“This is nothing short of a sea change for the region,” says Faisal Ghori, a principal at strategy consultancy Middle East Ventures.

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.

Hope is often in short supply in the Middle East, but that may be quickly changing, at least for the region’s entrepreneurs. On August 25, Yahoo!, the Internet giant, announced that it will acquire Maktoob.com, the Middle East’s largest web portal and online community founded and operated in Jordan. As the very first acquisition of a Middle East-based technology company by an American technology giant, this is nothing short of a sea change for the region. Overnight it has bolstered the region with instant credibility and given its entrepreneurs reason to hope that they too can succeed in creating companies. The acquisition, in short, has fundamentally altered the technology landscape in the Middle East.

The QRCE recently announced the start of its 3rd Annual National Entrepreneurship Competition which will award $70,000 (USD) in total cash prizes.

Google will be offering a special $10,000 (USD) award for the best online focused business. The King Abdullah II Design and Defense Bureau (KADDB) is also offering $10,000 (USD) for the best business plan catering to defense and security.

To date the QRCE’s business plan competition remains the regions only technology focused business plan competition.

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.

The event was attended by startups old and new: Maktoob, Jeeran.com, Ikbis, Kindisoft, Albahith, Akhtaboot, Minerets, Ketab, easyinfo, and many more. There were consultants, bankers, investors and students, all there to discuss there companies, businesses and tech. Princess Sumaya made a surprise appearance as well. Ahmad Humeid has written about the event (here).

This is hopefully the beginning of things to come. Change is not borne overnight. And must be birthed, in Jordan and the Middle East. Over time, we’re going to begin seeing some incredible technology companies emerge and compete not only in Jordan or the region, but globally. And some have already started.

See you all at the next TechConnect!

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.

The Maktoob.com portal is held by the aptly named Maktoob Group, which also owns the following internet properties: Bentehalal.com – a matrimonial site, Sport4ever.com – a sports oriented online community, Araby.com – “the first Arabic search engine”, Souq.com – an eBay for the Middle East, and CashU – a PayPal-esque site for the region.

Of all the startups in the region, Maktoob has certainly received more media attention that any else, both locally and abroad. In part this has to due to Maktoob’s age; it was one of the earliest internet sites catering to the Middle East and has seen its share of ups and downs in the global internet life cycle. Samih Toukan, CEO of Maktoob, still refers to this time as the beginning for Maktoob, which then begs the question where is the end?

Maktoob has been profitable for quite some time and given its age, it’s lived the average of two startups in Silicon Valley. It remains to be seen what the exit will be for Maktoob’s investors. IPO’ing is not really in the picture, either regionally or in Europe or America, so that leaves open the door to getting acquired and that’s about it. If and when Maktoob has a liquidity event will not only be good for Maktoon and its investors, but could be the first tech. startup success story in a region where if you have some extra money lying around you invest in real estate.

To date, Maktoob has been backed by EFG Hermes (~$2.5mm), Abraaj Capital ($5.2mm) and Tiger Global ($5.25mm).

I had a chance to chat with Samih Toukan, CEO of Maktoob. The conversation follows below:
Part 1: The Technology Environment in the Middle East
Part 1.mp3

Part 2: Running a Startup in Jordan
Part 2.mp3