the Middle East has become an “increasingly important” market, says Faisal Ghori, principal at Middle East Ventures, a Washington-based business strategy consultancy focused on the Middle East and North Africa.

“In the next five years, you’re going to see people taking risks on both the entrepreneurial and the invest- ment side,” says Ghori.

In 2006, Abu Dhabi launched the Masdar Initiative, a $15bn project that seeks to “embrace renewable and sustainable energy technologies.”

One of the ways that Masdar Initiative hopes to do this largely through the construction of Masdar City, a zero-emissions, zero-carbon, zero-waste city with a target population of 50,000.

According to VentureBeat:

Although much of that money will go toward construction and infrastructure requirements, Masdar is also becoming a significant force in fostering new technologies. The Masdar Clean Tech Fund has already sunk $250 million into cleantech ventures from its first fund, and is in the process of raising more capital for a second.

The investment dollars are going in large part to ideas for energy generation. The planned power supply of Masdar is to be split between several sources, with solar providing the majority; a 500 megawatt solar thermal installation a 100MW solar concentrator project (which funding has not yet been announced for) are in the works. Research is going into thin film, and the city will play host to a solar photovoltaic manufacturing plant.

However, another 500MW will come from a plant fueled by hydrogen, Al Jaber said in his speech. The new city will provide a rare opportunity to test out utility-scale use of hydrogen, which is estimated to be decades away in this country.

The initiative has also launched an eponymous Masdar Clean Tech Fund that seeks to invest $250mm .

While most social entrepreneurship ventures are based in the U.S. and focus towards the developing world, there are few that have emerged from the developing world itself. This one comes from Jordan:

One of the social entrepreneurs here is Soraya Salti, a 37-year-old Jordanian woman who is trying to transform the Arab world by teaching entrepreneurship in schools. Her organization, Injaz, is now training 100,000 Arab students each year to find a market niche, construct a business plan and then launch and nurture a business.

We often don’t hear of such news coming out of the region, but Jordan is nearly exceptional in this regard and has taken great strides (some unrealized) towards investing in its only asset: its people. The YEA has also done a lot to support and bolster entrepreneurship in Jordan and the region. (We covered them earlier here).

Founded in 1997, The Young Entrepreneurs Association (YEA) of Jordan is a rare organization both in Jordan and the Middle East. The organization exists to encourage and develop a culture of entrepreneurship in Jordan, and support and mentor entrepreneurs. As the organization recognizes entrepreneurship is far removed from the day-to-day culture of Jordan and it hopes to remedy this:

Entrepreneurship has not been part of the Jordanian business culture although 70 percent of the Jordanian population is less than 30 years of age representing vast untapped economic resources. Thus, a new business mentality and new generation of entrepreneurs beyond the traditional inherited business philosophy of local industries is needed in order to claim a greater share of the regional and international export markets.

Chances are that if you are a tech. entrepreneur in Jordan you’re a member of YEA. The organization is supported by its members and corporate sponsors including: King Abdullah II Fund for Development, Aramex, Naouri Group, Jordan Kuwait Bank, Primus, Zain, and the One Global Economy Corporation.

I had a chance to sit down with Nour Kabariti, the Executive Director of YEA. There are few people that are as committed and passionate about improving and making Jordan better than Nour. She’s an unsung hero in the development of Jordanian business.

Our conversation follows below:

Interview with Nour Kabariti – YEA.mp3

In fact, the quality of the investors may be the main advantage of startup hubs. Silicon Valley investors are noticeably more aggressive than Boston ones. Over and over, I’ve seen startups we’ve funded snatched by west coast investors out from under the noses of Boston investors who saw them first but acted too slowly.

I was talking recently to someone who works on search at Google. He knew a lot of people at Yahoo, so he was in a good position to compare the two companies. I asked him why Google was better at search. He said it wasn’t anything specific Google did, but simply that they understood search so much better.

And that’s why startups thrive in startup hubs like Silicon Valley. Startups are a very specialized business, as specialized as diamond cutting. And in startup hubs they understand it.

This has significance for the Mid East for a few reasons:

1. There are a tiny handful of investors in technology, and most couldn’t tell you the difference between web 1.0 or 2.0 and having learned the buzzwords of today (UGC in particular is a favorite one) they’re keen on participating. To put it simply, there are very few investors in tech., and most are not of high quality and couldn’t come in and give meaningful advice to a startup. Though, they’d love to take a board seat. And that’s the problem.
2. Startups are a “very specialized business” and most in the Middle East have no clue to that. That’s as true for entrepreneurs as it is for investors. In that sense, to some extent, it’s a case of the blind leading the blind.

Having said that, the region is changing quickly. We are now seeing more sophisticated entrepreneurs. Unfortunately, and, for obvious reasons, investors still lag behind in being as tech. savvy. In the Middle East, the closest thing to a tech. hub remains Amman, Jordan. It’s the only place where there is a tech. startup community, an incubator, an entrepreneurship center, and some investors.

The region is still far, far behind the Valley, and the gap will only be shortened when we see the alignment of clever entrepreneurs and investors that are willing to fund them.

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The Middle East nowadays doesn’t evoke a sense of technology development, and innovation or much of anything else unrelated to a few things in the imagination of most: Iraq, oil, terrorism, and increasingly the question “will the Bush administration or the next American government bomb Iran?” Over the next few days and weeks, this blog, will seek to change that (to some extent), and provide a fresh perspective on the overall technology landscape in the region.

As the inaugural post, I’ll begin with a few starting observations that are important when considering technology (or most other businesses). More than half of the region’s population is under 25 and internet penetration is increasing rapidly. Purchasing power in on the rise with the introduction of readily available credit. In short, the Middle East over the next few years will have a key target demographic, that is widely sought by most everyone, and with money to spend.

The MENA region extends from Morocco in the West to Iraq in the East, including wide swathes of Asia and Africa. To simply say the “region is this” or “the region is that” would be to oversimplify the complexity of various histories, peoples, cultures and religions that reside in it. Yet, to some extent it becomes necessary to have some general observations as a starting point for discussion. As such, please pardon any generalizations from my end, and I encourage readers to please participate in the comments section to share their views and opinions in keeping my perspectives grounded in the various realities that comprise the Middle East.

Having put that disclaimer out there, let’s continue. In this post, I hope to provide a general overview of the region’s technology landscape that will frame future posts, and assist in understanding the region. As such, I offer the following points of observation:

1) Technology is widely misunderstood in the region. If you’re talking about a technology business in the region you might as well be talking about Jack and his beanstalk. With the exceptions of familiarity with Google, and to a lesser extent YouTube and Facebook, very few people know what a technology business is. As such, building a successful technology business in the region is particularly challenging.

2) The greatest success in the region with tech. has been in IT services. The largest private players in the region have been outfits providing support, sales and consulting services for the region’s various large industries and companies. This is an area that has shown considerable growth and success. It remains largely privately owned. The largest global software and hardware players (Microsoft, Oracle, IBM, Sun, etc…) have all played in this space.

3) Funding? Fuggetaboutit. Investors in the region are loathe to invest in technology businesses. The region has experiences a real estate boom where itinerant Bedouins that had land once considered worthless have emerged as the landed elite. As such, investors in the region look to investments with “guaranteed returns.” There is no such thing as early or seed stage investing. Angels remains a religious phenomenon, very few to be found as investors. And those that do exist, entrepreneurs view as their piggybanks with no rational reason as to why.

4) The Tech bubble also burst in the Middle East. Many individuals don’t know or have simply forgotten that investors in the region lost billions in the tech. bubble. The largest investors in the Middle East invested across the board in some of the world’s most known venture funds and lost a great deal of money, in companies that evaporated as soon as they went public (think WebVan). This is a memory not easily forgotten.

5) Politics? Who said anything about politics? As I mentioned earlier this is a region known globally for things that go bump in the night. It’s often known for its wars, its instability and horrific acts of violence that either happen here or originate from it. Some refer to it as an “unfriendly neighborhood,” quite the euphemism. It would be naïve to ignore the region’s global politics and those of respective nations that make up the Middle East.

6) There is a nascent public financial market. While the possibility of IPO’ing was non-existent a few years ago, the Dubai stock exchange has provided the ability for companies and investors to have meaningful liquidity events.

7) We’re still at the very beginning. Although the technology sector is fairly mature in the U.S., particularly in Silicon Valley, it remains in its infancy in the Middle East. While this may strike some as self-observant, I can’t overemphasize this point. It’s often said that Europe is 2-3 years behind the U.S., and Asia 3-5 years. If that’s to be believed the Middle East is a good 5+ years behind. Bearing in mind that those time gaps are shortening over the years, the region globally lags behind. There remain abundant markets to be served and opportunities to be found for the plucky entrepreneur, it just means getting accustomed to the region’s particular uniqueness which isn’t without its perks.

Saudi Arabia doesn’t enjoy a reputation as being a hub of intellectual achievement. On the contrary, the Kingdom is widely regarded as being backward, even by its Arab neighbors. King Abdullah want’s to change that by creating the Kingdom’s own M.I.T.

As the NYT reports (here) King Abdullah will be investing $12.5bn for the creation of a university, known as Kaust (King Abdullah University of Science & Technology) devoted to bridging the gap in technology and science in Saudi Arabia, and the Middle East.

Saudia Arabia has become famous for all the wrong reasons: women can’t drive here and are generally treated as second class citizens, there’s a religious policing body that has become infamous for its brutality, non-Muslims are generally not welcome, and perhaps the most well known reason for the Kingdom’s inhospitality is that limbs are amputated in accordance with the Saudi interpretation of Islamic law. That doesn’t excactly scream “Welcome to Saudi Arabia.” While King Abdullah can’t change the reasons for the Kingdom’s infamy, he’s hoping to stem the decline in Saudi Arabia when it comes to education in the sciences and technology by literally throwing money at it, an all too common strategy in the oil-rich gulf.

Qatar realized early on that it needs to invest its educational infrastructure and is now home to Georgetown, Cornell, Carnegie Mellon who maintain campuses there. Shaykh Mohammaed, the ruler of Dubai, recently established the eponymous Mohammed bin Rashid Al Maktoum Foundation which has a $10bn mandate to assist in the education development of Dubai. (In classic Middle Eastern fashion – the website for the Foundation is still not up. You’d imagine $10bn could get you a decent website). Saudi Arabia is certainly the wealthiest of Middle Eastern nations and the most populated. So it’s not surprising that it is investing in its educational infrastructure. Some may say its a bit late in the game, but better late than never.

Universities are built upon its academicians. If Kaust can get world-class faculty it has a shot at catching up; if not, they might as well give up. Many of the best American universities were founded by poaching start faculty from other universities, the most notable of which is probably the University of Chicago, which over a very short period of time established its reputation as an intellectual powerhouse. But moving to Chicago is a lot easier than moving to Saudi. As an advisor to Kaust has explained:

“Getting the faculty will be the biggest challenge,” said Ahmed F. Ghoniem, a professor at the Massachusetts Institute of Technology who is consulting for the new university. “That will make it or break it.” Professor Ghoniem has advised the new university to lure international academics with laboratory facilities and grants they cannot find at home, but he also believes that established professors will be reluctant to leave their universities for a small enclave in the desert.

“You have to create an environment where you can connect to the outside world,” said Professor Ghoniem, who is from Egypt. “You cannot work in isolation.”

He admitted that even though he admired the idea of the new university, he would be unlikely to abandon his post at M.I.T. to move to Saudi Arabia.

For all the freedoms being promised at the university, Kaust will not be allowing any Israeli academics to visit, which is a step in the wrong direction. If there’s any one nation that Middle Eastern nations would be wise to model themselves after, it’s Israel. It boasts some of the brightest minds the world over, in the humanities and the sciences, and has top-notch universities. Technion is widely recognized as the best technical university in the Middle East and is often thought of as being superior to M.I.T. There is a robust tech. industry and eco-system in Israel which is found nowhere else in the region. Kaust is in some ways shooting itself in the foot by ignoring what Israel has to offer.

Kaust is a step in the right direction, hopefully it can achieve some of its promise. But Saudi Arabia and the other Gulf states would be wise to realize that one can’t simply create education institutions just by throwing money at them, there needs to be greater incentives than simply money. Universities are places of the mind and unless that type of freedom is accompanied with the hefty endowments very few will come.

Jordan is home to some of the most well known technology companies in the region. Chances are that if there’s a technology company that is well known in the region it originated or was incubated in Jordan. But for a region as condensed as the ME and for country as small as Jordan there’s never been a meetup…till now.

It’s been a few years in the making but with the support of the QRCE, I’m very happy to announce that we’ll be launching TechConnect – The Middle East’s First Ever Tech. Meetup in Amman. Details can be seen on the flyer below. Thanks also to Jeeran for sponsoring the event.

The event is invite only, so if you’re interested in attending please send me an email.

Having now become accustomed to free, reliable wifi in the Bay Area, it makes it very difficult while traveling abroad to not have such access. In the Middle East, in particular, finding wifi access is nearly impossible; and you can just about forget trying to get it for free.

While internet access is free in most hotels these days, this isn’t the case in Dubai. Not only is it not free, it’s fairly expensive.

For a city that prides itself as being the most modern and cosmopolitan in the region, it’d do well to invest in free wifi. In a city known for grand projects (world’s tallest building, world’s only 7-star hotel, floating cities), the world’s first city with free wifi would certainly draw positive attention. Perhaps, that’s just wishful thinking on my part. But for all the red tape that’s embroiled similar projects in the U.S. there’s none of that in Dubai.

In other news:

Akhtaboot.com get’s some coverage here. We covered them here.

Akhtaboot.com is not the first company to begin addressing the online job market in the Middle East. Bayt.com has been doing so for quite sometime and is the undisputed leader in the field in the Middle East. Akhtaboot.com is currently focusing primarily on the Jordanian market and hopes to expand in the region over time. The Company’s business model focuses on two revenue streams: 1) Paid job listings (posted by employers); and 2) Online resume searches. Both of which revolve around potential employers posting job listings and searching for potential employees. The Company is heavily marketing itself in Jordan through radio and and online advertising, mainly through Google Ads and they now also appear on Facebook.

The pricing structure is as follows:

The Company was co-founded by Yousef Shamoun, a graduate of McGill University with an MBA from Georgetown. I had a chance to sit down with him and discuss the tech. startup environment in Jordan and the Middle East, and his plans for Akhtaboot.com

Part 1: The Technology Environment in the Middle East
Part1.mp3

Part 2: Running a Startup in Jordan
Part2.mp3