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In Gaza, Tech Start-Ups Break Down Barriers to Entrepreneurship

BY Daniella Peled | Wednesday, May 14 2014

Gaza is now home to a promising startup scene (Mercy Corps)

Ahmed Borei is proud to run Palestine’s first-ever 3D printing business –- even though the 23-year-old has never even seen a real 3D printer, much less owned one.

Borei, from the city of Deir el-Barah in central Gaza, is a product of a generation who has spent much of its formative years under the Israeli blockade imposed after Hamas seized power in 2007.

Travel for study or work is often impossible; imports such as 3D printers -- which have notoriously been used to make weapons –- are clearly out of the question.

But displaying the kind of ingenuity Gazans say their strained circumstances has made them well-known for in the Arab world, Borei hasn’t let details like that stop him.

First introduced to the idea of 3D printing when he saw a five minute YouTube video back in 2008, Borei tried to build two prototypes himself “but they didn’t work because I didn’t have the right components or technical support,” he said.

Undeterred, in February 2013 he set up his own online 3D design platform, Fabraca, with the help of a small grant from the Palestine Information and Communications Technology Incubator (Picti). Designers upload works for sale, not only showcasing their own efforts but giving clients the chance to commission tailor-made products; the actual models are printed via three partners in the USA, UK and Spain.

By the end of the year he had amassed some 90 online contracts and subcontracted work to designers in India and Serbia, as well as employing half-a-dozen people in Gaza.

The idea of a Gaza start-up outsourcing its work seems outlandish due to the ongoing economic crisis in the Strip, one of the most crowded places on earth and subject to repeated rounds of violence due to its ongoing conflict with Israel.

Israel allows people out of Gaza through the Erez checkpoint only in “exceptional humanitarian cases,” and passage through the Rafah crossing into Egypt has been severely restricted since the military took power last summer, with the new Cairo administration implacably opposed to the Hamas regime.

The official unemployment figure in the first quarter of 2014 was 40.8 percent, up from 31 percent in the same time period the previous year. More than 70 percent of the population receives humanitarian aid.

Gaza’s leading exports used to be furniture and agricultural products, but the political situation means that is no longer viable, and there is a growing awareness among young entrepreneurs like Burei that the old business models here have no future.

It’s too soon to tell whether entrepreneurship is helping the beleaguered economy of the Strip, but those involved in the sector hope it can capture the imagination of a generation mired in frustration and give them hope for the future.

With nowhere to go, bored young Gazans seem to spend a huge amount of time online, electricity permitting –- the Strip has an average of only eight hours supply a day, and fuel for private generators is pricey.

So enterprises that exist in a virtual world, one where the difficulty of physically crossing borders can be overcome, are becoming increasingly attractive.

“ICT is a really promising sector here in Gaza because we can’t travel, we can’t go outside to learn different methods,” explains game developer Abdul Abu Rahman. “With the ICT sector there are a lot of materials available on the internet -- the web is full of ideas and tactics, you just have to learn how to get information, almost all of my students and friends are self-taught,” he continued. “All we need is a laptop and very good internet connection -- and unfortunately electricity,” he added laughing. “If you have all three then all you need is a clear mind and you can just work.”

Those in the ecosystem say that this is also a way to not just make individual fortunes but also boost Gaza’s image on the world stage and give local entrepreneurs pride in their abilities and hope for their future.

A Start-up Accelerator

Gaza Sky Geeks (GSG) is the Strip’s first and only start-up accelerator, launched in 2011 after Google -- keen to promote the tech sector and start-up ecosystem in the West Bank and Gaza -- approached the NGO Mercy Corps.

Google supplied a grant called the ADNI (Arab Developers Network Initiative) that was initially used to run Start-up Weekends and give grants to start-ups, writes Iliana Montauk, GSG director, in an e-mail. “Google wanted a way to support the start-up ecosystem in Gaza […] In 2013, Mercy Corps saw a need for a real start-up accelerator in Gaza with the rigor of private investors. We also saw the opportunity in the region (that investors were looking for deal flow, and that we could bring them to Gaza). We proposed the strategic shift to use the funding to run a start-up accelerator. Google loved the idea.”

Mercy Corps has helped run Start-up Weekend (SW) the global grassroots entrepreneur movement aimed at generating early interest in start-ups and bringing teams together, in Gaza since 2011.

Headquartered in Seattle, SW has held over 1800 events in 120 countries around the world, with each one a 54-hour marathon of pitching, coding, designing, and critical feedback.

A Mercy Corps report from 2013 notes that the ICT sector currently employs three per cent of the Palestinian workforce across the West Bank and Gaza, with employees contributing more than eight per cent to overall Palestinian GDP. And for each new worker employed in ICT, three employment opportunities are created in other sectors that support the sector.

Despite Gaza’s political and security problems –- and the fact it is effectively cut off from the rest of the Palestinian community in the West Bank –- the same report nonetheless found that there was an “active ICT sector with several companies continuing to provide software services and applications for export, often through subsidiaries located outside of Palestine, but owned in Gaza.”

Still, the ecosystem is largely supported by civil society. Picti are developing a “Palestine Network of Mentors” to build bridges for a new generation of entrepreneurs, but there has been little interest in investment from within the Palestinian business community.

“Gaza Sky Geeks does not give aid money to start-ups because we do not believe that would be beneficial for the start-up ecosystem in Gaza,” says Montauk. “We connect start-ups to outside investors who invest in the start-ups for equity because they believe they will receive a return on their investment. These investors are looking for investment opportunities throughout the region and find the opportunities in Gaza to be very compelling.”

The GSG office, near a seaside stretch of seafront hotels and restaurants looking out on a litter-strewn beach which locals semi-ironically label the Gaza “corniche” is also a source of reliable electricity and wifi, serving a vital need in the power cut-plagued Strip.

The walls of the GSG office are emblazoned with Google, Android and Facebook logos; there’s a chillout room with multi-colored bean bags and plans for an X-box and Playstation to help the entrepreneurs loosen up.

“Gaza Sky Geeks serves as an accelerator program to take on start-ups after incubation,” explained GSG program assistant Hazem al-Habib. “The start-ups have already started working on their ideas and products, so we give them an investment of about 31,000 dollars, 14,000 as cash and the rest as client services. We started with a boot camp event and about 40 companies signed up. It’s about giving them training in business models.”

In June, GSG will also be hosting a women-focused Start-up Weekend, funded by Google as part of their #40Forward initiative to support women-led tech companies.

The Gaza start-up scene is not just a boys club (credit: Mercy Corps)

GSG also focuses on arranging mentoring sessions, with Skype or Google Hangout meetings with people from Facebook or Google, and successful entrepreneurs from the Arab world.

Last year it announced its first acceleration program, with 164 teams applying. After an initial competition, a bootcamp, mentorship, and several rounds of pitching, Datrios, an Arabic-language social network for sports, and DWBI Solutions, which handles big data management were offered investment and acceleration by GSG in partnership with Oasis500, a leading start-up accelerator in Jordan.

They received $14,000 seed funding and three months of acceleration with Oasis500, a Jordan-based early-stage investor, although it took many weeks for GSG to obtain the exit permits to facilitate their trip to Jordan.

Since winning the GSG competition, DWBI Solutions has been in conversations with several potential clients – sales cycles for B2B clients tend to be lengthy. DWBI has also already won gold in competitions in Malaysia and South Korea and signed a contract with the government of South Sudan. But its CEO and founder Mohammed Awad, 32, says many obstacles lie ahead.

“I’m worried because of the political situation: the closure, the lack of resources and because people are worried to deal with us,” says Awad, a university professor. “Assume we have a customer in the United Arab Emirates or Saudi Arabia or even in Europe -- they will ask, how will you reach us when we need you, because you need to apply for a visa to exit and even enter Gaza. So even arranging to have a meeting is a long story. Why do they need to deal with this provider, when they have others to deal with?”

His fellow GSG winner, Datrios CEO 25-year-old Alaa Saqer –- dapper with a flat cap and goatee –- agrees that Gaza is synonymous with problems, he adds. Finding an investor willing to put their faith in a team from Gaza is the first obstacle, he explains, and then accessing mentorship to enhance and develop existing skills and introduce new technologies.

Nonetheless, the opportunities are there, particularly for Arabic language apps.

“Our first app targets the Arabic market – on Facebook alone there are 15 million Arabic-speaking sports fans, so we can have a big market in the Arab regions.”

This is crucial, because Arabic-language apps represent a market with huge potential.

“Arabic is the fastest-growing language online and investors in the region -- as well as investors from Silicon Valley - are eager to find companies that will create content or products for the Arab market,” said Montauk.

There are 90 million Arab mobile phone users and 46 million smart phone users in the Arab region, yet the Arabic content is less than 3 per cent, according to Salah Ahmed, 31, an animator whose Shakhabeet start-up is aimed at producing interactive, educational Arabic-language children’s’ games.

His portfolio includes advertising and marketing clips -- as well as a personal project of satirical animations featuring grumpy Israeli soldiers ineptly trying to bomb Palestinian villages.
But his real passion lies in trying to help kids bridge what he says is an often-confusing gap between Western and Arabic culture.

“Animation has the power to inspire people,” he enthuses.

Start-ups With a Cause

There is a similar socially-aware aspect to many of the apps being developed by those in the nascent start-up movement.

Game developer Abu Rahman also focuses on education, and put together a team of teenagers to create their own sports-focused educational app as part of Start-Up Weekend.

“My main idea was that normal education is very boring, many educational games are considered to be just a way of enforcing information on children and not very interesting or unique. Children will always go for fun –- so we tried to create a new game of action and education.”

A youth worker at Gaza’s Qattan Foundation for the Child, Abu Rahman has his own start-up called Game Madness, “a small company for creating games and simulation programs, we make every type of visual but it’s very hard here in Gaza to market your work and there is no demand,” he explained.

Wesam Elmadani, a 30-year-old mother-of four, agrees. Demurely dressed in a checked hijab and floor length coat, she has startling green eyes and immense enthusiasm for her start-up, I Am Alive.

Her concept creates a sign language interface via which deaf people can watch television, browse the web and use social media and chat rooms. Developed after eight months research with organizations supporting the deaf, she says that sign language rather than subtitles is how deaf people truly express themselves. I Am Alive will give deaf people an emotional voice, she adds.
“If I close your mouth for a minute you will feel very angry because you want to say so many things,” she explains.

So far she has two versions of keyboard software, one a smart translator for social media and the other for films.

Asked what it is about Gaza that spurs people’s ingenuity, she thinks for a moment and then responds, “Pain. Pain makes you look for better [in life] -- if you lived in a good society with everything you need, you wouldn’t look to help yourself, you would live a normal life. If you feel the pain you try to improve yourself and your society. Working with the deaf is a way to make our society better.”

Manal Sleem, 25, from the al Burj camp near Gaza city, also wants her start-up to make a difference. She won second place in Start-Up Weekend with Color Vision, a company incubated by Picti producing mobile applications focus on helping visually-impaired people.

“The first application helps them to choose their clothes -- to identify colors and differentiate between them, to match colors they want to wear,” she explains.

The app works via a cellphone camera, processing colors and sounding a different note for each tone.

Sleem is a communications engineer and a graduate of the Hamas-run Islamic University, whose Business and Technology Incubator is focusing on gaming, apps, web development and multimedia.

Moving Towards Self-Sufficiency

The ICT sector appears to be growing in Gaza even without any involvement from humanitarian and development organizations; a new outsourcing company recently launched in in the Strip.
Montauk says that Gaza has “some of the top tech talent in the Arab world”, pointing out that launching a start-up there only costs $14,000-$20,000 -- with $20k in the Strip having the purchasing power of $500k in the US.

But some entrepreneurs warn that the ecosystem is too reliant on civil society. The Palestinian business community needs to be involved, and commercial success is key.

“All entrepreneurs here depend on NGOs but, believe me, NGOs will destroy the entrepreneur sector,” said Shakhabeet’s Ahmed. “Their relationship ends with the end of the program, there is no follow-up. The only solution is to support entrepreneurship through loans or investment.”

Montauk says GSG have researched business models and think that it will be at least three years -- and possibly closer to eight) before an accelerator in Gaza can become self-sustainable. Investors want to see a few more years of traction and successful cycles of acceleration. She agrees it is a problem that much of Gaza’s start-up ecosystem relies on giving grants instead of making investments.

But she notes that even for-profit accelerators often have an NGO branch that accepts donations to run early pipeline activities, as they represent not only a large part of the operating costs but also because such events are often a win-win for corporate sponsors, convening the top tech talent in the country.

Start-ups may not be the answer for all Gaza’s myriad political and economic troubles, but its proponents hope a more immediate impact will be to empower Gazan youth.
As Abu Rahman notes, a major obstacle is the perception of Gazans as poor, oppressed people who need donations rather than investment.

Laughing, he sums up the attitude from the outside world thus, “You are from Gaza? Ok, what support do you need?”

“I don’t need support,” he continues. “ I need a job, I need work! That’s our creed, we don’t need support; we want to get our money through our projects, just like anyone else outside Gaza.”

Daniella Peled is editor at the Institute for War and Peace Reporting. Based in London, she has reported widely form across the Middle East and Afghanistan.

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