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October 23, 2011 / trajsingh

Mobile commerce in mid-east/north africa

I have recently had the chance to visit an interesting startup in the MENA region. They have developed a platform that allows them to push information down into feature phones, and therefore enable them to participate in the world of mobile apps.

They know that in their region, feature phones are still the dominant platform, especially when it comes to business use. This is often because the value of a smart phone is so high that some of the sales and support reps of their customers wouldn’t be seen again if you gave them an iPhone!

What was interesting also is the difficulties they are facing in gaining customers – pretty much in line with their counterparts all over the world. For example, waiting for the regulator to agree the ground rules for m-payments; hoping companies will adopt m-CRM and m-ERP solutions sometime soon :-); and generally struggling with how to manage on a tight budget.

What *is* different about the region is the lack of information flow. No reports on the market size and growth; little region-specific information about competitors or customers; and a huge reliance on personal connections to make a sale (the right offer at the right price is not enough). This also translates into a lack of community around the startup – few if any places to chat with your peers about the issues facing you.

Still, it is recognizably the same business model as any tech startup anywhere else, and the trade-offs are there too, albeit at very much different cost breaks (office space, salaries at a fraction of EU/US prices). Which in a funny way makes it tough for them to crack our expensive market places – they can’t get over our huge salaries and costs 🙂

And, where there are startups, there are VCs. The opaque and feeble size of the industry means that VCs are a bit of an unknown quantity; deal terms are all over the place, and the ecosystem (lawyers, accountants) to help startups understand the implications of each one is also small (or extremely expensive). And there are relatively few options to choose from as well. All this explains the small size (and sometime ambition) of startups in the region.

I definitely came away with the impression that there is a great play in mobile here – lots of consumers, and small businesses, and a need for arabic that most international vendors would struggle to deal with, a natural barrier to entry. But as long as the surrounding ecosystem of information, finance, advisors and talent remains small, it’s going to be an uphill struggle.

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