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Intersect Innovation Hub (IIH) based in Palestine, supported by the Bank of Palestine, stands as a prime example of the transformative power of Entrepreneur Support Organizations (ESOs). Led by Rateb H. Rabi and Huda Tahboub, IIH connects entrepreneurs throughout Ramallah, Birzeit, Nablus, and Hebron. It focuses on developing digital solutions with cross-border growth potential. Operating in a complex environment, IIH leverages the region’s tech talent to foster innovation and economic development, illustrating the vital role ESOs play in MENA’s startup ecosystem.
The Middle East and North Africa (MENA) region is experiencing a “golden age” for startups. This growth is driven by:
Despite a surge in total investment from USD 863M in 2018 to USD 3.2B in 2022, a USD 123B financing gap remains. Local startups struggle without investor capital, and investors hesitate to fund startups lacking significant traction.
Over 55% of MENA’s population is under 30, representing significant untapped entrepreneurial potential. However, the region faces challenges such as:
Despite these challenges, the region is filled with opportunities:
Family offices and early-stage funds are increasingly interested in tech-enabled ventures with high growth potential. The expansion of local ecosystem actors and the presence of international accelerators like 500 Startups and Y Combinator contribute to this dynamic environment. Rising education levels and high youth unemployment present a critical opportunity for startups. Enhanced digital penetration and literacy further position digital innovation as a key driver of economic development in the region.
The Middle East and North Africa (MENA) region is experiencing a “golden age” for startups.
However, significant challenges remain. Entrepreneurs need more technical assistance than the typical 2/20 model can provide. Although more talent is attracted to startups, diversity of founder profiles remains challenging, with women and marginalized communities often overlooked. The ecosystem is in its early stages, with limited collaboration between regional actors. High costs of capital and lower risk tolerance in the current economic climate are significant barriers to capital access for high-impact entrepreneurs.
ESOs such as incubators, accelerators, and consulting firms bridge this gap by:
However, substantial capital and service barriers hinder their growth, particularly for enterprises aligned with the Sustainable Development Goals (SDGs) and those led by underserved communities. These startups often have longer timelines to demonstrate traction and higher risk profiles but offer profound social and environmental impacts. Investing in ESOs is crucial for de-risking startups and boosting investor confidence. Despite their importance, only a small fraction of funding reaches small and medium enterprises, with just over 13% going towards ESOs. Advanced organizational development initiatives, data-sharing platforms, and impact measurement systems are urgently needed to maximize and sustain their impact. A forward-thinking approach, such as catalytic capital, is essential for funding ESOs and early-stage impact-creating startups. This flexible funding, including debt, equity, or guarantees, accepts lower returns in exchange for social and environmental benefits. Local ESOs, with their deep regional knowledge, are well-positioned to improve access to this capital, bridging financing gaps, and promoting inclusive entrepreneurship.
After supporting 120 ESOs from 90 countries, Village Capital ran an “accelerator-for-accelerator” for ESOs in MENA called the Ecosystem Builders Program in 2023. Informed by the “Unlocking the Pipeline MENA” report, the program supported 12 locally-led accelerators from Egypt, Jordan, Lebanon, Morocco, Palestine, and Tunisia.
These accelerators aimed to create a pipeline of investable opportunities for early-stage investors. The selected ESOs demonstrated potential for:
The program helped ESOs build resilient ecosystems through hands-on training, best practices, and peer connections, driving positive economic and social change. Their lasting impact is only beginning.
Case Studies: IIH and Athar Accelerator Intersect Innovation Hub (IIH) IIH helps startups access private sector investment within Palestine and the region’s investor hubs of Saudi Arabia and UAE through their annual International Conference on Entrepreneurship in Palestine. Their recent RISE initiative seeks to support Palestinian startups and tech teams to recover and sustain tech ventures affected by the ongoing war.
Athar Accelerator in Egypt offers another compelling example. Based in Upper Egypt, Athar supports tech-enabled and green startups in an area with a population of over 40 million. It creates jobs and demonstrates inclusive development. Since its founding in 2016 under the leadership of Shoaib El Qady, Athar has:
Six months after the Village Capital program’s conclusion, we are optimistic about the outcomes we’re witnessing:
However, much work lies ahead to amplify the efforts of ESOs, specifically to close early-stage capital gaps and scale effective entrepreneurial support.
ESOs bring immense value to startups and the broader ecosystem. Their impact extends beyond supporting individual ventures and communities; it contributes to regional and national economic growth. But they cannot do it alone.
Local organizations are often seen as service providers for development initiatives and are funded as such – yet they are much more. They are ecosystem builders. Investing in ESOs is crucial for the sustainable growth of MENA’s entrepreneurial ecosystem.
Actionable Steps to Support ESOs:
By taking these steps, investors and stakeholders can collectively unleash the potential of ESOs, driving significant economic and social impact across the MENA region.
The ESOs of the MENA Ecosystem Builders program identified several key priorities to support their organizational growth and scale their impact. These include targeted talent and team development, improved impact measurement, and revenue diversification. These are just a few opportunities at our fingertips. Through catalytic capital, investors can collectively unleash the power to make them a reality.
We encourage you to download the report for additional insights into MENA’s early-stage venture ecosystem. Together, we can continue to catalyze change and shape a brighter future for the MENA region.
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