The Middle East has burgeoning pockets of startup investment, innovation and invention in almost every Arab nation. While the UAE will perhaps inevitably continue to make headlines in this space, countries including Palestine, Lebanon, Egypt and Jordan have all featured in Forbes Middle East ‘Top 100 startups in the Arab world’ list for 2017.
The impetus for innovation appears to be spreading geographically, culturally and technologically. So what can Arab entrepreneurs learn from other nascent and expanding startup hubs in other parts of the world? Specifically, could the startup scene in the German capital of Berlin provide us with a template for Arab innovation?
Meaty connection
Berlin has experience of hard fought freedoms. The virtually completely destroyed city emerged from the ravages of World War II and Berliners then endured years of ideological and physical segregation as a result of the Berlin Wall. Both eras have now passed and Berlin now looks to a time when it can attract new startup activity that may previously have gravitated towards London, prior to the UK’s European Union Brexit vote in 2016.
According to corporate analytics company Ernst & Young, figures from 2015 show that Berlin startups raised around US$3 billion in venture capital funding, more than London or Stockholm in that year. So what is Berlin doing right and how can we emulate its success?
Multiculturalism & internationalism
Berlin is attracting startups away from London for many reasons and one of them is operational cost. Office ground rents, Internet connections and commercial property maintenance costs are often half or a fraction the price. The same parallel might be drawn between Palestine versus Abu Dhabi, or perhaps Marrakech versus Muscat or upscale parts of Cairo.
Startup zones place a heavy emphasis on look and feel. Berliner startup offices favour exposed brickwork, glass-sided rooms and mismatched furniture. Essentially it’s a kind of modern day version of hipster cool, which, if we’re honest, is a look that probably originates from the shaded riads and open majlis chambers of the Middle East.
"There is plenty of room for growth in the still-evolving Arab startup scene. While the Arab governments are working on creating better conditions to start and run businesses, I believe the youth can do a lot to accelerate the growth. As we know recruiting is one of the hardest things when building a company. So having super active and united student communities is very important," said Martin Talvari, former chief strategy officer of Finnish startup programme Slush and now founder and CEO of Myriad, a community-driven event.
Right (café) cultural fit
Berlin has rich history and a diverse culture, the city is full of expatriates most of whom communicate in English, there’s a big emphasis on high-tech skills within an increasingly young population and the city’s Arab district stretches for considerably over a mile down the busy avenue of Sonnenallee down the southern Berlin borough of Neukölln. Doesn’t that sound like a displaced Middle Eastern startup zone that should have been located on inside the Arab League? There’s even a rich café culture in Berlin, but you’d expect that in any vibrant startup zone.
“Berlin has a lot of parallels with growing Middle Eastern cities now aligning themselves for startup activity. The German capital’s appeal starts with its central location, add in two large airports and you have a recipe for an international startup scene. Matched with that is its low cost of living when compared to other ‘tech cities’ like London and San Francisco and its existing start-up ecosystem which is vital in providing a welcome environment for talent from across the continent. These are all good lessons for Arabian startup zones to try and emulate.” said Morten Brøgger, CEO of collaboration technology company Wire.
International finance analysis firm KPMG’s Deutscher Startup Monitor for 2017 notes that one in every tenth startup founder in Germany is foreign-born. With our influx of expatriates in the Middle East, we experience a similar if not higher level of entrepreneurship – and talent moving around the region to chase opportunity is a key factor in driving many startups today.
Perhaps if anything, Berlin has come out of a ‘chic but poor’ period while it was shaking off a more turbulent past to now ready itself for development and expansion. The Middle East can empathise. The time of backpackers and special interest tourism even in less developed Arab nations is all but gone; we are ready for the next chapter.