The West Bank technology startup ecosystem is in its early stage but maturing.
The resources are certainly available: a recent World Bank report found that key strengths in the market included talented and highly educated founders, who are well connected with international knowledge networks, along with incubator and accelerator programmes and good access to venture capital. Additionally, thousands of IT specialists graduate every year.
However, very few new IT companies are being established and most graduates end up joining the 31 per cent of the population that is unemployed. On the whole, startup founders tend to be young graduates with little or no managerial experience and limited business acumen. As a result, there is a need for experienced business mentors or angel investors in the Palestinian territories who can offer experience and resources and provide the necessary credibility to access new clients and markets.
The West Bank has lower costs than much of the Middle East and has access to grants and venture capital. Partnerships between experienced entrepreneurs and talented locals, therefore, have the potential to create successful, profitable companies.
One such success story is Transcend, founded by partners from the UK, the US and the Palestinian territories and with follow-on investment from the Palestine Investment Fund.
Transcend grew out of a vision to use strong language and IT skills in the Palestinian territories to create jobs, skills and service exports unaffected by movement restrictions.
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The company’s three founders are Nassim Nour, a Palestinian business person with experience of working internationally; Jerry Marshall, a UK technology and social entrepreneur who had been involved with Palestinian businesses since the mid-1990s; and Russ Sandlin, an American who managed the award-winning Gulf Bank call centre in Kuwait.
An 88-seat contact centre was built to international standards and the company opened for business in 2012. The core business is serving clients that want to find and support customers in the Middle East using social media and bilingual English/Arabic voice contact for sales, customer support and research.
Venture capital investment in 2013 then enabled the company to recruit a senior management team and grow its software development arm. This year, a further initiative in real-time customer feedback kiosks is being developed. Transcend is now a profitable company with 120 staff in the West Bank and Gaza, serving clients in the Middle East, US and Europe. A recent commitment from a venture capital fund from Chile will help the firm get closer to its target of 1,000 employees.
The business has achieved its aims and met the expectations of its international client base. One of the company’s Middle East clients goes as far as to assert that Transcend has achieved a 600 per cent return in investment on sales development to the Gulf Cooperation Council (GCC) nation-states, and a US client describes the software development team as “high-calibre, productive and creative” IT professionals.
Behind the success
The founders believe that part of the company’s success comes from encouraging and respecting staff.
“I feel like management trusts my decisions and supports me in my daily work,” says Rozet Najajrah, who has frequently been named ‘Agent of the Month’ and is now team leader for a wellness programme. “I love the open-door policy and flexible schedule. I work with people who are intelligent, fun and responsible. We are all working toward a common goal.”
Another element contributing to the success of the business is the international nature of the partnership. “[The Palestinian territories have] a stable economy with a young, well-educated and IT savvy workforce,” says Marshall.
“Strong local leadership is essential, but there is an openness to foreign direct investment and there are incentives to encourage investment and growth. Furthermore, international partnerships bring a broader perspective and a wider range of contacts and opportunities,” he adds.
Transcend also demonstrates that an investment and mentorship model geared towards tapping latent IT talent in economically deprived areas of the region, like the West Bank, is highly viable.
Marshall says the World Bank report, which is available online, is an accurate assessment of the technology startup ecosystem. “My colleagues have considerable business expertise, but my past experience of tech startups in the UK added a further layer of realism,” he says.
Marshall continues: “More generally, the World Bank report rings true: there is an immense pool of talent, incubator and accelerator programmes, and good access to venture capital, but there is a particular need for experienced business mentors and angels.
“I thoroughly enjoy spending time with my fellow directors and Transcend staff. Their hard work and the benefits of being based in the Palestinian territories have shown through in the bottom line.
“I would recommend the experience to other entrepreneurs and investors, and I encourage business decision-makers around the globe to consider outsourcing to Transcend and to the Palestinian territories.”
This article is sourced from Power Technology sister publication www.meed.com, a leading source of high-value business intelligence and economic analysis about the Middle East and North Africa. To access more MEED content register for the 30-day Free Guest User Programme.