Saudi Aramco World: May/June 2014 - page 29

F
and other Gulf states, which he says may create a disincentive for
young professionals to take risks: “If you are making $10,000
per month, why would you work for a startup and leave at 10
o’clock at night, when you can leave in the early afternoon?”
“I don’t think there is lack of liquidity,” he says. “There are
trillions of dollars. There’s a lack of maturity among investors,
entrepreneurs, regulators. What needs to be done is to create
an ecosystem.”
It’s high time, he asserts, for regional telecom companies that
are already making billions to invest in the sector. “If an ecosys-
tem does not mature fast enough, it’s going to be given to inter-
national companies who will set up shop here.”
From his offices in the heart of Dubai’s new financial district,
Toukan looks down at the rows of towers that line the city’s
main thoroughfare, Shaikh Zayed Road. Though there are no
exact figures, he estimates the current value of the Arab tech in-
dustry to be worth the equivalent of a couple of the $100-$200
million skyscrapers below.
“If only one percent of what is spent on real estate would go
into technology investments,” he laments. “Investors are used to
traditional investments. Tech is new to them. We need to prove
it. Over the last 10 to 15 years, I have done a lot of convincing.
I can see things changing. In the beginning people didn’t believe
at all in what we were doing, but when they start hearing about
things like WhatsApp being sold for $19 billion, I mean this all
helps,” he exclaims with a laugh.
Though there are new funds coming online, such as Saudi
telecom-giant
STC
’s launch of a $50-million fund to invest in
small- and medium-sized businesses, Toukan says this is not
enough. “We should be talking about billions not millions.”
Alfi says the pool of major investors, known in industry-
speak as “angel investors,” needs to broaden: “The people of
my generation—myself, Fadi Ghandour, Samih Toukan—these
people are not that many. If there were a few hundred of us, the
sector would move a lot faster. So now Fadi funds 50 companies,
I fund 50 companies, but if there were hundreds of us it would
be fantastic. Hopefully in the next 10 to 15 years, the new gen-
eration of entrepreneurs will be playing our role but for a much
broader sector.”
Another challenge cited by Toukan, Al Balla and other inves-
tors is the difficulty of mobilizing talent in the region with the
complications of visas procedures, particularly in Saudi Arabia.
On the other end of the spectrum, while poorer countries like
Lebanon may be more desirable and accessible destinations, they
are beset by massive infrastructure challenges.
Despite the buzz over Beirut’s new Digital District, Internet
connections in the country remain among the world’s slowest.
The government has promised to deliver discounted fiber optics
to such facilities as Berytech, an incubator and one of the first
tenants in the district. Berytech has a $6 million fund to invest
in startups, and it accelerates three firms per year. But so far the
facility has obtained just 12 megabits per second of bandwidth
that it must share among dozens of tenants, resulting in indi-
vidual speeds that hark back to late 1990’s dial-up era. And yet
the costs of even this minimal service are staggering.
For Ahmed Zahran, the future of economic growth is “off the grid” in the swaths of the Middle East not served by national electricity
networks. In 2011 he cofounded KarmSolar, which is building one of the world’s largest solar-powered water pumps and aims to bring
renewable energy to desert farming and tourism across the Sinai Peninsula.
May/June 2014
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