After launching an online DVD rental business, Hasan Haider decided he wanted to help build the ecosystem for other entrepreneurs in the Middle East and North Africa so that they would not have to go it alone the way he did.
He set up the first angel investment firm in his home country of Bahrain, which was featured as a case study in the World Bank report “Creating Your Own Angel Investor Group: A Guide for Emerging and Frontier Markets.”
More recently, the Silicon Valley-based venture capital seed fund and startup accelerator 500 Startups recruited Haider to lead 500 Falcons, a $30 million fund focused on the MENA region that was announced last month.
Devex caught up with Haider on his last trip to San Francisco following a retreat with heads of other regional 500 Startups microfunds. Here is an excerpt of the conversation.
Last month, you traveled with investors to Bahrain, Jordan, the UAE, and Egypt for the Geeks on a Plane tour, which is one of the things that sets 500 Startups apart from other accelerators. What else drew you to this opportunity to lead 500 Falcons?
500 Startups is unique in that we don’t have a copy paste model. We have local partners that understand the region in depth. I’ve been doing this for more than five years now. There’s a gap in the MENA region for startups looking for $100,000 to $500,000 in funding to get to a series A. Many startups are looking to accelerators, and things like that, but the biggest gap we have is that pre series A level … We have the advantage of linking other ecosystems to Silicon Valley.
Before joining 500, I was thinking, “How can we fill this gap in the region?” If I ever want to get any exits, I need to be active in the region where I can get acquirers for the startups. My initial approach before 500 was, I’ll do a fund that will invest partly in Silicon Valley and partly in the MENA region and bridge those gaps to get the knowledge transfer and also look for acquirers … The 500 startups model is unique. It’s not command and control from Dave [McClure, the founder of 500 Startups]. Everyone has authority to work within their regions. The whole philosophy at 500 is little investments in a large portfolio. 500 Falcons will invest in 100 to 200 companies and that will make us the most active venture capital firm in the whole region.
500 Startups already has 30 investments in MENA, but part of the motivation for this fund is to address the larger issue that most economies in the MENA region are dominated by the government and large companies. Can you expand on the need for a functional funding system in MENA in particular?
Entrepreneurs need to be part of a larger community that will help them grow and continue to develop. One of the things Silicon Valley has as an advantage is there is an ecosystem. There are people that will support you and help you with your idea. There’s funding available. There are community events. There is a high concentration of talent. And more importantly there’s this whole optimism and belief here in Silicon Valley that doesn’t exist in other places. You know the statistics aren’t on your side when you’re starting a startup, but you’re going to do it anyway, and the ecosystem supports that.
In the MENA region it was taboo. If you’re starting a startup, the reaction is ‘Why aren’t you getting a job and working your way up?’ Now everyone is looking to entrepreneurship as a solution to the employment issues the region will face very soon … The MENA region must create 100 million jobs by 2020. The majority of the population is under the age of 25. These statistics could be a ticking time bomb or an opportunity … Building that ecosystem, having accelerators, incubators, seed funds, acquirers, exit paths, liquidity, that will help those companies grow.
I know the primary focus for you will be a financial return on investment but you’ve said you also see the connection between opportunity and stability. Can you expand on that?
The interesting opportunities I see for investment are e-commerce startups and other services enabling people to get access to products and services they wouldn’t have access to otherwise. We’re focusing a lot of our efforts there. I’m also looking at media and education, like companies doing Arabic language education online. And lately I’ve been seeing a lot of activity in Egypt in particular on product-related startups ... I may be naive in thinking this but I think supporting entrepreneurship and building out an ecosystem and investing in startups is actually a very effective way of fighting extremism … It really is a lack of opportunity that drives people to extremism. If you had a job and you had a family and you were gainfully employed, and you had a mortgage and car loan, you wouldn’t be drawn toward extremism. There isn’t economic opportunity, there aren’t jobs, there’s high youth unemployment, and that leads people to look for other options.
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