The recent ranking of Amman as one of the world’s top cities for internet start-ups has highlighted Jordan’s success in the IT sector. The list, compiled by Rachid Sefrioui, the founder of venture capital firm Finaventures, ranked 10 cities on the basis of availability of talent, infrastructure and capital, legal environment and evidence of entrepreneurship.
Sefrioui calculated his list in relative terms, meaning that “a city with $200m in seed and venture capital may achieve a better ranking than a city with more capital, simply because other human, legal and infrastructure factors scored higher”. According to Sefrioui, the list attests to the vibrancy of each city’s entrepreneurial community, no matter how large or small.
While IT heavyweights Palo Alto and Los Angeles topped the list, Amman came in 10th place. Sefrioui told Bloomberg that due to a lack of traditional economic opportunities and capital, Jordanian entrepreneurs have gone the do-it-yourself route, starting their own companies and leveraging the internet to access global markets.
A sample of some of Jordan’s best-known internet start-ups include Dakwak, a translation tool and localisation service website; digital artist marketplace Taltol; the competition-based employment recruitment agency Fakker; and Arabic-language audiobooks provider Masmoo3.
Many of these start-ups have the website Maktoob to thank for their success. In 2009, Yahoo! paid $164m to acquire Jordan’s Maktoob, an Arabic web portal offering email, search, social networking, payments and auction services.
It was the region’s first major buyout of an online company, and Maktoob has since generated substantial revenues for its investors. Indeed, analysts say that Yahoo!’s buyout represented something of a sea change in thinking for the Arab business world: for the first time, the internet was seen as an emerging sector, able to offer investors real returns.
The sector has been growing ever since. According to a report published by Sindibad Business, an online business portal covering the IT sector in the Middle East, between January 2010 and the end of August 2011, Jordan attracted the largest number of e-commerce-related investments in region. During the study period, Jordan saw the introduction of 30 start-ups; the UAE saw 11; and Egypt, nine.
Playing a major role in these investments is Jordan’s Oasis500, an early stage and seed investment programme focused on the Middle East and North Africa (MENA). Sindibad ranked Oasis500 first in terms of the 20 companies it looked at during the study period. Indeed, Oasis500 has set an ambitious goal of investing in 500 start-ups within five years. If it succeeds, Sindibad expects the company to make a huge impact on the internet landscape in the Arab world, allowing Jordan to maintain its leading position in the coming years.
The programme seems to be well on-track. On February 7, Oasis500 announced that two of its start-ups had attracted investments due to an angel networking event held in Amman in December 2011.
The first, an online sports apparel store called Run2Sport, received $2.5m from Souq.com, an online marketplace owned by Jabbar Internet Group. Run2Sport plans to use the funding to expand its presence in the Gulf market, while Souq.com intends to leverage its investment in Run2Sport to multiply its sporting goods offerings in the MENA region.
The second start-up, the online bill payment platform Madfoo3atCom, secured a total of $529,000 from Saudi Arabia’s 2PCompany, Oasis500 Ventures 1 (Oasis500’s investment arm), as well as a host of private investors. Madfoo3atCom currently serves the Jordanian market, but its investors see potential for growth in online bill payment systems in Saudi Arabia.
“E-payment is one of the most promising niches at the moment, with lots of room for growth in the region," Monther Jubran, the vice-president of finance and chief coach at Oasis500, told OBG.
In the same vein, with its close historical and cultural links in the fast-developing regional market, Jordan has the ability to leverage its tech-savvy human resources to seize opportunities that might be out of reach for Western rivals.
Indeed, as Abdelmajeed Shamlawi, the CEO of the country’s Information Technology Association, int@j, told OBG, “Jordanian ICT companies have a longstanding reputation in the MENA region for quality and reliability, giving them a competitive advantage in the market when bidding for contracts and tenders.”