A Look at Oasis500's 5th Angel Event: Are Accelerators in the Middle East Doing Their Job?
Jordanian tech accelerator Oasis500 hosted its 5th Angel Investment event in Amman last night, bringing together 100 members of the entrepreneurship community, including major angel investors, to assess 8 companies- including one non-Oasis500 startup.
Before taking a look at the companies, it's worth asking a question that's been on the minds of many lately- are accelerators doing their job?
In a Kauffman Fellow Program study examining the U.S. market, Aziz Ahmed Gilani of venture capital firm DFJ Mercury (which invested in accelerators TechStars and Excelerate) looked at 29 accelerators and found that 45% of them had not produced a single startup that had secured follow-on funding. Only two- Y Combinator and TechStars- had produced meaningful exits.
At Oasis500, that's not the case. The tech-focused accelerator, which typically invests US $32,000 at the seed stage for a 20% equity stake, has incubated 51 startups since launching in late 2010. Of those, 25 have pitched at their periodic angel events, with 10 receiving follow-on funding from angels. Overall, 18 total have received follow-on funding, some from 3rd parties. 18 out of 51 total is an impressive 35% funding rate.
That doesn't mean that 35% of Oasis500 will succeed, or be able to secure future rounds of funding, but it does mean that 35% are getting a very tangible boost from the program. And the fact that non-Oasis500 startups are pitching at their angel events is a good sign that the accelerator is not creating an exclusive pipeline when it comes to promoting tech startups in Jordan.
Its equity stake of 20% is high compared to Y Combinator and TechStars, which respectively invest $20,000 for a slice of equity between 2-10%, and $18,000 for a 6% equity stake. While it's far too early to look to exits as gauges of success in this market, future follow-on rounds will indicate to new startups how far this initial capital will likely them.
A Look at the Companies
Of Oasis500's startups to date, 41% are in the e-commerce sector, 40% in Arabic web content creation, and 19% are in IP, hardware, and software, @oasis_500 tweeted last night.
The 8 that pitched last night were mostly from older waves at Oasis500, pitching with a bit of experience under their belts:
Gallery AlSharq: an online photography site providing exclusive Middle Eastern and oriental photography, images, and digital content. (Oasis500 Wave 6)
HealingLand.net: a platform that connects international patients seeking medical treatment in Jordan to key service providers. (Wave 8)
Sajilni: Time Out meets Ticketmaster; an event listing and management platform that allows event seekers to directly buy tickets to local events. (Wave 5)
First Bazaar: an online store offering handicrafts, which include fashion, home décor, and vintage products. (Wave 7)
Koala: a B2B SaaS cloud-based sales force automation solution for the life science industry. (Wave 9)
Hashdoc: a socially-built library of useful professional documents, that uses machine learning algorithms to accurately tag documents automatically. (Wave 6)
Madfoo3atCom, a centralized electronic bill payment service that connects banks with billers. (Wave 5)
Shoozat: an online store that sells shoes and accessories at discounted prices. (not Oasis-incubated)
What Stood Out
Of the companies I had a chance to chat with to more in depth, Hashdoc stood out. One of its main founders, Tarek Koudsi, knows his business inside and out. He's data-obsessed, looking to entice a global market, and not in a rush to make a big splash before the platform is ready.
Having worked at consulting companies in the past, and seen how they overcharge customers for the use of standard templates, Koudsi has resolved to make the document industry more open source. Now he's leveraging machine learning algorithms to tag documents automatically, and developing a tagging system that's far more nuanced than say, Scribd, he says.
The company is focusing on aggregating documents in 6 verticals right now: IT, design, software development, leadership, project management, and HR. It will need all the focus, loyalty, and intelligent tagging it can muster to go up against U.S. rivals DocStoc, which just launched 30 free iPhone and iPad apps, but Koudsi seems primed for the challenge and ready to iterate until he gets it right. Hashdoc is currently in invite-only beta.
Another interesting one to watch is Shoozat, which founder Mohammad Ben Tarif revealed has generated $40,000 in revenue in two months since launching, mostly by selling to women in Saudi Arabia.
The online store, which sells shoes, handbags, and accessories, is looking to start stocking at least 50% of its inventory locally and expand into the UAE, Saudi Arabia, and Lebanon. Ben Tarif knows the business of e-commerce, having previously co-founded Run2Sport, which is now integrated into Souq.com after Jabbar's acquisition of a majority share.
Yet the question looms- can he compete with Rocket Internet's Namshi? "We want to position our brand to gain traction with users that know us for our specific products, especially shoes," said Ben Tarif. It's a scary prospect for a startup to go up against Rocket, but then again the market for online shoe shopping seems nowhere near saturated- neither in the Gulf nor the Levant. The devil is in the details of stocking, payment gateways, and gaining consumer trust, regardless of how much funding you have.
Continuing to Build in Local and Regional Markets
Event management platform Sajilni burst onto the scene recently in Jordan by exclusively selling skydiving tickets in Jordan and tickets to pianist Zade. It's filling a much-needed gap in the local market, and allows user to directly post and sell tickets to small events, taking a 5-10% commission only when the first ticket is sold. But can it compete outside the Jordanian market?
Gallery AlSharq is going strong, now boasting 15,000 original Middle Eastern images on the site, including both user-generated content and content artfully shot by in-house photographers. Thanks to deals with advertising agencies, newspapers, and Arab Radio and Television, the platform is close to turning a profit and hopes to break even at the beginning of next year. The site, which is already backed by Abdul Malik Jaber and Husni Khuffash, also won $25,000 in the MENA 100 Business Plan competition.
Madfoo3atCom is steadily taking off, soon announcing partnerships with major telecom companies in Jordan to connect customers to online bill payment, and it's received interest from major banks in the region.
First Bazaar may validate the online handicraft market, in which it competes with Ananasa. Founder Linda Al Hallaq says that, by using a custom logistics solution, she can deliver handicrafts within 2-3 days to customers in Dubai. Whether she can crack the Saudi market remains to be seen.
When it comes to reflecting on the evolution of startups at Oasis500, "the quality of ideas keeps getting better," said Oasis500 executive chairman Usama Fayyad. "All of these startups are regional or global, confidently going after big markets."
While Usama didn't say it openly, I'll say it- the pivot away from an exclusive focus on Arabic content, which limits market scope, and towards global tech ideas is a trend that will likely continue to grow in Jordan.