It’s the investors, stupid

Entrepreneurship is hot in the Middle East.  And that was long before President Obama announced last June in Cairo that he would host a summit on entrepreneurship, which will take place April 26-27, 2010 in Washington DC.

Arabs are abuzz about getting their ideas for new businesses off the ground.

Habib Haddad, founder of Yamli and Yalla Start Up, is excited but worried that this is just a trend.  “It’s unusual for someone in the Middle East to admit that he is going off to start a business. So, I’m excited to see that so many Arabs are diving into it.  But I wonder how long it will last?”

How not to make it a trend?  Here are Haddad’s three suggestions:

• Increase the influx of sophisticated investors: While there are entrepreneurs in the Middle East, there are few entrepreneurial savvy investors.  Haddad suggests that along with all the entrepreneurial education and support that is pouring into the region, equal focus must be placed on strengthening and diversifying the investor class. “We need less bankers and more venture capitalists.  Bankers don’t understand what entrepreneurs need.”

• Source mentors: Where do budding entrepreneurs go for advice?  While there are organizations like Endeavor in Egypt and Jordan, the region lacks the networks and entrepreneurial support structures that exist in the United States. “It’s a myth that entrepreneurship is a lonely venture,” says Haddad.  He believes that serious entrepreneurs need feedback, criticism and guidance.  “That’s why as an early stage start-up I decided to be based in Boston and not the Middle East. I wanted a support network.”

• Train the media: I screamed when Haddad mentioned this (I hope his ears have recovered.)  Journalism in the Middle East is under developed to begin with.  It’s virtually non-existent when it comes to entrepreneurship.  It’s not just a matter of training journalists to understand how to cover entrepreneurship, investments and innovation (which incidentally is a project I’m spearheading at Endeavor .)  It’s getting Middle East journalists to see the importance of those things.   “It is rare to see an article about a start-up, an investment or simply anything about someone with an idea in the Middle East.”

Yahoo’s acquisition of the Amman-based Arab Internet service provider Maktoob in August 2009 is a prime example.  Only after there was considerable buzz in the US press and on Twitter did the Jordanian press pick up on it.  “It always has to be a Western story first before the Arab press will pay attention.”

Will this work?  May be.  May be not.  I’ll tell you though, with passionate entrepreneurs like Habib Haddad thinking about this stuff – and given the region’s proximity to Europe, Africa and Asia, the Middle East is a place I’d put my money on and in.

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