SeedStartup, a seed-stage investment vehicle launching in the UAE this September, is coming online as the latest in a series of new accelerators in the Arab World, including Oasis500 and Meydan in Jordan, Plug and Play and Tahrir2 in Egypt, Seeqnce in Lebanon, and Tenmou in Bahrain. While Dubai is not typically known for being a startup laboratory, SeedStartup is working to change that, combining ample funding with the Middle East's best and brightest mentors.
Using a model similar to that of Silicon-Valley based startup fund Y Combinator, SeedStartup brings 10 selected startups to Dubai for a three month bootcamp, giving them US$20K- $25K and steady mentorship in exchange for a 10% equity stake. A final investor day offers founding teams the change to pitch to a global network of potential investors, including SeedStartup itself, which can invest up to an additional US$250K.
The accelerator also boasts membership in the Techstars Network, which provides its startups with access to a unique global network of mentors, and the chance to attend the Techstars Founder’s conference. With Techstars launching a new reality TV show about startups this fall, it seems the sky is the limit for startups that make it onto Seed Startup’s launch pad.
Wamda chatted with founder Rony Nashar, who previously launched intheloop.me, as an answer to LinkedIn in the Arab World, about founding SeedStartup.
What personally motivated you to start SeedStartup?
I enjoy the excitement of creating and investing in startups. It's the same expression of creativity that an artist might enjoy while painting or an architect enjoys while designing.
SeedStartup was also born to serve a clear need in the region. There are only a handful of venture capital firms in the entire region and most of them don't invest at the initial seed stage of a startup's life cycle. It’s outside of their risk appetite. And angel investment in technology ventures has historically been fragmented and negligible in this region.
What is the goal of SeedStartup?
Although we're a privately held investment firm whose primary responsibility is generating returns for our investors, SeedStartup has a double bottom line. Our goals are to generate returns, ignite the creation of a true venture capital industry in the MENA region, contribute to economic development by creating opportunities, and to have fun.
What do you look for?
SeedStartup is looking for innovative startups that are going after large markets, with a differentiated offering and a solid entrepreneurial team. We’re open to everyone regardless of nationality or country of residence.
Why can't someone apply alone?
There have been very few success stories for single founder startups. It's not impossible but it's not ideal. I believe the ideal founding team consists of either 2 or 3 founders, and the team should be well-rounded.
Ok. But what does it really take to be accepted into SeedStartup?
Passion- the entrepreneurs should be passionate about the space they're in, the opportunity they're going after, and the product they're building.
Knowledge- web and mobile entrepreneurs have to know: what startups just launched? Who was funded? What new markets are being created? Staying updated helps them identify market opportunities and differentiation potential.
Execution- ideas are easy to come by, but what really matters is the ability to implement the idea. We prefer to see a working prototype of the product even if it's very basic with a limited number of features. We also like to see what team members have built in the past.
Synergy- co-founders should have complementary skill sets and be able to complete each other.
What are the biggest mistakes that you see applicants making?
The biggest mistakes I see are:
- Not having performed sufficient market research to have solid awareness of the competitive landscape.
- Not having a clear vision of how they will differentiate and position their product.
- Having a lack of attention to detail, i.e. not answering the application questions completely or with adequate thoughtfulness.
How do you think players in the region can encourage more small-scale angel investment?
Investors should make more Series A venture capital investments in early stage startups, and allow earlier investors some level of liquidity, or a potential exit. When seed and angel investors see that there is a clear path to a liquidity event for their investment they will be more likely to invest.
Investors should also encourage large corporations in the region to create more mergers and acquisitions. And public stock markets can be more friendly to small businesses by having less stringent listing requirements. NASDAQ Dubai is making great progress on this front.
A successful entrepreneurship ecosystem comes down to a simple factor: if investors think they can make money, they'll invest. If not, they won't. Investors must be able to see a clear potential return on their investment at each stage of a company's lifecycle, and infrastructure must exist that will enable them to sell shares. The more early stage investments, acquisitions and initial public offerings (IPOS) that occur, the more that infrastructure takes shape.