Before the uprising in Tahrir Square, young entrepreneurs had been creating their own opportunities throughout the Middle East and North Africa. For investors brave enough to overcome the existing political strife, the pay-offs could be huge.

This article was originally published in Fortune.

The great science fiction writer Arthur C. Clarke famously said that revolutions are most often overestimated in the short run and underestimated in the long run. One need look no further than recent events in Middle East and North Africa, the region known as MENA, to know that the long run is now.

Many investors understandably remain on the sidelines of a region long caught in a narrative of political unrest, poverty and corruption. Others, however, are betting on a new generation of entrepreneurs writing their own narratives of technology and innovation at a regional and global scale.

Arif Naqvi, Pakistani-born founder of Abraaj Capital, the largest private equity firm in the global emerging markets, knows these entrepreneurs well. "These young populations have strong aspirations for a better life and are better educated, better connected, more politically aware and have a stronger sense of national pride and dignity than many give them credit for," he says. "As such, they want to have a voice in deciding their own futures. "

Ahmed Alfi, who returned to Egypt after a 40-year absence 18 of them investing in successful tech and media companies in the U.S. notes that recent events electrified these voices in his country for an almost patriotic mission. "Egyptians have always loved Egypt, but they haven't always felt that Egypt belonged to them," he says. "People are feeling empowered now, they have demonstrated together for their rights and have stood guard together over their homes and families. They are responsible for Egypt now."

This empowerment has recharged the entrepreneurial energy throughout the region. "These levels of energy and passion are the bedrock of entrepreneurship," Naqvi says. "The events have given people self confidence that will translate into vibrant economic activity when the situation normalizes."

Often forgotten in today's uncertainty are the region's remarkable market dynamics. Begin with a population of 320 million people, nearly twice the size of Brazil, with a GDP larger than Russia and India, and per capita GDP nearly twice China's. Add disposable income growing 50% over the past three years to eclipse $1 trillion in 2010. Make it a young market, with over 100 million people under the age of 15, who love their connectivity and mobile phones. Mobile penetration, in fact, will approach 100% in three years. Social media penetration hits 25%, growing 125% year over year. There are more college and graduate students and engineers turning to start-up and medium-sized ventures than ever before.

Both Naqvi and Alfi are hoping to capitalize on that talent. Abraaj raised hundreds of millions of dollars last fall as the largest player to invest specifically in small- and mid-cap tech innovation companies in the region. Alfi recently launched the newest MENA venture capital fund, Sawari Ventures, with investors including Naguib Sawiris, executive chairman of a leading regional and global telecom company, and one of the courageous executives to remain in Egypt and support reform. They are not alone.

Opportunity in Arabic and Beyond

Usama Fayyad also returned to the region from years in Silicon Valley, having created and sold several successful technology and data companies, including one to Yahoo. He heads Oasis500, one of the first start-up tech incubators, backed by the Jordanian government and private sector. His goal is to invest in 500 regional start-ups within five years. With Arabic-speakers representing nearly 9% of the globe, and less than 1% of all online content, he believes opportunities abound for the region. "Arabic content is at least ten times smaller than where it ought to be by population index, and of the seven trillion ecommerce dollars worldwide, MENA represents $100 million," Fayyad says. "This is all huge upside."


Arabic, Islamic and culturally-attuned versions of proven successful web companies can be quite lucrative. But Alfi and one of his partners, Hany Sonbaty himself a development engineer and veteran of regional private equity and tech investing see greater excitement in regional start-ups embracing the global reach. "They have international yard sticks," he notes. "They consider themselves citizens of the world that have signed up to make their mark on the global scene and not just on the local and regional levels." They are backing a young team from Alexandria, Egypt that's creating the best-selling paid weather app in the world, and considering an Egyptian, Stanford-educated PhD who has patents pending for his technology allowing significantly accelerated server speeds.

Investor support could not come at a more critical juncture for the nascent movement toward entrepreneurship. Too often, founders and CEOs who receive initial funds from friends and family, "enter a veritable desert when it comes to capital" notes Fayyad. While money has been available in the region for some time for later-stage, profitable enterprises, "most entrepreneurs never survive the desert crossing, and those who do are totally alienated to the notion of raising capital for equity having survived a harrowing prolonged ordeal."

It's too early to know whether there will be one main hub of activity. Alfi and Sonbaty have started in Cairo and remain committed to staying, for now. Egypt has nearly a quarter of the region's population, a fifth of the mobile subs and both mobile and Internet penetration that grew 40% each per year over the last five years. There is already a broad information tech environment, with nearly 3,700 companies employing more than 150,000. It's a leading producer of film, print and video in the region. But they focus on the wide local entrepreneur talent itself. Sonbaty observes, "The raw number of individuals combined with ingenuity and opportunity means you get many more and better projects and ideas."

Fayyad has put his stake in Amman, leveraging its well-trained IT population and a relatively low cost of doing business. Located geographically in the heart of this rapidly growing region, he notes Jordan is "an amazing place to do start-ups that benefit from local strengths, political and legal stabilities and its capitalist orientation it is a great environment to operate and grow companies. "

Naqvi headquarters in Dubai. In many ways, no other place in the region stands as better evidence of the raw will it takes to create something that was never there before. "Anyone who comes to this city state can only see and feel the power of vision and determination," he says. "Dubai has become the home to families and peoples from around the world. Dubai has been a trendsetter. It is a first mover that has shown the way to what this region can become."

Staying above the political fray?

Business ideas are coming from every corner of the region. Imagine the next leading animation firm being Ox Animation, headquartered in Damascus and backed by Syrian angel investors. Or how about the next great media enterprise being the comic book/television series The 99, founded by Kuwaiti-based clinical psychologist Dr. Naif al Mutawa, backed by Abraaj?

Sonbaty notes that entrepreneurs like these are moving at Internet speeds, refusing to wait for fixes to the obvious political, infrastructure and economic challenges of the region. "Most of all, the MENA region is connected," he says. "The new generation is educating themselves and bypassing failed systems. They are seeing online what can be done and no longer being told what can't be done. They are hungry for success and recognition."

To feed this hunger, these investors know that their job is more than investment capital, but the commitment to mentor and build an ecosystem that embraces entrepreneurship. Naqvi with his friend Fadi Ghandour, who built the region's largest logistics company and is viewed by many as a god father of entrepreneurship in the region, hosted a sold-out gathering of over 2,400 regional entrepreneurs and investors at "Celebration of Entrepreneurship" in Dubai last November. They've since launched what they hope will become a central, inclusive portal dedicated to entrepreneurship in MENA.

Google was among the many global tech companies in the region connecting entrepreneurs long before its executive Wael Ghonim became a leader among the protesters. It held a conference last December with the goal "to invest in the Egyptian talent pool and to increase online penetration by giving developers, academia and businesses the tools to grow local content in order to make information more relevant and more accessible," says regional director Wael Fakharany. More than 2,000 people attended over the course of three days. Similar sized gatherings are happening regularly from Beirut to Morocco every month.

Despite significant progress and potential the narrative of political risk and concerns over rule of law remain perhaps more uncertain than ever. There is no doubt, Naqvi cautions, that "the direction will be determined by whether regimes in the region realize that 21st century developments should not be met by a 19th century mindset