://bit.ly/EHnz8
@Hatam
* Definitely need to set up something long-lasting, vibrant that encourages constant participation.
* I’d probably vote for an open and public subscription base with effective monitoring by a moderator (or several). I don’t think we can get away with an invite only model in such an open world… might be counter-productive.
* SalamBC.com is the only one I know that has Arabic and targets this area. But it’s not specific to entrepeneurs or specifically to the Middle East.
Not sure that re-inventing the wheel is the best path with this. There are platforms like Ning or elgg.com which would allow us to create a community/social networks. I’ll do some digging to see if we’d have access to the code-base to hack it into arabic. Facebook only provided Arabic through crowd-sourcing translations from Facebook members.
thanks for keeping the ideas going here. on a related note, what’s the GVCA (gulf venture capital association) done of late? ever?
Excellent post, on target, and hot like fire.
My only advice here is:
Don’t wait for governments or investors to help you. Do it the Nike way… Just do it !
I know its tough, but bootstrapping is our only way out of this. We could cry for years, but Arabs won’t get it.
But wait until we sell some companies, and make real money, and then you will see what will happen. Investors will flock to ICT startups. As they say in the US.. Cash talks! No one wants to take risk, we need to prove that we are capable of generating value first, then we can ask for money… I know this is kind of mean, but it is real.
Excellent post Gaith, a bit optimistic, but really, your words were all on target !
Thanks,
to follow up on Amad’s post:
* optimistic? starry-eyed optimism built many companies that did not sound viable in the tech world: think google, apple, intel and amazon for starters (microsoft was built on pure greed fyi and it shows).
* most of what you need in this field can be bootstrapped i agree although the costs are higher in the arab world somewhat from what i have seen.
* DONT wait until you see some companies make money and do it now. i guess what im trying to see is dont wait for a roadmap although that’s easier said than done.
still working on that forum but in the meantime this comment thread is a stopgap it seems.
regarding the online community..
I definitely agree that re-inventing the wheel isn’t the best approach. It will take a lot of time and effort to build the website and attract traffic. After all the ‘Arab entrepreneurial’ community is small so payback will be low.
There are two main users for an online community:
1) users who already have ideas and are looking for help with developing, implementing and executing their ideas
2) users who are interested in creating their own ventures but don’t have any ideas yet. They are looking for a place where they can either help someone with an idea or generate their own ideas
3) Any others?
The first set of users would want an active and a trustworthy community that is willing to listen and give constructive feedback. This can be created by developing a website or an application that runs on FB or linkedin with forums or a BBS system.
The second set of users would want a facilitator who is able to elicit idea generation and organize a structured dialogue between participants. Something like what Gaith did in this post. He posed a problem that exists in the ME region and we gave our own opinions as potential solutions.
Regarding Bootstrapping…
I recently read a Harvard Business Review article by Amar Bhide called Bootstrap Finance: The Art of Start-ups. His main argument is:
- Entrepreneurs are wasting a lot of time trying to raise money and not focusing on taking advantage of the opportunity before it goes
- Bootstrappers not only grab opportunities faster but also manage themselves better since they have limited capital. This allows them to come up with creative ways of serving their customers need as well as using money more efficiently.
Bootstrapping is the way to go… at least when a company is still at the initial stage of the start-up
amir
don’t think fb or li are the right place. it dilutes the context.
no need to start from scratch. as hiconomics mentioned, something like ning etc. would do the trick.
amad – it’s not mean, it’s pragmatic.
amir – 3) angels.
agreed, bootstrapping *is* the way.
In the last call to me Luo suggested to me to write a guest post for Linkedin Blog, however I think they might change their mind, since I am actively reporting this
Guys
Guys, Hold your horses I am doing community it is underdevelopment coming soon inshallah
As for Boot strapping, that the option now. As if some in did it, yep e-marketing MENA and many forums and websites that were bought by Maktoob. Bayt.com itself was a startup now they launched a VC arm.
Yes we cannot wait our governments but making a noise will help them do some acting.
Saed u r IP is from Israel?
yes, it is. what’s the question?
so ur Israeli? ur name is Arabic?
my name is arabic, and sajil 2ana 3arabi!
i’m hitting ac from al-quds, hence the ip.
Gaith, will be looking forward for the online community u’r building!
folks – a bit off-topic and i dont mean to be obtuse or pedantic but i really can’t understand numbers filling in for letters and words. what in the heck is ‘2ana’?
i see that ‘yamli’ is integrated into this forum so lets make some use of it يا إخوان و أخوات. (and no i used my mac’s amazing arabic qwerty keyboard that is like a built-in yamli)
back on topic: what successful models of startup incubation have we seen in the region so far? (really successful, no stillborns)
cheers.
ya la3eeeeeb
keeep the good work, Ghaith!
Yours,
Khawaja M.
sajil 2ana 3arabi = سجل أنا عربي
hope this helps.
Gaith,
Excellent brainstorming article in right time!!!
I seriously doubt your credibility or the depth of your research when you fail to include one of the first ICT VCs in the region: Accelerator Technology Holdings / IV Holdings.
They are not only the first, but also the ones with the biggest web related portfolios.
What a silly comment Omar! I am not supposed to mention every VC in this post, if you look at the paragraph that talks about VCs I said ” with initiatives like” look at “Like” I did not say here is the full list of VCs in the region! Btw I posted about IV Holdings recent investments in ArabCrunch before. And plz next time u wana post a silly comment put ur real email.
Anyone here knows PHP very well? Plz msg me at Editor(at)arabcrunch dot com
This is a very important topic. Thanks for bringing it up.
I have one comment though; I sense a lot of frustration in your post and I think it might be clouding your vision on several topics, namely the issue of “Arab governments should 1st buy from regional based IT companies if an alternative is available”… I believe that will mean the demise of Arab innovation because if we don’t feel the need to compete, we will never innovate. This is proven by all the smart ideas coming out of the Arab world that aim to take a piece of the global market share.
I don’t know why anyone would want to take us back to the 1970’s when local businesses were “protected” from competition and therefore survived with very bad services and products.
ahmad khari – that’s a very good point and one initial thought is that all arab startups need to be treated as contenders without discrimination. but even discrimination can be considered a result of the IT industry in the region not being up to the level of international competition so the struggle to end the discrimination is in itself a fair competition partially based on image enhancement and reputation built through quality and innovation.
if you want a good example of protectionism’s downside, look at india before the 1990s where industry and innovation was lethargic because of state protected licenses to private businesses and similar obstacles. only when policy drastically changed and there was open global competition did you see india as a business builder excel.
@ Ahmad Khair thank you for your comment
Well if u look what I said it was “Arab governments should 1st buy 1st buy from regional based IT companies if an alternative is available, and use Open-Source projects rather than property based systems”
I said “if an alternative is available.” “1st buy” means favor them, this is not protectionism, and will not demise innovation. I also said they should adopt Open source. Because some countries spend millions of Dollars on non local but on International platforms. And actually the sellers are mostly local agents for international companies.
Why not run the whole government on Linux for example? Would not it be cheaper for them? Moreover does not Linux have the reputation of being more secure and reliable than Windows? We have local companies who can do open source projects in many fields. And besides most International vendors have many Local alternatives from this region. ERP, CMS? And GRP? We all have that, it can be developed using any language, PHP, Perl, and even .NET
There is even open source software for this kind of stuff like Drupal for CMS.
Some will say we do not have enough talent in Open-Source technologies. Well I am not sure at the current curriculum of the IT departments in our universities. But I am sure they do not teach PHP or Unix and Linux. Community colleges in USA teaches those things! We should also teach them in our universities, at least to have open possibilities for the student and the market. I know many web companies in Jordan for example, who adopted open source, struggle to find adequate PHP and Perl developers. Actually most Linux admins and PHP developers are even self learned or took a private course. I would like to point out here we do have open-source talented geeks, but we do not have the right amount of the. So there should be an effort to increase them
hamad tarek made a good point “that all Arab startups need to be treated as contenders without discrimination.” I agree, because many times customers in this matter governments will look high and favor big international brands, so at least treat them as equals, I’ve seen Arab IT companies -and worked with one- that does the same or better than the International rivals.
There should also be R&D investment in military technologies, why? Because many have dual use and can spin off as a civilian innovative projects, this has been the case in “Israel” for example. In this area for instance there should be joint Arab and Muslim R&D efforts in Telecommunications, which can be used for civilian and military purposes. You’ll never know the next Cisco might come from one of these R&D projects.
Thanks Ghaith for this elaboration.
Your statement was very clear, and is –understandably- a very common mistake people make when they haven’t had that much practical experience –and suffered- in the IT industry… things aren’t that simple.
I don’t think you realize the real issue that comes with adopting opensource in such a large scale org like the government. When the government chooses a solution, they are really looking for a complete “solution”, one that is guaranteed and supported. Adopting opensource in this era means having your own in-house experts. We all know how scarce these are when it comes to open source technologies.
I also think you contradict yourself when you say “I know many web companies in Jordan for example, who adopted open source, struggle to find adequate PHP and Perl developers” when you want our government to run on these technologies ???
I hope when we say opensource you don’t just talk about price. Getting a CMS for free –like Drupal- is just step 1 of 50. Do you know how many people in Jordan –for example- are very capable Drupal developers? On a scale relevant to the needs of a government project, none. Remember, we’re talking about proper Drupal development not what you get from two months of playing around with the modules.
p.s. Sometimes you provide anecdotes from real live examples but you never mention names. Like here you say “I know many web companies in Jordan for example”… and early in the post you say “a friend of mine who is a geek told me” …and then.. “a very senior executive from a well known US based vendor met with a ruler of an Arab country…that country’s official media said ….multi million deal with that country’s government, basically a fat sale for him!”… You always quote anonymous people which doesn’t look good. It’s much better to give names so that these statements can have some credibility.
Always like your stimulating posts… Keep em coming
Thank you Ahmad Khair.
I do not contradict myself, I have provided ideas for a solution to adopt open-source, did not I say that we need to have open-source courses such as Unix and Linux in the curriculum of the IT departments in our universities!
Besides many other IT companies at least in Jordan, face problems when it comes to find good techies, whether it is .Net or PHP. And from my experience and from what people have been telling me, the quality of computer science graduates in Jordan is mostly low, I do not know about other Arab countries, but it seems similar. The problem is the IT student does not spend time to learn things.
I do not know how many companies that provides open-source solutions in the Arab world to be honest, but I know a few in Jordan and Egypt. In anycase. whether it is International vendor or an open-source solution. Both need some level of training. So why not spend that money in Open-source training. And the amount of Money the’ ll spend on licenses can be spent in training and using Open-source technologies that are based on homegrown talent, and thus you are not under the mercy of anyone.
Look Syria and Sudan cannot buy Microsoft Windows because of US sanctions; I do not know what they use. But do you suggest using a cracked version of Windows with no support? Or is it better for them to use Linux tweak it and do whatever with it? (PS: I am not endorsing any government here.)
So Ahmad why do not you tell us about your experience? Do you sell to any government? What company you work with?
[...] This year Forum’s theme is the ”implications of the Global Economic Crisis for the Middle East: Home-grown Strategies for Success.” We at ArabCrunch believe in a home grown Startup based Technology Industry that should be fostered in order to solve our long term… [...]
Well, I guess we’ve established that Opensource is not the best way to go for governments since there are only a few companies in Jordan and Egypt who provide that.
I Don’t sell software, I’m just a developer who happens to love any and all technologies. I guess I have a view about the technology industry in the region (investment included) which is much more optimistic than yours
I have a lot of comments about this particular article -and forgive me if I seem too harsh- but it’s really full of holes. You take one topic, touch on it very superficially -and inaccurately- and then derail into a bunch of unrelated topics which in my opinion are typical rants stemming from some sort of frustration.
If you want, I can elaborate more and maybe you can shed some light on some of the ideas you touched on.
I really enjoy most of your reporting on events and latest news that don’t require alot of thinking of me. But, when I read analysis like this, I am forced to think
Hi Ghiath. I came accross your blog while reading up on the WEF in the Dea Sea and the Intel investments in Jordan. That’s quite a big achievement for such a small country.
Interesting article. One thing caught my attention; you said that (a $5 Billion regional fund can be a start) Do you have an inside info that you’re not telling us
? I’m curious how you came up with this number?
Thanks.
@Yousef Jum’a no it is just a number i came up with, 5 billion is nothing for people who have trillions invested outside the arab world.
@Ahmad Khair I did not establish that u did, i said instead for Arab governments paying millions to Microsoft’s of the world they can use it to train people and advocate open source. Not saying everyone should abandon Microsoft .Net necessarily
It seems that you work for Microsoft! or an undercover MS fanatic
look I am not against MS or Oracle, but few of the things which I mentioned here are backed by people who worked with Arab government and aware about things there.
Do not tell me to disclose sources, bc if I do not have permission from the sources to mention their name, then I cannot ethically and professionally. And Habibee, this post is not a research so do not expect everything to be referenced.
if you have something against FOSS remember AC would not be here if Wordpress was not free and open source, maktoob would not be what it is today without it. Google, Yahoo, facebook they all use FOSS, Oracle bought Sun for the sake of Open source stuff: Java and MYSQL – separate post with an insider info about Oracle/Sun will be here soon- . The most popular web hosting platform is Linux not Windows. However Microsoft has recognized that startups generally will go for free tools, with its launch of bizpark offering their tools free for starups in the 1st 2 or 3 years of operations. Feel free to elaborate and post ur thoughts but do not expect me to reply back specially if u were being rude or when you mention false accusations.
Also why not, when Arab governments pay millions to these companies make a condition that they should open R&D centers in the region? Thus help in tech transfer and in creating experienced poll of engineers, Abu Dhabi bought around10% of AMD and they will be opening manufacturing or R&D center in UAE.
Any logical man will say for US sanctioned countries like Syria and Sudan, Open source is the only way for them to go since they cannot use propriety software from US companies, right!
@Ahmad Khair and @everyone feel free to post your thoughts here, plz be constructive.. give some ideas. but try to be respectful.
[...] encouraged before here on AC and else where; Arab governments to ask International IT companies to open R&D centers when [...]
Ghaith, I really am being respectful and you can’t throw accusations at everyone who does not agree with you or challenges your views.
I really wish you would support your opinions and numbers with facts, but you don’t. In your own words you confirmed my guess that this article was not based on any research, which makes your arguments no different than the rants of any frustrated person who blames the microsofts of the world and the governments for everything.
Nobody likes Microsoft or Oracle, but its really not about them or FOCC, but about where you come up with those views… I think throwing a number like 5 billion which -Yousuf asked about- is really an example of how baseless and very superficial this whole article is. Do you know how much it takes to start a VC? do you know how many VCs the Arab world needs right now? and do you even know the amount of deals in the market right now to support those VCs?
Finally, reporting on news is one thing, but doing a long article that talks about the state of the Arab VC environment seems way out of your league if you’re not willing to do the proper “research” (as you said).
I think it’s actually damaging to Arab entrepreneurs to be reading opinions not based on facts. Opinions they can hear if they talk to any frustrated IT person in the Arab world.
p.s. Ghaith, to put things into prespective, I’m curious to know about your background and experience, and why you decided to become a journalist in this particular sector if IT?
Thank you.
Ahmad Khair: It seems you argue only for the sake of argument, this is not a research true, however I report about the industry, many things mentioned here are based from what I read and hear from people in the industry, the VC thing is based many talks I had with many Arab startups and some of the VCs I know. Everyone agrees that the amount of VC investment in IT is low in the Arab world.
The fund number I gave is ya just a number! It is an idea, but again it should be in billions of dollars, Do not you agree? and it is not just a VC fund but Also for R&D as I said in the post, do not tell me we do not need an R&D fund, just google the amount of patents all the Arab countries produced in the last 10 years and compare them to the number in USA, Japan and “Israel”.
U said that “I guess I have a view about the technology industry in the region (investment included) which is much more optimistic than yours” but u did not tell us your view. If you think this post is so damaging go ahead and tell us the truth you know. You tell me how many patents the Arab world produce? How many tech companies get funded every month? How many R&D centers we have in the Arab world? Mention to us one R&D center for Microsoft, Intel, Oracle or IBM that is equal to the size of their centers in “Israel”? If you provide some good info I’ll report that here, and If I posted any wrong info I am ready to correct.
When I said that Arab government should share the responsibility, this is not a socialist idea, I am not a socialist, I mentioned before I did a research about the IT sector in Israel long ago, its IT sector status today Is because mainly of the “Israeli” government plans and huge involvement in the civilian and the military ICT industry. In USA the mother of Capitalism , the government provides grants and funds for R&D every year, remember the internet was a US military project.
And btw I am not a journalist AC is a blog, which is different in some ways. If you are from the lazi-fare ranks, a believer in the magic of the invisible hand and if you think the market self corrects itself and that we do not need constructive government involvements in the economy, just look at the billions the US gov. is giving to banks and the car industry.
The Us government is only giving money to the auto industry to save it from collapse and therefore the collapse of the US economy because millions of people depend on the auto industry for pension and health care.
There are few VCs in the Arab world, but only a handful of startups got funded by them simply because the rest are no viable. Those VCs are crying out for more deals. If you do your research and talk to them you would know it.
I’m not the journalist, so I’m not obligated to support my opinions with data, but if you start looking at the number of deals available in IT, you can start to get the idea that it doesn’t take billions of dollars to fund all of them. The main problem is the lack of viable startups.
Again, I urge you to not write “opinions” but to write well investigated reports. opinions are written by 50 year olds who have seen this and done that in the world, who have started a handful of multi-million dollar companies and succeeded. I would accept opinions from any one of existing successful startups or VCs, but not from a someone who is just blogging (as you put it).
p.s. Maybe if you interview or quote some of them to support your views, it would help make this blog more credible and less about just the opinions of Ghaith Saqr, don’t you think?
Thank you.
@all Guys I am sorry this is a long post, but I have to clarify few points here.
khair: I said “R&D in the Arab world is also not visible too. So there should be national and regional funds for R&D. A $ 5 Billion regional fund can be a start. This can be done via a small cut from Oil profits and another cut from each Arab country, which would be a healthy start to finance all the needed money for R&Ds and VCs activity the region.”
So this fund is also for R&D why 5 billion, it can be more, but because Arab sovereign funds assets are valued around 2 trillion mostly invested in the west, 5 billion is not a large amount.
You want some data here you go:
WEF:
Number of Patents Registered
Global competitive index.
in the USA, 1976-2002
Yemen 3
Lebanon 4
Syria 16
Jordan 22
Tunis 23
Morocco 65
Kuwait 75
Egypt 104
Saudi Arabia 225
Israel 11,071
Sweden 26,318
South Korea 27,298
Number of utility patents (i.e., patents for invention) granted between January 1 and December 31, 2007, per million population | 2007 global competitiveness index/ World Economic Forum
RANK COUNTRY/ECONOMY HARD DATA
1 Taiwan, China………………..270.4
2 United States ………………..261.7
3 Japan……………………………260.0
4 Finland………………………….160.4
5 Israel ……………………………158.1
6 Switzerland …………………..141.8
7 Korea, Rep. …………………..130.9
8 Sweden………………………..116.6
9 Germany ………………………109.4
10 Canada …………………………100.9
51 Saudi Arabia ……………………..0.8
Research and development expenditure (% of GDP) http://hdrstats.undp.org/en/indicators/128.html
HDI Rank Country 2000-2005
1 Iceland 3.01
2 Norway 1.74598022358616
3 Australia 1.70497399344551
4 Canada 1.93
5 Ireland 1.21
6 Sweden 3.74
7 Switzerland 2.56702710606346
8 Japan 3.14540285993759
9 Netherlands 1.84822798236219
10 France 2.16
11 Finland 3.46
12 United States 2.68
13 Spain 1.10532054929947
23 Israel 4.46
33 Kuwait 0.195154797264097
35 Qatar ..
39 United Arab Emirates ..
Researchers in R&D (per million people)
http://hdrstats.undp.org/en/indicators/129.html
HDI Rank Country 1990-2005
1 Iceland 6,807
2 Norway 4,587
3 Australia 3,759
4 Canada 3,597
5 Ireland 2,674
6 Sweden 5,416
7 Switzerland 3,601
8 Japan 5,287
9 Netherlands 2,482
10 France 3,213
11 Finland 7,832
12 United States 4,605
13 Spain 2,195
14 Denmark 5,016
15 Austria 2,968
16 United Kingdom 2,706
17 Belgium 3,065
18 Luxembourg 4,301
19 New Zealand 3,945
http://oberon.sourceoecd.org/vl=1917787/cl=11/nw=1/rpsv/sti2007/a-4.htm
You want some data about the US and “Israeli” government involvements in R&D here you go:
National Science Foundation (NSF) estimates indicate that U.S. spending on research and development (R&D) totaled $368.1 billion (current dollars) in 2007, up from $347.9 billion in 2006.
>>>In 2007, The (US) federal government conducted $38.6 billion, or 10.5%, (including federal intramural, $24.7 billion, and federally funded research and development centers, $13.9 billion[3]). Other nonprofit organizations performed $15.3 billion, or 4.2%.
>>>In 2005, Israel had the world’s highest R&D intensity, spending 4.5% of GDP on civil R&D, twice the OECD average. Chinese Taipei and Singapore were the only other non-OECD economies with an R&D intensity above the OECD average.
20 Italy 1,213
http://oberon.sourceoecd.org/vl=1917787/cl=11/nw=1/rpsv/sti2007/ga4-2.htm
>>>>“Isreali” government budget for civilian R&D in 2005 amount to about €770m
http://cordis.europa.eu/erawatch/index.cfm?fuseaction=ri.content&countryCode=IL&topicID=329&parentID=50
http://www.nsf.gov/statistics/infbrief/nsf08317/
>>>Arab countries spend less than 0.2% of their national budgets on science and technology research and development. This is more than ten times less than the amount that developed countries spend.
The results become clear if we consider the publication of scientific research papers and/or patent registration. Results of research conducted in Arab countries are rarely published in international professional journals. The number of patents produced by Arabs is meager; during the past two decades, South Korea registered in the U.S. over 44 times the number of patents from all Arab countries combined.”Dr. Farouk El-Baz, member of the U.S. National Academy of Engineering,”
http://www.strategicforesight.com/iwf_farouk_el.htm
More about “Israeli” Government involvement in the “Israeli” tech industry and the Legal Framework -
http://globes.co.il/serveen/globes/nodeview.asp?fid=962
Research & Development Strategy for Information and Communication
Technology, 2007-2009 in Jordan, has some nice info too http://www.moict.gov.jo/downloads/Jordan_RD_ICT_Strategy_Volume_1-Final%20May%203_07.pdf
Khair you said “The US government is only giving money to the auto industry to save it from collapse and therefore the collapse of the US economy because millions of people depend on the auto industry for pension and health car” it also is giving 10s of billions to banks, this crises is a proof that markets are not self correcting, it is not just “only giving.” and as you said save “therefore the collapse of the US economy.”
In 2007, The (US) federal government conducted $38.6 billion, Americans are around 400 million people, Arabs are the same number do not you think 5 billion is not too much? And by the way many Arab governments recognize the lack of R&D activity and funding and the lack of VC funding, you see that in Jordan R&D strategy, also Jordan is gona launch soon a government VC fund, do not you think if there was enough VC they would not launch it? The problem is that every Arab government is having its own initiative for its own country not a pan Arab or pan Islamic one. The regional and pan Islamic work is not a must because we are brothers, but also because it is our future and our national interest that lies ahead.
Khair you said” There are few VCs in the Arab world, but only a handful of startups got funded by them simply because the rest are no viable. Those VCs are crying out for more deals. If you do your research and talk to them you would know it.” I think I answered you many times before I talked to some VCs in the region and also startups, everyone agrees that VC’s mostly in the region do not invest (specially at seed stage), and actually many are not VCs it is not just there are no viable ideas as they (or you) claim, but because its their mentality.
I also mentioned in the post the viable idea problems look at section 1-Entrepreneurs & Opportunities where I suggested how entrepreneurs should think, plus when there are R&D funds we’ll have inventions which can be turned into innovation if you know the difference between both. The ecoy-system I proposed is not a final say it is open for discussion and more points to be added and things are interconnected, I Think at the begging of this post I said “In this post I would highlight a few points that I think can help in creating a vibrant startup-based IT sector in the Arab world “ underscore few points.
Khair you said “I’m not the journalist, so I’m not obligated to support my opinions with data” well if you do not support your opinion with date then do not accuse others of writing “the rants of any frustrated person who blames the microsofts of the world and the governments for everything.” of being “baseless and very superficial this whole article is” and “damaging” “a someone.” And do not through accusations and take words of course.
Khair you said “opinions are written by 50 year olds” this is a jock, I can give you many example of people who achieved great things or taken higher positions when they were much younger, do you not know that Osama bin zaid lead an army when he was 18? Do not you know that Yang started Yahoo when he was in School? Dell? King Hussein became King when he was 18? ….etc
“just blogging (as you put it)” no shame in just blogging, this is a specialized blog not a personal blog, do some Googling to understand what blogs are all about. and just look at blogs stats, over 200 million people visits blogs each month.
“Maybe if you interview or quote some of them to support your views, it would help make this blog more credible and less about just the opinions of Ghaith Saqr, don’t you think?” ya that is coming inshallah, for the VC part. As if you do not think this blog not credible, well I’d not think that the 5 of the top 10 blogs in the world think agree with you. Not to count over a hundred more blogs who cite ArabCrunch as a source for many news.
Wow Gaith, I call this the most perfect response of all times, well say man, well say
Opinions are written by people with real experience (this is what I meant) “50 year olds” is just a metaphor because in most cases those people have been through and seen alot.
With regards to the data you provided, it’s really nice to see that you’ve finally done some reading up on the topic and told us what we already know. R&D is really lacking in the Arab World, there’s a ton of research on that in the last 15 years, which is why that specifically wasn’t the disagreement.
Lack of R&D can be recited by any person with enough time to attend conferences and listen to speaches, so it’s nothing new. The problem here Ghaith is the way you write; you say the obvious, things that you would hear on the street (or in any conference) but then start preaching about how to solve them as if you actually know. There’s no problem in quoting experts and people of knowledge on those proposed solutions, but you don’t. You didnt’t provide a single credible source when you quote you heard or someone told you.
p.s. the difference between 3,4,and 5 billion is alot, but I can see how that difference may appear trivial to someone who looks at them as simple digits
Thank you.
Gaith, Ahmad…
I’m sure most readers will agree that it’s been both enjoyable and informative to see the comments, arguments, challenges and responses flying back and forth with regards to this subject.
It does seem however that it is turning a little sour and personal and is distracting from the main issues and points of the initial post. Without sounding patronising, I really do think we should focus on combining the talents, thoughts and initiative from all of us and come up with some tangible actions rather than argue over some of the detail.
Personally, I don’t really care who’s right or wrong. I thought the initial post was timely and brought up some interesting points, and it clearly stimulated some discussion. The fact remains that we are behind, in R&D, Venture Capital, Government Support.. we have a low resource of human capital (although improving rapidly), and lack of experience in management and entrepreneurial approaches.
It seems futile to argue over how far back we actually are, or how much support we actually need… or even compare ourselves to everyone else. We have our own circumstances and market, and we should combine forces and focus on tackling it.
I hope my comment is accepted with the good will that is intended and hope I have not caused offense.. I only mean to bring us back to the main points of the topic. Onwards and upwards…
[...] و اليوم نزف البشرى التي اعلنا عن نيتنا تنفيذها في شهر ابريل الماضي. شكرا لكل من [...]
[...] social platform was what we the passionate startup community wanted to do when I mentioned back in April that AC will do it, when I wrote about the ecosystem that we need to help grow the tech industry in this region. Here [...]
salam guys:
I am happy to inform you as a result of this post ArabCrunch.NET http://arabcrunch.net was developed and launched in private beta around 1 month ago to help Arab startups and help the region innovate, continuing ArabCrunch Mission.
anyone needs an invite connect me plz