Innovation ‘Launch Pad’: A Startup Hub For The Middle East
Muhammed Mekki is well equipped for his mission to promote a robust startup culture in the Arab world. The Iraqi-American studied economics at the Wharton School, and then became immersed in the Silicon Valley startup community while earning an MBA at Stanford University. In 2011, Mekki co-founded Dubai-based Namshi, an online fashion retailer that raised more than $20 million in venture capital. Now he is founding partner of AstroLabs, which has partnered with Google to build a startup hub and training academy in Dubai. (For an in-depth look at the growth of startup accelerators in the Middle East and beyond, see: “Disrupting the Disruptors: Startup Accelerators Feel Pressure to Evolve.”)
Since its soft launch April 1, 2015, AstroLabs has had more than 400 technology startups apply, according to Mekki, who recently talked to Knowledge@Wharton in the United Arab Emirates.
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Innovation ‘Launch Pad’: A Startup Hub For The Middle East
An edited transcript of the conversation follows.
Knowledge@Wharton: What is AstroLabs Dubai?
Muhammed Mekki: AstroLabs Dubai is the only Google-partnered tech hub in the Middle East/North Africa region, serving as a launch pad for the most scalable online and mobile startups. Our collaborative co-working space is designed by and for entrepreneurs, featuring a mobile device lab and a training facility housing AstroLabs Academy. Through a partnership with the government-sponsored Dubai Multi Commodities Center Free Zone, AstroLabs-based entrepreneurs can easily obtain a company license as part of their membership with no upfront costs, making it easy to set up a bank account and UAE residency for the team. Once accepted, AstroLabs members gain access to a range of practitioner mentors, direct connections to the top venture capital funds, and curated offers from startup service providers.
Knowledge@Wharton: Why did you choose Dubai to embark on this project?
Mekki: We believe that Dubai is the best base for startups to access emerging markets, with one-third of the world’s population living within a four-hour flight radius. Infrastructure and lifestyle are world-class, individuals as well as corporations pay no tax, and you can easily obtain local residencies for talent recruits from anywhere globally without the lengthy immigration processes typical in other geographies. The UAE and its neighboring Gulf countries are wealthy, have the highest smartphone penetration levels in the world, and are underserved by tech companies.
Knowledge@Wharton: What kinds of startups are you accepting?
Mekki: We’re looking for tech-driven startups that are scalable and have a developed product ready to be launched or live in the market. AstroLabs startups tackle more than 20 industries, from food to finance. Even though we do not take equity, we put an investor hat on when interviewing applicants so that we build the highest-quality community possible. Thus far, we have accepted over 60 startups whose founders hail from 27 countries.
Knowledge@Wharton: Have you seen any trends as far as the types of startups that apply to your program?
Mekki: Several clusters have started to form organically, taking advantage of some of the unique opportunities presented in Dubai, a global hub for travel, finance and retail. We recently ran a travel and hospitality focused startup exchange program in Dubai, which attracted top companies from all over the world to AstroLabs. With brands like Emirates, Jumeirah and Google backing the initiative, it was a first step in putting Dubai on the map as a hub for travel tech.
Knowledge@Wharton: Are the range of projects diversifying?
Mekki: Dubai has evolved substantially over the last few years from an ecosystem with a handful of modest locally minded tech startups to an emerging international player with entrepreneurs thinking at least regionally and oftentimes globally from day one. Whereas new startup concepts used to be dominated by replicas of successful business models in more advanced markets, we are now seeing teams selecting Dubai as the launch pad for innovative businesses across multiple geographies.
Knowledge@Wharton: What does the future hold – from now to five years from now?
Mekki: In 2015, we scaled up to more than 100 companies. In the years that follow, we plan to open additional locations in the UAE as well as Saudi Arabia. We also plan to expand our training company to work on closing the tech talent gap in the Middle East/North Africa. Youth unemployment is a big challenge in the region, and we plan on doing our part to help address the issue.
Knowledge@Wharton: There are very few examples like this around the world and the investments are relatively significant. How are you measuring success? Are there any modifications planned for the future?
“The UAE and its neighboring Gulf countries are wealthy, have the highest smartphone penetration levels in the world, and are underserved by tech companies.”
Mekki: We have set a high bar for ourselves, which is to play a pivotal role in defining the entrepreneurial ecosystem in the countries in which we operate. In Dubai, we aspire to build a high-density community of the best entrepreneurs supported by top resources, mentors and the physical environment….
We measure success through the successes of our members, tracking metrics such as the growth of teams, rounds of funding achieved and financial exits. In less than one year since opening, we have already seen the first startup established at AstroLabs Dubai — Beneple (an automated human resource processes firm) — get acquired. Because of the demand thus far, we are planning an expansion space in Dubai and are exploring other geographies to open similar concepts.
Knowledge@Wharton: You have obviously been successful in connecting with some great partners. What was the thinking behind that approach? How did you go about securing the partnerships and what roles have they played – and will play – in your project?
Mekki: We were fortunate to start our tech hub project with two very committed anchor partners, Google for Entrepreneurs and the DMCC Free Zone of Dubai. We have since added several others, including Amazon AWS and global legal firm Latham & Watkins to assist our member companies with contracts and structuring. We look for partners who have a deep-vested interest in growing the tech startup community themselves, have tangible benefits to offer our members, and, most importantly, make things happen.