Entreprenerurship in the MENA region is changing I’m meeting a lot of young ambitious people with great new ideas lately, but what about VC’s and investors in the MENA? Are things changing on that front? Luckily I had the chance to meet with the founder of Dubai’s first startup accelerator and he had some very good insights as well as sound advice for entrepreneurs worldwide.
If you don’t already know who I’m talking about it’s Rony El Nashar, Founder and Managing Partner of Seed Startup. I first met him at the step conference where he was a panelist encouraging all attendees to focus on execution rather than ideas. I remember him saying that there is no marketplace for ideas – you can’t go to a place to buy and/or sell an idea. Not that he’s against a good idea, but he prefers people not to waste too much time on perfecting an idea but making it work to gather enough traction for it to take off and find a good product market fit.
To give you an idea about Seed Startup it’s a UAE based startup accelerator and seed venture fund that focuses on digital media web, mobile, software startups launched in October 2011. During our conversation I was surprised to find out that they accepted startups from any part of the world and not just the MENA region, “the goal behind it was to make it open to the world, we value meritocracy the only thing that matters is the team” Stated El Nashar.
Interested entrepreneurs can apply for the program on their website. The next round starts on June 14th, 2012 and the application deadline is on May 3rd, 2012. In the previous round they received 74 applications and only accepted three, that’s an acceptance rate lower than Harvard’s according to Rony. As for the round coming up on June they already had 140 applicants when we spoke, I’m pretty sure they’ll be around the 200 mark by the deadline.
Successful applicants receive mentorship and seed investment of up to 25,000 USD (depending on the team size) in exchange of 10% equity stake. I asked Rony whether he thought that was fair or not, to which he replied “yes, its comparable to other seed accelerators everywhere, we’re not doing anything different in this regard”.
We then discussed the restrictions of applying to the program I was specifically interested to know why they don’t accept single founders to which Rony clarified that in the early stages of a startup it doesn’t make sense to outsource all the work, “Build cheap, build in house. It’s a very bad idea to spend a lot of money before getting any traction”, although he did mention that it is alright to outsource the design. Rony believes that teams should ideally consist of three members with a technical background and one business person (even though they accept teams with 5 founders into the program), because startups should be nimble and able to change quickly so a lot of the work will initially be handled by the founding team. The reason he doesn’t prefer all founders to be from a business background is that “you can learn the business aspect faster than the technical aspect”.
Accepted applicants are then expected to spend three months in Dubai to work on their startups with the help of the Seed Startup’s mentor network. The list of names is a very impressive one from big global and regional companies, and Rony stated that a number of them actually contacted him to be in the network and not the other way around. Each startup in the program is assigned to a mentor which they must meet at least once a week and the remaining time they are working closely with Rony to set targets and discuss progress. I wanted to know why the mentors were doing it, so I asked Rony what was in it for them and he replied “there’s no compensation for the mentors they usually do it to give back” and he believed that mentors in his network fall under one of the three groups below:
- Entrepreneurs: These are the most altruistic, they want to help and be a part of a group
- Angels & VC’s: Giving back and looking for deals
- Domain experts: Looking for business development in the future and to network with the other mentors
Moving on I wanted to know on what basis they selected the teams to join the program and who it was making that decision. Rony replied that the decision was made by him and his business partner Salem Al Noaimi CEO of Al Waha Capital PJSC, although he doesn’t get involved after the decision that is left up to Rony. How they come to the decision is more of a process, they review the application forms – which are designed on the website to simulate a business plan – the ones they do like, they contact. Afterwards Rony either meets the startup team in person if they’re located in Dubai, or via Skype if they’re located abroad.
What he looks for in a team is mostly the ability to adapt and change, which raised the question if there is a way to find out if a team possesses that ability or not? “Unfortunately not, you can never know!” replied Rony, the closest thing is their past work, CV’s or track records but even those were not a 100% indicators whether a team has that ability or not.
We then moved on to discuss what’s going on in the MENA region, Rony believe’s that there are interesting startups popping up in the region and said that “we shouldn’t really compare ourselves to Silicon Valley because we have the potential to do and we are doing cool things.” He also mentioned how important it is to have good events such as Arabnet Digital Summit to get the word out, “the buzz from Arabnet was inspiring” referring to the recent investments made by Middle Eastern Venture Partners (MEVP).
Finally I asked Rony what advice he would give to anyone that’s looking to venture out on their own, and he said it’s difficult to narrow it down but the general advice would be “launch by spending as less as possible, launch with most important features. And keep in mind that the business plan is a hypothesis, it’s probably not going to work! A good team is a team that has the ability to adapt and change their backgrounds if need be – it makes sense to be nimble.”
I’d like to thank Rony for his time and valuable advice and would like to wish him the best of luck with Seed Startup. If you’d like to receive other valuable insights to your inbox, register to receive our newsletter.