Revisiting Flat6Labs: Startups Rising Across the Middle East, Four Years Later

It was hard for me to fathom four years ago that one of the most interesting and well thought-out startup accelerator efforts I had seen in the world was in Cairo, Egypt.  Four years later is more surprising still.  With nearly 100 companies graduated and operations expanded across the Middle East, Flat6Labs is building a narrative of innovation, technology, and economic empowerment we never see on CNN here in the United States. Like great business launchers, conveners, and builders in America—YCombinator and 500 Startups in Silicon Valley, and 1776 here in Washington, DC—Flat6Labs is a beautiful, open office space where up to seven tech startups can be housed for three months at a time.  Entrepreneurs have easy access to seed funding, internet access, training, mentorship, and basic accounting and legal services. Once initially focused only on Egypt coming out of the uncertain days of uprising and unrest, something is happening region-wide. In the past four years, technology has become near ubiquitous across the region, with well over half of Egyptians alone having access to smart devices and software—the same computing power in their pockets alone that once all of NASA had in order to put a man on the moon. "I think the ecosystem has matured big time in the past few years," founder and Flat6Labs CEO Ramez Mohamed told me. "The main cornerstones are all there. Access to technology; rise of investors (angel and venture capital); accelerators like ours with support from universities and government."  He pauses: "This is not only happening across the Middle East, but in startup communities Silicon Valley misses that might share (or have shared) similar challenges/opportunities we have—like Eastern Europe, Southeast Asia, Latin America—and in particular watch what is happening in African countries where I think we can add value too." Flat6Labs was the vision of Ahmed Alfi, an Egypt-born entrepreneur and investor who had success in Los Angeles for over 18 years. He decided to return to Egypt a few years before the uprising, seeing the young talent there, and founded one of the first venture capital firms in Egypt, the Sawari Ventures. He and his partner Hany al Sonbaty, an Egyptian with an impressive track record in investing in London, studied accelerator programs around the world and believed two things: the nascent Egyptian ecosystem was ripe for the resources an accelerator could bring, and that whatever was created had to meet specific and unique needs of each market in the region. One of the earliest and smartest moves was finding Mohamed—on Twitter of all things.  He was a 27-year-old Alexandria University computer science alum, enjoying a successful career in website design for business and mobile applications. He also began to study online about the power and potential in the accelerator model to help other young Egyptians like him that wanted to innovate and build economic opportunity nascent at the time. The tried and true path for a career then, if at all, was either a government job, a job in a big company or, if one was lucky and had the resources, getting a graduate degree in science or medicine. He saw something happening among his generation in the U.S. and around the world. He saw something different for Egypt in the Middle East. The process Mohamed created is simple and Darwinian. Each quarter, a new "cycle" commences, where Mohamed and his team select up to seven startup concepts from hundreds of candidates online. Flat6Labs invests and houses these companies, and each week they present their progress internally and to advisors and guests. At the end of the cycle, on "Demo Days," they present to outside investors, mentors, media, and the business community. The companies would be familiar to anyone tech savvy anywhere—covering a wide range of concepts including online collaboration tools for businesses and their clients, online video services, consumer facing social recommendation engines for restaurants and other local entertainment, and more. In a city, country, and region suffering from significant infrastructure challenges, many entrepreneurs see software solutions as the way around them. In a region where there is still high illiteracy by global standards, and challenges in public education overall, Nafham, from one of Flat6Labs early classes, is a platform where teachers and parents can upload supplemental education videos for the existing primary education curricula. In two years since its’ founding, the numbers are staggering. Over 20,000 videos on reading, writing, and mathematics have been uploaded with over 105,000 video lessons viewed per day. Average monthly unique users are near 500,000 and videos have been viewed over 36.5 million times. The near 100 companies launched now also come from Flat6Labs’ accelerators based in the UAE, Saudi Arabia, and Lebanon. Expansion has been based on a three-pronged strategic approach: 1) market need and readiness to support startups; 2) a local partner who has a keen understanding of how each country and city has unique attributes; and, 3) a specific need for accelerating capabilities not already in existence there. Their launch in the UAE is a good example, as it has been a leading economic hub for business in the Middle East generally for over a decade.  Significant changes in rule of law to become a startup, and making it easier for investors has also made it a magnet for strong tech talent and, thus, an appealing and more mature startup ecosystem. In opening there, Flat6Labs has focused on international opportunities—not merely country or region—and has attracted entrepreneurs from all over the world. Managing Director of Flat6Labs Abu Dhabi Nina Curley, was previously the Editor-in-Chief of Wamda (wamda.com), the leading online media platform for startups in the region. She notes:  "As a free zone entity—where investors and businesses can function with minimal regulatory requirements and full ownership—the UAE is an ideal landing spot in the Middle East. Its international community is very tech savvy, it has the highest smartphone penetration rate in the world, it's the regional financial hub, and it's home to the world’s major technology and media companies. Media, education, healthcare, retail, energy, and analytics for industry are all rapidly growing sectors." The UAE is eight hours or less to London, Shanghai, Singapore, or Johannesburg. It’s no surprise that of their last cohort, half of the founders hailed from Italy, Russia, and India. As enthusiastic as the team is, they are distinctly pragmatic in an industry, at least in the West, where hubris can cloud investment judgment. Curley, who has seen significant growth in the region she was a pioneer in covering, cautions: "I have always been acutely aware of the line between growth and hype. We have an obligation not to inflate the community's sense of opportunity at the expense of young entrepreneurs, or to allow societal hope for job creation on a massive scale to obscure the reality that it is difficult to grow a successful startup. The mountains are big, and we play a crucial role in equipping startups for the climb on all fronts.” Mohamed reminds me that three of the core attributes of any successful ecosystem of innovation and business building—the free movement of people, goods and ideas—still has a way to go in the Middle East. "Remember, each MENA country has its own regulations that can make it cumbersome for startups planning real and scaled opportunities across the entire region—and not just country by country. Visas, outside of the Gulf Cooperation Countries (GCC) can too often be an issue. Political agendas and instability absolutely weigh on the potential." At the same time, he notes, we in the West miss that this is changing—and that six core markets of Egypt, Saudi Arabia, the Gulf, Jordan, and the GCC are leading in ways unpredicted when he got started. And, Mohamed notes, failure is a part of starting up enterprises that have never been there before—half or more of startups fail in Silicon Valley fail as well. "People who are skeptical of what we are doing miss that even when companies fail, the ecosystem gets stronger," Mohamed points out. "Many entrepreneurs who didn't make it the first time here—like everywhere—are taking on new entrepreneurial roles and some have joined other Flat6Lab companies. This proves that the model doesn't stop at failure but that there are many learning opportunities in the process that they can benefit from in their next journey, and that will benefit others." "All the pieces are there," notes Alfi upon reflection. "We have made a very good return on our investments and this is essential because it is a real and important part of a functioning ecosystem—functioning in that is above all now self-sustaining. We are helping change the culture of the region while expanding into more countries. And we are finding enough talent to make sector specific accelerators in the countries we are now in, succeed." He has a wide and infectious smile: "And it's the beginning."   Christopher M. Schroeder is a U.S based tech/media CEO and venture investor. His book, Startup Rising: The Entrepreneurial Revolution Remaking the Middle East is the first to describe the rise of startups in the region, and the latest edition came out last winter. He may be followed on Twitter @cmschroed.