Different places do different industries differently – and over time they may come to be identified with the industries they do well. Los Angeles is world renown for filmmaking while Detroit was once the global center of the auto industry. In the same way startup ecosystems can begin to be identified with particular sectors. That’s true across the world – including here in the MENA region.
In 2012, TechCrunch posted an article based on data compiled and analyzed by the Startup Genome project. Among other things, the analysis revealed that companies founded in Silicon Valley were about half as likely to build marketplaces than those in New York. At the same time, entrepreneurs in Silicon Valley were twice as likely to create game companies.
As an ecosystem accelerator based in MENA, Wamda has been able to compile similar research since it was founded more than three years ago. A quick search of Wamda’s regional startup database reveals that since 2002, Amman, Beirut, and Dubai have seen comparable levels of early-stage startup activity – judging solely by the number of companies founded in each city.
With 163 companies, Dubai only slightly edges out the other two cities. Amman and Beirut were host to at least 145 and 136 startups respectively.
A more granular analysis of Wamda's data reveals that 13% of all database companies founded in Amman are focused on the consumer web market. The second-most popular sector is media, with 11% of all startups dedicating their activities to the space.
In Beirut, software – both enterprise and consumer – leads with 16% of companies pursuing opportunities in that sector. Media is the second-most popular industry with 15% of all companies focused on producing content and animation, among other things. Finally, in Dubai, consumer web and e-commerce each comprise 14% of all startup activity.
Overall, it appears that Beirut is most popular for software and mobile development. Amman is favored among game developers while Dubai seems to draw the most financial technology and advertising companies.
But these figures tell a partial story; they only provide information on the opportunities founders perceived in these markets, rather than what opportunities there actually are. It may be that founders – who frequently possess imperfect and incomplete information – fail to optimize for the comparative advantages available to them in their city. For example, a founder may assume that Beirut and Dubai deliver the same opportunities to financial technology startups. Over time however, it may become apparent that financial technology companies do better in Dubai for a variety of reasons.
Wamda will be working to analyze company survival and success rates over time to gain a meaningful understanding of the different industries that cities cultivate. The next few posts in this series will unveil some of those findings.