BEIRUT, Lebanon — Some of the Middle East’s most promising entrepreneurs and deep-pocketed investors gathered at the Habtoor Grand Hotel here last month for the sixth edition of the ArabNet Digital Summit, one of the largest forums for the Middle East’s burgeoning startup industry.
Among the sea of Lebanese government officials and notable international figures was Hala Fadel, an angel investor and the founder and chairwoman of the MIT Enterprise Forum of the Pan-Arab Region. Fadel is also a partner at Leap Ventures, a new Beirut- and Dubai-based venture capital firm that debuted at the conference. The firm, which has raised $71 million, plans to invest in late-stage regional startups by injecting between $3 million and $7 million into up to three companies a year.
While locals often complain of a regional brain drain in the Middle East, international investors and entrepreneurs see the potential for young Middle Eastern entrepreneurs to change the region. With a population of 100 million under the age of 15 and Internet and smartphone penetration rapidly increasing, Fadel sees plenty of entrepreneurial promise. She has made it her life’s work to address the lack of support for entrepreneurship in the Middle East.
Fadel sees herself as a connector, someone who discovers the region’s future innovators and links them with money, mentors, press, and anyone or anything that can help them grow faster and overcome the many obstacles in this tumultuous region.
Her interest in the Middle Eastern entrepreneurial scene, however, was born in Boston, while she was pursuing an MBA at MIT’s Sloan School of Management. “Being in Boston in 1999 and 2000 at the time of the Internet bubble, when entrepreneurship was really booming and everyone on campus was starting a company, I caught the virus,” she said.
She entered and won part of the MIT 50k business plan competition in 2000 with Booleo, a telecom software startup. When she returned to the Middle East years later, Fadel found it lacking the kind of motivational environment that inspired her while at MIT. The region, she decided, needed a little bit of that Boston magic.
“There was really nothing being done for entrepreneurs here. At the same time, I was seeing a lot of talent – people with creative ideas who were bored with their day jobs and thinking up things on the side. I wanted to create a forum for people to meet and learn from others from the same species,” she said.
S0 decade ago, Fadel founded the MIT Enterprise Forum for the Pan-Arab Region, one of the 28 worldwide chapters of the university’s global network for entrepreneurship and innovation. The Middle Eastern arm organizes the annual MIT Arab Startup Competition, whose winners will be announced at the end of this month. This year, the contest received over 5,000 applications.
The competition offers applicants three different tracks. The startup track is aimed at established companies looking to expand, and awards a $50,000 first-place prize. The ideas track targets those who have yet to build a team and garner sales, and awards $15,000. The social entrepreneurship track provides three $10,000 prizes to for-profit businesses that have strong social impact.
Paradoxically, Fadel explains the plethora of problems plaguing the Arab world have served as creative fodder for regional entrepreneurs, many of whom have the professional and educational training needed to address the region’s most flawed sectors. From the need for Arabic-language content online, to better health care access and innovation in digital payment methods, there is no shortage of problems for entrepreneurs to solve.
Last year’s winner in the startup track, for example, was SudaMed, a medical software company founded in 2011 by Mazin Mohammed Khalil, a young hospital executive in Sudan who was disturbed by the scarcity of clinics in his country, where many have to walk long distances by foot in search of medical aid.
Khalil built an online medical directory that lists hospitals, clinics, and other medical institutions, along with their locations and hours of operation. Khalil also offered SudaMed users a $30 discount card that would give them access to half-priced treatments at SudaMed-registered clinics if they paid in cash, helping doctors who were having difficulty securing timely payments from insurance companies. Fadel said most of Sudan’s doctors have now joined the platform.
Similarly, the winning project at ArabNet’s Startup Demo competition this year was Otlobdoctor.com, an online health directory from Egypt that offers patients access to doctors’ resumes, plus the ability to request a house call, rate doctors, and relay locations to emergency dispatch units.
“Nobody understands a patient’s needs better than a physician,” said one of Otlob’s founders, Ashraf Fakhry Elfikry, himself a doctor. “The boundaries for online medical services are untapped and virtually limitless in Egypt’s $14 billion market. Internet penetration is 48 percent. That’s 43 million users. Egypt’s workforce is the largest in the Arab world, with three doctors per patient.”
Fadel has set up shop in Lebanon’s up-and-coming Digital District, a 10-year initiative aimed at building about 10 modern high-rises with subsidized wifi and fiber optic cables, creating a hub for training tech-based startups.
It was hard, however, not to notice the poverty enveloping the handful of new, voguish buildings in Khandaq al-Ghamiq, an otherwise decrepit neighborhood. It was also difficult to ignore the fact that the Lebanese are perpetually frustrated by one of the world’s slowest Internet connections.
Fadel admits that inadequate infrastructure and funding continue to obstruct entrepreneurial development. While investors made public mention of some hefty numbers at ArabNet, and government officials promised ambitious reforms, strategies, and roadmaps, it’s unclear whether the region has what it takes to make the most of its youthful residents’ obvious entrepreneurial potential.
Fadel remains optimistic. “It will take less time than you think for this region to change,” she said.