Catalyzing Yemen's Startup Ecosystem: ROWAD Entrepreneurs Foundation
There’s no way to sugarcoat this: Yemen is a nation that’s being stifled by civil conflict and unrest, adversely affecting everything from its economy to individual citizen livelihoods. A survey research by the United Nations Development Program (UNDP) and Yemen’s Small Micro Enterprise Promotion Service (SMEPS) from August to September 2015 examined to quantify the impacts of the conflict on Yemen businesses- one-fourth of businesses closed from March 2015, with the service sector -which includes private health and education- reportedly most affected by closure. SMEs shouldered the biggest hit, with 35% of medium-sized and 27% of small enterprises closing, compared to 17% of large businesses.
But as dire as the situation may as seem, there’s no lack of really trying among Yemen’s entrepreneurs. In situations when it’s tempting to give in to failure, their attitudes have remained steady and resilient. We saw this first-hand with the founders of ROWAD Entrepreneurs Foundation, and the entrepreneurial community it has fostered. Such is their enthusiasm, that in fact, it was the ROWAD team that first reached out to us, asking us to shed light on the country’s ecosystem. Even later, during a Skype call, they patiently real-time translated an Arabic language event supporting entrepreneurs; their earnest passion, despite their special circumstances, was easily evident.
The establishment of ROWAD Entrepreneurs Foundation began from the ground up by entrepreneurs for entrepreneurs. In 2012, Ahmed Qasem, Ameen Sanad and Yasser Alwan started a business management consulting firm, Dipherent Training, that would provide training courses to Yemeni professionals. It was then that they experienced the limited support for founders with “ideas that have growth potential.” They felt that existing organizations focused on self-employment initiatives or micro-business ideas, while others focused on already established family businesses. “We needed channels to network with other like-minded entrepreneurs as well as successful businesspeople,” says Qasem, which is why they started Talking Business in 2013, an event hosting successful Yemeni businesspeople to share stories, thus creating a network of successful up and coming ‘treps.
It was through running these events that the trio realized that they could play a bigger role in supporting entrepreneurs based in Yemen: “So, we established ROWAD… We wanted to create a hub to support entrepreneurs and streamline efforts to create a supportive ecosystem, so we launched our first business competition BlockOne, where we helped create six startups.” BlockOne Venture Competition was held in 2014, with 240 applicants -all aspiring entrepreneurs- seeking to start their own venture. It was followed by the three-day BlockOne Training Bootcamp, which hosted 52 entrepreneurs and focused on strengthening entrepreneurial skills for the final stage of the contest.
Currently, there isn’t a set date for the next round of competition and bootcamp, as they’re seeking funding to add an incubation component and to expand its duration to three months. With that momentum, ROWAD also started BlockOne Business Acceleration Program and BlockOne Incubator, wherein the winning teams of the competition were supported for three months in the acceleration program with office space, infrastructure, seed money, and mentors for support.
The BlockOne Incubator is open to all startups, with mentorship, training and networking opportunities from ROWAD. BlockOne also had its own activities like Founders Event (a platform for founders to share experiences), Startup Doctor (for startups to seek business consultation) and ROWAD seminars. A recent project is its How To Start seminar series, featuring sessions on the different aspects of running a startup, such as business models and finance basics, catered to those thinking of starting businesses but that have no formal background to draw on.
Besides BlockOne, another competition catered toward Yemen’s youth was Afkar, the Youth Innovation and Creativity Award, supported by UNDP, which aims to utilize the potential of turning Yemeni youth’s ideas to sustainable businesses. “It is an opportunity for the large unemployed youth population of Yemen to confront the country’s development challenges.” Qasem worked on designing the process of Afkar 1.0, and after ROWAD partnered with UNDP to implement Afkar 2.0, ROWAD had already completed its BlockOne Venture Competition and Qasem felt prepared in going forward with Afkar.
ROWAD is presently working with UNDP to secure funding for Afkar 3.0. With BlockOne and Afkar, while the competitions are a valuable resource for entrepreneurs, Qasem assures that ROWAD continues to check in on past winners to see how they’re progressing, as well as connecting opportunities when suitable. As for the Afkar 2.0 winners, they’re currently going through the acceleration phase, that provides them with coaching, trainings, and networking avenues.
Even with a plan in hand, starting ROWAD’s projects wasn’t easy, Qasem notes. “There is very limited funding that goes into skilled entrepreneurs or innovative businesses with growth perspective. This funding is focused on capacity building for direct employment or micro-businesses.” The same challenges that they faced when they launched -lack of funding and commitment from active players- are still there, though Qasem adamantly says that they’re still looking for partners to help reach their vision.
A current obstacle, Qasem says, is supporting the tech startup scene in Yemen, and indicating how businesses in the tech sector can really create more jobs and opportunities for Yemeni youth: “We want the Yemeni tech market to export services into the region, and that will only happen if we build faith and demonstrate it through startups that we can support. As an NGO, ROWAD’s financial sources include events and activities with minimal registration fees, as well as the BlockOne Training Bootcamp and Talking Businesses events.
Both of the latter are income generating events for the foundation, while BlockOne Incubator accepts startups based on membership fees. Qasem also credits their relationship with the private sector for support- some of the funding towards BlockOne Incubator has been contributed by partners Alkuraimi MicroFinance Bank and Yemen Liquefied Natural Gas Company. From about 20 entrepreneurs for the first Talking Business event, to over 80 entrepreneurs today, Qasem adds, “Despite the start of the war in 2015, and having to close down for three months, we were able to run 22 events and engage over 600 young entrepreneurs”- undoubtedly an impressive feat.
According to the research of UNDP and SMEPS, 73% of businesses have had no access to external funding since the war broke out. In Sa’dah, Sana’a, Abyan, Hajjah, Taiz and Aden, the top three contributors to business closure were infrastructural damage, capital and customer loss, and mounting debt. Qasem sums up their challenges as having limited access to proper financing channels, limited access to guidance and coaching services, and limited access to proper infrastructure. Finance options are from primarily personal savings/family and friends or micro-finance loans, which, Qasem points out, doesn’t allow “for support of bold and creative ideas with high growth potential.” Angel investors? “There is no venture capital scene in Yemen- and although there are some cases of funding through support of established businessmen, they are rare and presently there are no clear access channels to them.”
Infrastructure is a major obstacle, especially in the cases of Internet and electricity. “There has been no public electricity in Sana’a since the start of the war in March of 2015,” says Qasem, making business incubators such as BlockOne more relevant and needed for SMEs and startup founders. However, amidst the instability the country is weathering, perceptive entrepreneurs have emerged to solve problems and provide services- it’s worth mentioning here that the UNDP and SMEPS research indicates that 29% of business owners pursued “income diversification as a survival strategy.” Among the top three, fuel tops as the most lucrative new opportunity at 21%, followed by food at 29%, and the black market at 17%.
Given the loss of public electricity, a demand for solar solutions came about, with Qasem giving examples of how entrepreneurs started small businesses to import panels, batteries, installation services and maintenance services. An enterprising Afkar 2.0 winner is working on assembling solar panels, while another is working on a prototype for biogas production. Qasem also adds that another sector they have noticed is booming is social media marketing and content creation- the need and space for Arabic and Yemeni content online is still unaddressed. “We are also working on creating programs to support local entrepreneurs to catch the wave of mobile app development and big data,” adds Qasem.
More on the positive side, ROWAD is working on partnering with local microfinance networks and partnerships at a regional level to create an avenue of financing options suited to the needs of Yemeni entrepreneurs looking to scale up. “Yemeni entrepreneurs have the will to walk the distance, but in order to grow and avoid unneeded failures they need support and guidance throughout the startup process.” Qasem gives the example of the Afkar competition, which has made ROWAD certain of the value of access to business coaches and mentors in supporting startups with hands-on advice.
One of ROWAD’s major projects in the coming year is expanding their coaching service at a national level by creating an online platform to facilitate access to business experts, and advocates for support from ecosystem stakeholders: “I believe we need to keep on pushing entrepreneurship as the solution for unemployment and economic stagnancy in Yemen, not just to Yemeni youth, but to government, to international and local organizations, and to donors.”
Qasem admits that most college graduates prefer employment, rather than starting up: “The culture in general is critical of failure and not very supportive of [the] reiterative process needed to increase chances of startup success.” He continues, “A good number of youth feel that the only obstacle between them and starting a business is financing, which is not always the case, as more work needs to be done to validate their proposed solution to improve their ideas and make the investment worthy.” Qasem also notes that with women, cross-gender interaction is limited: “Thus most female entrepreneurs seem to take advantage of this culture and focus on services/products that are provided only to females and/or can only be provided by females.”
And issues such as these, Qasem asserts, is why ROWAD makes the case for entrepreneurship in Yemen as a major pillar of economic development. “These entrepreneurs understand the challenges facing them and facing the country, yet they keep on navigating the circumstances around them and prove that their solutions are much needed by the market. They have to constantly adapt to restrictions to be able to overcome these obstacles. Under the current situation, simple tasks like importing needed equipment and transferring money are not straightforward anymore. But as entrepreneurs, they are proving their resourcefulness in finding work around like assembling equipment locally, or transferring money through many hubs in order to get results.”
There is still a lot more work to be done, as Qasem feels a vibrant entrepreneurial ecosystem is “where [the] choice of becoming an entrepreneur is not restricted by limited resources and unfavorable conditions, but rather a function of the value added to the economy and humanity. We define our work on three fronts: the creation of sufficient and proper finance channels, the provision of the needed business support and coaching services, and the advocacy for entrepreneurship friendly laws and public policies.”
Qasem wants budding ‘treps to know that there is a need for entrepreneurs: “Yemen faces major challenges in all sectors, and these challenges are further complicated due to the ongoing war,” and concludes that Yemeni entrepreneurs can play an active role in solving these issues. “It is their skills and local knowledge that can discover [the] best ways to address local needs.” In Yemen, there isn’t only a passion for entrepreneurship, there’s a desperate need for it.
MEET THE TEAM: THE ROWAD ENTREPRENEURS FOUNDATION
Adeeb Qasem, the Executive Director of ROWAD Entrepreneurs Foundation, is also one of the business coaches to some of the Block One winning teams, Business Incubator & Acceleration program, the Afkar competition, and the Mubadara Program by SMEPS. He is also an entrepreneurship lecturer at the Lebanese International University (LIU) in Sana’a, Yemen. The second co-founder is Ameen Sanad, whose background is in web development and pursued a career with the UN in Yemen, and with Qasem co-founded Yemen HR and Dipherent Training. Yasser Alwan is also a co-founder, and his background is in project management. Alwan is the co-founder of Griffin Telecom, a subsidiary of Griffon Group.
YEMENI ‘TREPS NEED ANGEL AND VC ATTENTION
ROWAD EXECUTIVE DIRECTOR ADEEB QASEM
“Yemeni entrepreneurs are the most committed and determined I have seen, and they have proved it throughout the recent war. They work against extreme conditions, yet they manage to overcome and prevail. The 10 winning startups of Afkar 2.0 award showcase how, with some support, these entrepreneurs are taking solid steps towards creating profitable and scalable businesses. These entrepreneurs are not looking for easy access to cash; they understand the difficult situation they are in and they have practical ideas to make advantage of whatever opportunities they have available to them. There is a lot of potential for growth in Yemen, but there is even more potential in working with Yemeni entrepreneurs. What most investors look for [in] business teams and partners are mostly the commitment, hard work and ability to learn fast- Yemeni youth have these qualities and are always innovative. Investing in Yemeni entrepreneurs will always pay off in a good way.”
COMMON MISTAKES MADE BY YEMENI ENTREPRENEURS
“First is the haste [in getting] into partnerships without thinking carefully about ‘chemistry’ and understanding between partners. Partnership done right is one of the main reasons that leads to startups’ ability to succeed, however, many of the failed initiatives I have seen were founded by people who didn’t think critically about going into partnerships and what each partner is bringing to the business. These partnerships failed fast at the first sign of stress, despite [the fact] that some of them have got access to finance and coaching. Another common mistake among Yemeni entrepreneurs is overestimating the importance of the idea while underestimating the need to validate it and building a proof of concept; being very protective of an idea and thinking that all is needed is financial support to make it a success- without putting in the needed work to validate the solution and customer need. Another common mistake amongst Yemeni entrepreneurs is underestimating the scalability potential of their businesses and not pushing their startups to grow and expand nationally and internationally. Many Yemeni entrepreneurs have the skills and ideas to compete at a regional level, but the lack of exposure limits their efforts to expand.”
ADDITIONAL ENTREPRENEURIAL INITIATIVES IN YEMEN
“It is great to see other organizations working towards supporting local entrepreneurs here, [such as] Yemen Our Home, a crowdfunding platform currently being developed by UNDP, Mubadara Initiative by SMEPS. Mubadara is working with the government and ILO (International Labour Organization) to introduce entrepreneurship as a curriculum to be taught to all university students. Another is the Business Support Center established in partnership with Yemen Business Club, Sparks and UNDP to support Yemeni businesses. The first Yemeni Entrepreneurs Conference being organized by the Association of Chambers of Commerce [will] take place in Sana’a.”
Pamella de Leon
Startup Section Editor, Entrepreneur Middle East