Moving Mountains: Yemen's Startups Innovate Under Unimaginable Circumstances
When you speak to an entrepreneur about his or her fledgling business, scaling up usually crops up as a key challenge, and product development or marketing often figures as common need for funds. That said, it can be quite unsettling to talk to founders and have them share a predicament wherein the core survival of the business stands threatened by an ongoing war- as happens to be the case in Yemen. “We established our [company] Lumlim in Sana’a [in January 2015], but we never expected that war would commence in the next two months,” remembers Mohammed Abdulbaqi, founder, Lumlim. “[There was] no electricity at all for a year, and gas prices were raised to five times [the cost] in the black market! We cut our salaries in half to cover those extra expenses. At the end, the company was hit by an explosion [in May 2015], and everything was blown up.” Not every entrepreneur wishing to make a business out of their pet project comes across such obstacles, and it takes herculean conviction to persevere in such conditions.
For Yemen, entrepreneurship seems to have emerged as a helping hand for an economy drowning in political instability. “Yemenis have opened shops to sell everything from ice to cold drinks to solar systems to fuel,” says Tarik Alsharafi, Startup & Business Growth Coach. “Many employees have lost their jobs, especially in the private sector. Those who are smart enough, and have access to capital or savings, have turned into opening their own stores one way or another to serve the new market needs, and generate some income for themselves and their families.” He admits to seeing “exponential growth” in Yemen’s entrepreneurial ecosystem during the last year. Take for instance the aforementioned Abdulbaqi, for whom entrepreneurship is an avenue to escape a life of “being locked up with tasks that did not reflect [his] visions.” With Lumlim - a mobile-oriented engagement platform - Abdulbaqi wants to inspire young Yemenis to start their own companies, since he believes that “entrepreneurship is the way to push Yemen out of its current misery.” With its finger on the pulse of today’s social-savvy generation, who insist on being a part of the content they consume, Lumlim wants to personalize online content viewership experience. Launched in January 2015 in Sana’a, Lumlim’s app is equipped with a patent-pending voice recognition technology that enables users to identify online audio/video content, share it and engage with it real-time, thereby encouraging wider engagement. For content creators, the startup helps build interactive campaigns.
Analyzing the nature of the fledgling ventures coming up in Yemen, it’s quite evident that entrepreneurship in Yemen is directed at fulfilling real, basic needs, than being a matter of an entrepreneur’s choice. The entrepreneurs say that they are not looking to “disrupt” traditional businesses, but instead believe that entrepreneurship is their best bet for solving significant social challenges of Yemen. “Entrepreneurship is one of the most important economic growth accelerators for Yemen today,” says Bassem Warafi, founder and CEO, Tamween. “A couple of entrepreneurs who have smart ideas in e-commerce or video engagement may be able to build a parallel national income equal or maybe exceeding other sectors, in poor countries such as Yemen.” Warafi, winner of the 2015 Best MENA Entrepreneur Award from the Regional Office of the U.S. State Department, founded Tamween, a portal where suppliers and retailers have their own accounts/dashboards to manage their business and satisfy consumer’s needs for basic goods. Warafi realized early on that a typical B2C e-commerce model would require high operational costs on his part, and hence Tamween pivoted from being an online catering service into a B2B player facilitating commercial transactions between suppliers and clients by digitizing the process and offering key metrics in real-time.
Similarly, another sector emerging as a popular choice for entrepreneurs to tackle, to support the nation’s survival, is renewable energy. At a time when electricity is scarce and often unreliable in Yemen, a large number of solar-energy based startups have started operations in Yemen. Solar Ray is one such startup that launched in June 2015 assembling solar panels, installation units and fixing batteries for the same. “We have around 50-70 active customers,” says Faisal Alshabi, founder, Solar Ray. “And for the future, we are planning to expand and get our products to each home in Yemen and also bring new products for customers energy needs.” Operating in a non-tech field, Alshabi has unique hardships of his own to deal with. His biggest issue, he says, is absence of a fixed exchange rate for the U.S. dollar in the banks and market of Yemen, leading to complications in import procedures.
Abdulbaset M. Bakhdar, CEO, Skoolsbook is another concerned Yemeni entrepreneur- but his concern is not specifically about business, but about the development of future Yemeni generations and their education. With a team of six employees, Bakhdar runs Skoolsbook, a portal that aims to bridge access to education in Yemen. While the portal helps educational institutions share information on their services and activities, subscribers wishing to ensure stable education for their children stand to gain from the data. Perhaps the most significant social contribution of Skoolsbook lies in publishing electronic versions of Yemeni school syllabuses and materials for free, after the Ministry of Education stopped printing school textbooks due to the war. “Currently, we have 30 subscriptions of educational institutions and each of them include 700 students,” Bakhdar says. “Recently, an agreement has been signed with Al-Awon Foundation for Development, with the supervision of Ministry of Education of Hadhramout, to activate Skoolsbook inside 17 government schools.”
Usually, for any startup to scale, the key ingredients are the trio of idea, funding and mentorship. While there seems to be a healthy count of entrepreneurs in Yemen with novel ideas, the situation on the funding and mentorship front remains a worry. “Many of the rich companies have closed or temporarily suspended their operations,” Alsharafi says. “These used to provide most of the business funding for large projects and local Yemeni businesses.” He also notes that since anyone who had the means to move out of Yemen has already left, there has been an adverse effect on the retail spending in the country. The loss of this demographic has created a large void when it comes to mentoring or investments for Yemen’s startups. “Most funding resources here come from humble organizations, as the idea [of entrepreneurship] still hasn’t got across to our government,” adds Warafi. In such difficult times, organizations such as the ROWAD Entrepreneurs Foundation and its BlockOne Acceleration program have played the role of much-needed pillars of strength for Yemen’s entrepreneurs. “All we had initially was just a mere concept, which was turned into a startup in a short time through the incubation and acceleration program provided by BlockOne,” says Bakhdar. Even now, after almost a year of graduation, Skoolsbook continues to go back to the Foundation and its mentors for assistance. But the trials for this persistent group of Yemeni go-getters don’t end there. Besides the constant risk of an interruption in business, a lack of basic infrastructure has made day-to-day operations a daunting task. It is often seen that necessity propels innovation, and that is true of Yemen’s SMEs too. Lumlim, for instance, decided to tap into solar energy to satisfy their requirement for power. Working on solar cells and batteries (and under extreme pressure, since power used to last only for six hours a day), Lumlim kept going with its enterprise. “What we have really learnt from this experience is that you have to fight against all odds for your startup to survive, and get ready to sell whatever you own, even your laptop,” notes Abdulbaqi. Warafi, on the other hand, counts resistance to anything new, more so given the conditions in Yemen, as his major barrier. “Introducing a totally new concept to such environment and push it to get involved is an achievement,” he says. As a mentor, Alsharafi remains positive. Without denying the rocky journey, he claims that new markets like renewable energy, power storage and manufacturing have all opened up as a result of the crisis, and for entrepreneurs who are willing to listen and adapt, growth is certain. When prodded about what change he would like to see in Yemen, he says that the mindset of Yemen’s people that they cannot start businesses until they have a big establishment, capital and employees, etc. needs to change. “The most difficult concept to grasp for a new entrepreneur is to start small and grow from profits,” he says.
Despite the onslaught of political volatility, lack of financing opportunities, unstable infrastructure, and absence of an overall supportive ecosystem, Yemeni entrepreneurs are relentless in their pursuit of business success, and remain optimists. “We have an ambitious vision to be a pioneer service provider in the region by creating the biggest virtual FMCG store that owns no store,” says Warafi. “One of our strategic goals is pushing to make these transactions [Yemen’s expat remittances] flow through our gateway.” And as Abdulbaqi puts it, no amount of attending events or going through literature can prepare entrepreneurs for a scenario of “surviving sudden severe crisis like war,” and all they can do is remain steadfast in solving problems around them.
Ecosystem participation for Yemeni startups is integral to success
The importance of networking and learning from exposure to global entrepreneurial ecosystems cannot be stressed enough. As is often the situation for entrepreneurs in conflict areas, being cut off from the larger ecosystem has been a major drawback for Yemen’s startups. They confess to have missed out on the awareness and recognition that the connection with adjoining regions can bring. Nevertheless, these entrepreneurs have had their share of success reaching outside Yemen.
Tamween was adjudged the Best MENA Entrepreneur 2015 in the Entrepreneurship challenge organized by the U.S. State Department. Warafi says that the competition gave him something better than money. “Besides the connections, and besides shedding light on such an ambitious project, they gave me the certainty that I was on the right way. I’ve been told by high profile mentors that Tamween could be the next Alibaba,” says Warafi.
So far, Tamween has been making do with sponsorship and advertising revenue. However, Warafi has drawn up his financial projections and estimates that around $500,000 is needed to operate business for the next one year, out of which there is an immediate need for $60,000 for product developments before the Ramadan season. “Most of the biggest suppliers who run the FMCG market here, and some major stores and financial institutes have welcomed the idea to buy equities in Tamween,” says Warafi. He added that he’s evaluating the crowdfunding as an option to raise part of the amount in a month’s time.
Lumlim has been finalists in both ArabNet Riyadh and ArabNet Beirut, and also qualified for the semi-finals of MIT Enterprise Forum Arab Startup competition. Unfortunately, the team could not travel to Saudi Arabia to compete in the semifinals as they couldn’t get a visa, owing to the political situations. “It’s okay; we are working on Lumlim and looking for success, not just an award,” says Abdulbaqhi.
Lumlim raised seed funding from local investors during their launch, but sadly for the company, it admits to have faced “severe damage” in the local crisis, leading to material losses. “We are now looking to raise $200,000 to build our iOS and Web CMS in addition to expanding into advertising market to empower video ads engagement,” says Abdulbaqhi. He considers the recognition received at ArabNet Beirut 2016 as an inflexion point for the startup, which has since then been contacted by many investors and is “welcoming investment offers.”
Skoolsbook applied with their project idea to Oasis500 and had an opportunity to attend one of their boot camps in December 2015 in Amman, Jordan. “Our experience with Oasis500 was very inspiring to us,” says Bakhdar. “They helped us develop skills needed for entrepreneurship, for example, how to persuade the investor with your idea within minutes, and how investors evaluate startups and how to scale ideas.”
Skoolsbook set its operations in motion thanks to initial monetary support extended by the BlockOne incubator. Subsequently, the Al-Awon Foundation for Development has invested in Skoolsbook to help them continue their work in the field of education in Yemen. With already two branches in Yemen, the company is looking to further expand inside and outside Yemen.
Solar Ray received around $13,000 from Afkar program of ROWAD Entrepreneurs Foundation followed by and influx of capital of around $22,000 from new partners brought into the business by the founder. Alshabi says that they plan to take stock of the situation in the next three months to decide about funds.
Former Features Editor, Entrepreneur Middle East