A decade of evolution in MENA's startup ecosystem
The next seven episodes (including today's episode) are going to be pretty exciting! We've collaborated with 500 Startups in the Middle East in order to bring you insights on some of their portfolio companies, what they're up to in terms of solving some of the region's largest problem statements, how they build their solutions, and their vision for what's going on in the market.
Kicking off this special series with us in today's episode is Bedy Yang. She is the Managing Partner and Global Operator at 500 Startups - one of the world's leading venture capital and accelerator platforms. We discuss the MENA ecosystem and more importantly, how it's evolved over the past ten years.
In our latest episode, we sit down with Bedy Yang, Managing Partner at 500 Startups. Bedy oversees 500’s ecosystem development programs including investor education courses (in partnership with top institutions such as Stanford, Berkeley, and INSEAD), has helped launch strategic partnerships and accelerator programs across the globe, and leads 500’s corporate-startup innovation and consultancy.
Together we discuss:
Unlocking market access in the startup ecosystem
Different types of mentors
Working with governments to build startup programs
Current startup trends in the MENA region
Through funding, knowledge, and access to the market, successful startups are built
In the past few years, the MENA ecosystem has greatly transformed through successful startups, more investors, bigger networks, and the sheer excitement of new opportunities and ideas. Over the last 10 years, this ecosystem in MENA has seen larger capital and an increased number of startups.
The current support infrastructure that is offered to startups wasn't available ten years ago. For starters, there was a very limited number of venture capitals that were funding startups. Back then, entrepreneurs often had to rely on their own funds as capital. Now, founders can go to VCs or angel investors, before even generating any revenues, for financing.
Besides funding, knowledge on how to build startups in the early stage is essential. This includes information on how to maintain cash flow, grow business and get the first few customers. Early startup knowledge is accumulated by trying different ideas and processes to find what's best. Another way to add to your knowledge is by building a network of people from who you can learn.
Finally, entrepreneurs need access to different markets. In the MENA region, the golden ticket market is KSA. To access this market (or any other market of your choice), you need to find a buyer, form connections, and learn more about the country's specific dynamics. Through accelerators, entrepreneurs are able to get access to this knowledge to start the process.
Mentors share their knowledge and experiences with founders to help them with the early stages of their startups
Mentors are scouted and assigned to founders based on their needs, challenges, region, and market. At 500 Startups, dedicated teams are assigned to find the right mentors for each market. Local mentors are great because they already have a clear understanding of their region, and so are able to better support founders from the region. Mentors are chosen based on their past success with business, depth of knowledge, and willingness to guide future entrepreneurs.
Entrepreneurs need a foundation of growth that mentors can provide
Many mentors are ex-founders that want to contribute back to the community by sharing their knowledge and experiences. Those who want to help out of their freewill work pro bono, while mentors that provide extensive training and advice over a long period of time have paid partnership programs. These are usually accessed by entrepreneurs that "live in residence" with accelerators for long periods of time.
Besides receiving money (for paid long-term programs), mentors benefit from the growth in their network, association with accelerator brands, and overall growth of the startup ecosystem.
Government entities help improve the startup ecosystem in their countries
When gaining access to markets, accelerators and startups can benefit by working with governmental entities. Governments and other regulators are eager to understand what is needed to build a vibrant startup world - they're trying to make it easier for founders to access markets. If a country puts in too many restrictions, founders will start up in another country. Thus, there is an increasing amount of competition between governments.
By collaboration between governments and new businesses, founders are able to test out different markets, while governments are able to set in the best practices that benefit the startup ecosystem. Additionally, entrepreneurs will benefit from aligning their KPIs with the government's standards.
Many accelerators and venture capital firms work with governments around the world to see what practices, policies, and restrictions are in place. They can hold board committee discussions to facilitate the growth of certain heavily-regulated sectors (e.g. FinTech and healthcare).
The current areas of startup trends are e-commerce, FinTech, healthcare, marketplaces, and EdTech.
Startups don't need to be restricted to one region or industry so there's a lot of flexibility in the MENA region. Even though KSA is the largest market in MENA, startups don't have to always be based there. Common startup HQ locations in MENA are Egypt, KSA, UAE, and Jordan (in that order). The most trending areas for startups are e-commerce enablers, FinTech, healthcare/wellbeing, marketplaces, and EdTech.
The Sanabil 500 MENA Seed Accelerator Fund is an investment program in the MENA region for startups that have launched with the collaboration of 500 Startups and Sanabil Investments. They have a 2% acceptance rate as they select only 100 handpicked startups in MENA to invest in. This is a great initiative to initiate growth in trending startup areas.
Besides startups, corporates can be further grown and developed with the help of venture capitals. VCs usually look for corporates that have space for massive transformation, the most potential, and are investing in the next generation of founders.