The World Economic Forum (WEF) could not have picked a more appropriate location for its special meeting on Arab job creation in late October. The shores of the Dead Sea provided the perfect metaphor for an economic problem – youth unemployment – that is killing communities, crippling development and sucking the life out of an entire generation across the Mediterranean. Factor in the high population growth and the bottom line is that 85 million jobs need to be created across the Middle East and North Africa over the next decade.

But don’t look to governments to create those jobs. The best they can do, suggests Jordan’s Queen Rania, is clear the red tape and instil a new educational climate that weans young people off their dependency on public-sector jobs in favour of start-ups. “When we create one entrepreneur, they create three or four new jobs, sparking a chain reaction that seemingly does the impossible: create something out of nothing,” she told the WEF. “We can all do more to encourage young people to take risks, to teach our children to see and foresee the next big opportunity, to nurture the next generation, to break assumptions and confound expectations.”

That process is already starting – tapping into the same youthful energy that led to the Arab Spring. A slew of Silicon Valley- style business accelerators, boot camps, start-up weekends, technology incubators and mentorship networks have sprouted in the past couple of years, channelling that energy into something resembling an entrepreneurial ecosystem. Rania herself highlighted both Jordan’s Oasis500 and Egypt’s Plug and Play, but there could be as many as 150 others. Interviews with the key players in this emerging space (see ‘The Investors’ View’, p47) suggests that this rising tide of entrepreneurship offers the best prospects for a new beginning.

“The Arab Spring has revived much more than the political landscape,” says US entrepreneur Shama Kabani, CEO of Marketing Zen, after mentoring the NextGen IT boot camp in Cairo this June. “There is an undercurrent of great hope and passion in the entrepreneurial arena – and the ideas and talent are on a par with what you find in the Western world. What’s lacking is strategic mentorship, secure capital and a stable infrastructure.”

Even before Tahrir Square, these creative wellsprings were starting to bubble up in spite of infrastructural headaches such as the world’s slowest internet connection (in Jordan) and the hassle of getting travel visas. Alexandria, Egypt’s second city, is the unlikely home to Vimov, creators of Weather HD – the world’s top-selling weather app on the iPad and iPhone – which was rushed out to global acclaim and impressive sales in April 2010.

A year before that, the Arab tech world saw its first blockbuster acquisition when Yahoo! paid a landmark $175m to buy Maktoob, the Arab online portal founded in Amman in 1998. Back then, recalls co-founder and CEO Samih Toukan, the investment climate for new ventures was to all intents non-existent. “There weren’t many readily available options for us to raise money and we had to use our network of contacts,” he says. “We were able to secure investment from EFG- Hermes at that time, which is a regional private-equity firm. I think they acted like a VC, although they are not, and they might have made an exception because they liked the story of Maktoob.” Now in charge of a portfolio of e-commerce sites as chairman of Jabbar Internet Group, Toukan has become an angel investor himself.

This explosion of start-up activity is by no means just an Arab phenomenon. Southern Europe has witnessed something similar, in part because it has little choice. “What is happening in south-eastern Europe, specifically in Greece, was simply a matter of time; the crash was simply bound to happen. Instability, corruption and lack of initiative never lead to a happy ending,” says Mark Alex Dimitriou, VC investment adviser and strategist. “Zooming into Greece, the current economic turmoil has triggered a series of initiatives to boost entrepreneurship – it is a shame, though, that ugly events of such magnitude should take place in order to trigger something good. But this has always been the case in Greece – nothing happens unless people are cornered.”

Many of the early beneficiaries of this emerging ecosystem are regional variations of mobile and web concepts that have proven successful in the US already and don’t require large upfront investments. Among the first 25 companies that Oasis500 has invested in is Mustaqil, the Arab world’s first online freelancing marketplace (in other words, the local equivalent of Elance or oDesk). Its founder, Ramez Kawar, says: “In Jordan alone, I meet people daily with brilliant ideas and huge dreams. This new movement is on track to becoming one day the Arabic Silicon Wadi. However, in my opinion it still requires experience, maturity, funding and exposure.”In the meantime, entrepreneurs still face an uphill battle.

One would think that pitching one of the first Arabic mobile game apps would be an investment no-brainer, particularly one like Birdy Nam Nam, which offers an Arab Spring twist on Angry Birds. But developer Lebnan Nader, who bootstrapped the game with his brother Arz and their friend Jean-Christophe Hoelt, struggled to find an investor who would allow him to add features and market the game. “We got our first prototype in March. I grabbed my iPhone and laptop and started meeting investors in Lebanon and the region to see if they were interested. The problem is that there are not a lot of investors here, and the few there are took ages to reply. Some were not at all interested, and some showed some interest but asked for a lot of business planning and numbers and figures – which is something a game developer doesn’t care about and certainly doesn’t like doing.” In six months, the game had clocked more than 500,000 downloads. Today, investors are knocking on the Naders’ door.

THE INVESTORS’ VIEW

MAHER KADDOURA
Syrian-born Kaddoura is an entrepreneur, management consultant and philanthropist who spearheads the Jordanian business accelerator Meydan. “This entrepreneurial energy is all part of the rejection of the status quo. Youth are tired of waiting for governments to shape their future and they are doing it for themselves. Start-ups are one way. The mindset of ‘wait and see’ is gradually replaced with ‘I have got nothing to lose and it might just work’. Okay, there is lots of buzz and lots of wishful thinking, but this is the spirit that we want – although wise people must provide mentoring and support them with words, action and cash.

“I am optimistic that we are finally getting it. I believe we are directionally correct. The Arab Spring is fuelling the entrepreneurship space. We are becoming more confident, our self-esteem is adjusting, we are learning faster, we are gradually less intimidated by failure. The spirit of youth is the answer in the Arab World and I believe in them – in spite of all the dark clouds, dust, sandstorms, smoke and fog surrounding us.”

SAMER EL SAHN
El Sahn, the former CEO of software development company eSpace, teamed up with Mohammad Gawdat, Google’s managing director of Eastern and emerging Europe, Africa and the Middle East, to launch technology incubator Tahrir² in Alexandria. “In Egypt, fear was our main barrier, and after breaking this barrier through our revolution, things are starting to change. Building a company is much easier than bringing down a dictatorship regime.

“The main issues now are experience and scarcity of mentorship. Financing is not the issue: there are lots of funds sitting waiting for serious entrepreneurs in Egypt. We have high-calibre talents but they just need market experience to build world-class products.

“We have spotted a real issue in the entrepreneurial ecosystem here. On one side, VCs are frustrated with the quality of entrepreneurs pitching to them and disappointed with the small pool of prospective start-ups. On the other, many young, enthusiastic entrepreneurs are frustrated with VCs not helping out and being too shy to invest. With the absence of an angel network in Egypt, it became impossible to create a deal flow of successful start-ups.”

FADI GHANDOUR
Ghandour is the founder and CEO of Aramex, one of the leading logistics and transportation companies in the Middle East and South Asia, and the first company from the Arab world to go public on the Nasdaq stock exchange.

He is a founding partner of Maktoob; a founding board member of Endeavor Jordan; and a board member of Abraaj Capital, the region’s largest private-equity firm, which recently launched a $500m SME investment arm dubbed RED. “Arab youth are empowered… But we also see a difference between oil-rich countries and those with scarce natural resources. Those with oil and gas have much of their economic activities heavily reliant on government spending and contracts, rather than entrepreneurial activity.

“Young people in the Gulf appear to be still strongly attached to a public- sector career, especially in Bahrain (64% prefer to work in government, according to the 2010 Arab Youth Survey), Kuwait (59%) and the UAE (61%).“In countries that are not dependent on oil, the rise of entrepreneurship is by force. People are unemployed; governments are overwhelmed while private sector remains timid; and youth have no alternative but to create their own opportunities. More than 80% of entrepreneurs in the MENA region have very small-scale operations, with enterprise value of less than $15,000, so we also need to think about how we can scale these activities up, nurture them and help them grow.”

OSSAMA HASSANEIN
In the past 35 years, Hassanein has managed assets of more than $1bn in 14 international technology funds, spearheaded the mezzanine financing of at least 80 IT companies and been the founder or chairman of eight successful technology companies. He is general partner with venture-capital firm Global Technology and Innovation Partners and chairman of the board of TechWadi, the Arab-American networking platform. “The environment in Silicon Valley significantly tips the odds of success in favour of the entrepreneur. More than half the start-ups I meet in my office in Redwood Shores have come from outside Silicon Valley, specifically because they could not, or did not think they could, make it in Malaysia or San Diego or Rabat.

“The brain-drain, brain-gain issue is most interesting. With the emergence of entrepreneurship in MENA, especially Lebanon, Jordan, Egypt and Morocco, two brain-gain phenomena occurred lately: (a) returnees from Silicon Valley set up shop in Alexandria, Beirut, Amman or Marrakesh to gain a cost-competitive advantage or dominate an emerging market; and (b) the engagement, 'mind and heart', of the US-based diaspora to mentor the local entrepreneurs, sharing not only their riches but the richness of their experience.”

SAMIH TOUKAN
In 2000, Toukan founded Maktoob.com, the first Arabic email service and largest Arab online community, with more than 16 million users. Following its acquisition by Yahoo! in 2009 for a reported $175m, he became the chairman and CEO of Jabbar Internet Group. “The region can produce big, global ideas but that’s not the priority right now. The priority is to create an ecosystem that produces local and regional ideas and starts to invest a reasonable percentage of the huge funds available into technology. A reshuffling of investments, if you like, from oil and real estate into human capital and technology projects.

“Oasis500 is a good example of how to prepare early-stage entrepreneurs for the next stage. We need to invest in hundreds and thousands of these and prepare them, and to convince more and more angel investors to invest in them. The next step will be to create VC funds (only a few of which are available in the region) and to invest in the ideas that make it to the next stage. I see interest also from global funds in the region. I think after we get this ecosystem going, we will start seeing more innovations and ideas coming out of the region that will make it to the global level.”

MARK ALEX DIMITRIOU
A UK-educated senior executive at Marfin Investment Group, Dimitriou is a member of the board of mentors at SeedStartup (Dubai) and also a financing adviser with Openfund (Athens). He advises fashion, luxury and tech start-ups on business planning and development, strategy and marketing. “A country is in a crisis when there is no money, when the system is not working properly, when life is too expensive while salaries are too low. So, when somebody sits down and thinks about how he or she can improve everyday life, the answer is standing right in front of them: just give people what they want.

“What is that? Making life simpler, cheaper, more effective and more pleasant, and all this through innovative and disruptive business. Translate this into business, present it nicely and market it properly and in many cases you get exciting mobile applications and e-commerce – this is what is coming up in south-eastern Europe and Greece.”

RONY EL-NASHAR
Before launching SeedStartup in Dubai, El-Nashar was in charge of direct investments at the Khalifa Fund for Enterprise Development, based in Abu Dhabi. He has evaluated 4,000 seed and early-stage investment opportunities and funded more than 265 start-ups for an aggregate portfolio value of more than $117m. “Among the issues entrepreneurs face in many MENA countries is a lack of familiarity with typical equity-funding terms. This leaves them with a question they’re sometimes unable to answer: Am I getting a fair deal? Historically, most new business funding in the Middle East has been debt-based rather than equity-based. Since no bankruptcy laws exist in many MENA countries, entrepreneurs become personally liable for any debt incurred by the business. Clearly this is a red flag for the savvy entrepreneur. Now, with more and more equity-based financing options becoming available, the prospect of taking on outside funding is more appealing. One significant barrier to entry is eliminated.”

HASAN HAIDER
The CEO of Bahrain’s first business angels company, Tenmou, started his entrepreneurial activities by launching FILM2GO, a start-up venture that provided the Gulf with its first Netflix-style online DVD rentals. “There is a great potential for entrepreneurship in the Middle East but, like Silicon Valley, it needs to be led by the private sector with very little government involvement. And you need to build capacity in the equity-funding life-cycle for companies, as well as the support foundation and infrastructure for start-ups.

“The region is ripe for ideas. Many concepts, well developed and mature in the rest of the world, don’t exist here. The opportunity in the Arab world is immense, across all areas. There are, however, very few traditional venture-capital players in the region supporting these concepts. There might actually only be a handful or two of VCs covering the Arab world, and the idea of equity funding for a project is still very new to the region.

“The alternative is approaching family offices and the larger family conglomerates for funding, which relies on introductions and recommendations. Come to think of it, that’s very similar to the way VCs in Silicon Valley work.”

BOOT CAMPS & BUSINESS ACCELERATORS

OPENFUND
Athens, Greece
Targeting emerging tech and web ventures in Greece and south- eastern Europe, Openfund off ers selected applicants €30,000- €50,000 – enough to support all expenses for a seeding period of six to eight months – in exchange for 15% of the company that is created. www.theopenfund.com

MEYDAN
Amman, Jordan
This New Age Jordanian start-up factory offers 100 days of training for free and then invests in bringing start-ups from the idea stage to the funding stage – and reducing the time from idea to revenue. www.meydanjo.com

OASIS500
Amman, Jordan
As the ambitious name suggests, Oasis500 aims to jumpstart 500 tech start-ups in five years. Successful applicants who complete a six-day boot camp receive seed funding, mentorship and office space during the incubation period and the chance to pitch to angel investors. http://oasis500.com/

SEEQNCE
Beirut, Lebanon
As a start-up catalyst, Seeqnce combines two environments: a co-working space, where resident start-ups work, collaborate and share knowledge; and a community space, where students, partner corporations and professionals interact with those start-ups. www.seeqnce.com

BERYTECH
Beirut, Lebanon
Berytech is a non-profit incubator that provides shared infrastructure, counselling and managed workspaces for start- ups in the technology, multimedia and health sectors. To date, it has hosted 136 entities, graduated 72, overseen the creation of 550 jobs, trained 150 aspiring entrepreneurs and provided $300,000 in direct grants. First-round seed capital of up to $1.2m is also off ered in return for equity. www.berytech.org

N2V LABS
Amman, Jordan
N2V (National Net Ventures), one of the largest internet holding companies in the Arab region, invests in both start-ups and established companies, as well as offering infrastructure, resources, tools and expertise across its centres in Riyadh, Dubai, Cairo, Amman and Silicon Valley.N2V Labs recruits entrepreneurs- in-residence, providing them with salaries, seed funding and three to six months of mentorship to turn their ideas into early- stage web and mobile start-ups. http://n2v.com

PLUG AND PLAY EGYPT
Cairo, Egypt
A regional offshoot of Plug and Play Tech Center, the Silicon Valley incubator, PnP Egypt sends handpicked companies from Cairo to acceleration programmes at its HQ in Sunnyvale, California. Through its Rising Tide Fund, MENA startups can apply for anything from $10,000 of seed capital to test a new business model to $1m to revolutionise the internet. www.plugandplayegypt.com

SEEDSTARTUP
Dubai, UAE
Digital-media entrepreneurs from anywhere in the world can apply to take advantage of this UAE start- up accelerator and seed venture fund – but are required to live in Dubai during the three-month crash course. Selected start-ups receive up to $25,000 in financing in exchange for a flat 10% equity stake – and the possibility of another $250,000 when the fully incubated idea is pitched to a global network of potential investors. www.seedstartup.com

TENMOU
Manama, Bahrain
Billed as Bahrain’s first business angels company, Tenmou does not offer workspace, but does provide seed financing – typically $50,000 in return for an equity stake of 20%-40% – and three months of intensive mentorship to successful local applicants. www.tenmou.me

TECHWADI
California, US
From its roots as a gathering of Arab-American technology professionals in Silicon Valley, TechWadi has evolved into an international platform for cooperation and collaboration. Its TechWadi 100 network organises regular entrepreneurship forums, boot camps and even web-based mentorships. www.techwadi.org

TAHRIR²
Alexandria, Egypt
A clever verbal pun on Tahrir Square, this is the first technology incubator of its kind in Egypt’s second city, Alexandria. Entrepreneurs with promising ideas are off ered help with financing, workspace and mentoring. Tech conferences, tweet-ups and brainstorming sessions are also part of its ‘Start-up Nation’ agenda. www.tahrir2.com