Start-up firms bloom in wake of Arab Spring
By Mirna Sleiman
DUBAI (Reuters) - Jordanian entrepreneur Majied Qasem waited three years before arranging outside funding for his start-up company, d1g.com, an Arabic social media and content-sharing platform. He finally succeeded in September 2011, eight months after Arab Spring uprisings erupted in the region.
The company now has over 35 million page views per month, with growth in traffic stimulated by online debates about a wide range of political and social issues, says Qasem, 40.
Like many entrepreneurs in the Arab world, he believes the region's political and economic upheaval has helped rather than hurt his business, by creating fresh demand for his products, persuading investors to seek new opportunities, and making governments more sympathetic to the needs of start-ups.
"Investors historically targeted well-established companies that had very low risk and provided high returns. But now, after the Arab Spring, investors are pouring the same amounts of money into multiple smaller companies, betting a few of them will see a remarkable success story," said Qasem.
"We're seeing unprecedented amounts of money paid by investors, governments and development funds to seed start-ups and small firms."
The economic damage caused by the Arab Spring has not yet faded. Egypt and Tunisia are coping with waves of industrial unrest as they seek to rebuild their tourism industries and lure back foreign investors. Libya is recovering from a civil war, while sectarian unrest still weighs on Bahrain's economy. In countries such as Jordan, governments have boosted welfare spending to try to buy social peace, undermining their finances.
But a positive result of the turmoil is that in some ways, conditions for entrepreneurs are improving, officials and businessmen say. Previously, start-up firms were sometimes discouraged by authorities as threats to small groups of privileged businessmen cooperating with authoritarian regimes. Now they are more often welcomed as tools to create jobs.
Arif Naqvi, group chief executive of Abraaj Capital, the Middle East's largest private equity firm with over $6 billion under management, said one of the most dramatic changes in the region's economic thinking since the Arab Spring was the realization that smaller firms, not big state-linked ones, would be the engine for growth because they could create more jobs. Continued...