Beyond Corona, pre-seed early-stage investment key to reviving startup ecosystem in Jordan
If we look back at the entrepreneurial journey that Jordan has been through over the past two decades, we can easily conclude that there are a number of positive steps that were taken and has led Jordan to being a relatively good environment for setting up startups and enabling their growth. This is especially true in sectors such as IT and digitally transformed sectors, such as EdTech, digital health services, logistics and many more.
Despite of the economical hurdles in the region, a number of precedent actions have been implemented in Jordan to develop and cultivate the idea of startups, giving them a higher chance at succeeding in the business. Nevertheless, the Global Entrepreneurship Index issued by the Institute for Global Entrepreneurship and Development highlights that in 2019, Jordan
ranked 14 spots behind 2018, making it ranked the 63rd spot globally, which is unfortunately, the same rank it achieved in 2015! The 2019 ranking for Jordan places us at a lower spot than what we actually deserve within the region, considering that Saudi Arabia was ranked 42nd, the United Arab Emirates ranked 25th, and Egypt was ranked at 81st globally.
While the growth in the entrepreneurial ecosystem may not be as fast paced as we would like, we simply cannot ignore the numbers that do showcase some of our success stories and help us figure areas for improvement. Additionally, what should take place now is an analysis, whereby we can dive deeper into what we have done correctly, and can also dissect how we can actually improve, in order to achieve a higher success rate in the startup ecosystem. Indictors alone are not enough to formulate a plan of action for any business; in-depth and one on one communication with business leaders, young entrepreneurs and all stakeholder is essentially what is needed to ensure put us back on the right track. And this is precisely what I have been doing over the past 15 years, as a consultant for startups and governments in different parts of the world, with the purpose of analyzing challenges and opportunities, and creating realistic and effective business plans adopted by policy makers and influencers in the entrepreneurial world.
These days, there are a number of challenging factors that can be highlighted when it comes to funding. Firstly, and possibly most importantly, is the idea of seed funding (which ranges between 100–500 thousand USD) and pre-seed funding (which falls under 100 thousand USD) which still remains a very valid concern for startups, and cannot be ignored. Although leading national institutions such as the Ministry of Digital Economy and Entrepreneurship and The Innovative Startups and SMEs Fund, since their inauguration, have sought to bridge this gap through several programs, unfortunately, the challenges still remain.
Angel investment, in my opinion, is one of the most important sources when it comes to early-stage funding for startups as it’s not just a source of cash but also a source of business support that is highly needed at this stage of the startup life time. This is particularly true as funding of angel investors goes beyond cutting a cheque — they offer networking opportunities, one on one discussions, and a lifetime of experience to share best practices, which is an essential part of the growth of any business idea. Organizations tend to organize angel investment activity as networks that organize frequent meetings for their members “investors” and give entrepreneurs the chance to pitch their business in an effective manner, so that more than one investor can participate in financing the same business opportunity, this syndication allows investors to share the risk and meet the startup funding goal at the same time. At this time, unfortunately, there is no solid network that is actively meeting and offering “risk capital” for startups in Jordan, something that makes my blood boil when I witness active angel networks in other Arab countries in the region, as well as European countries!
But maybe something new is on the horizon! During the height of the pandemic that has gravely affected our world, I received countless calls and arranged several virtual meetings for startups and investors in Jordan and aboard, who were looking for lucrative investment opportunities in startups, especially considering the weakening of traditional “safe” investment opportunities to achieve capital growth in the current economic situation. We are now in front of a golden opportunity; to have investors meet these young minds through an online regular pitching sessions, where entrepreneurs can present their startups and secure investments for their startups. Investors -and all the business community- are changing their perspective to accept virtual meetings and pitching sessions more as an effective mean of communication and taking effective business decisions.
I truly hope that 2020 is the year where angel investor networks become the new norm when it comes to early-stage startup funding in Jordan, especially to attract both Jordanian and Arab expats in the region, who have the means and the experience to bring something new to the table. I am certain that you will find a new breed of hungry entrepreneurs, thriving for success, which will ultimately mature us as an entrepreneurial hub over the next decade.