3. Four tips to naming your startup – The Story of a Startup in Palestine

What’s in a name?

Propozal.com was our first official name, but we changed it after several months.  The main problem with that particular name is that after we pivoted a few times and changed the focus of our business, the name stop reflecting what we were doing.  When people heard Propozal.com, many were under the impression that we were a proposal builder or database (which we were when we first started).  Another problem with the name was that by replacing the “s” in proposal with a “z”, it was very difficult to find us online after hearing the name mentioned.

While there are many sites and tutorials that provide much greater insight into choosing a name for your startup, I can share the criteria we stumbled upon when we selected the name AidBits.

  1. Keep it short.  Selecting a company name that is 20 letters long can be hard to remember and spell.  We decided to combine two short words or modify an existing word.
  2. Make it relevant, but not too specific.  Propozal.com was not a good choice because it seemed like it was directly related to writing proposals.  The moment we shifted our focus, the name stopped reflecting what it is that we did.  You will definitely change your business a number of times so have the name focus more on the area or sector rather than what the tool is.  AidBits on the other hand reflected the sector we were targeting (Aid – both humanitarian and development aid) and Bits in reference to computer bits and bytes to reflect the technology focus of our company.
  3. Be careful of a play on words (intentional misspelling), because most people won’t be able to find it in the future.  If you’re on the phone or in many cases, a meeting or an event where you mention the name of your company, unless you have a business card to hand out, there’s little chance that people will find you even if they want to.  A common response when we gave people our business cards is: “Oh, Propozal with a z, we were looking for proposal.  Now we know why we couldn’t find you when we Googled your name”.
  4. Find the domain name.  This is one of the more difficult exercises.  If you’re building a mobile app or game, you could probably get away with a domain name with any TLD, such as .co or .biz or .info. If you’re building a web application, you should definitely have a .com or .net.  You can easily check whether a domain name is available or reserved.  Godaddy and Network Solutions are a couple of sites where you check and purchase domain names online.  Note that this process takes a lot of time unless you have a really weird and unusual name.  The chance of finding a good domain name on the first day is very unlikely.  I can’t remember exactly how long it took us, but it took weeks, not hours or days.  Some tools to help you find both a name and domain name at the same time are: http://impossibility.org/ and http://www.bustaname.com/

The most important thing is to get feedback and ask others what they think of your name.  If everyone else but you thinks the name is terrible, chances are it’s terrible.  If you’re juggling around a few options, survey people and ask them which name they prefer and why.  Make sure you reserve the domain name if you think the name is a likely option for your startup.

Deciding on a name for your startup is a big step.  Once you have a name you’re happy with, you can start sharing your name with others and start to get your brand known, even if it’s only to the people around you.  What I would highly recommend after that is designing a logo. In designing a logo, you have a number of options:

  • If you have decent design skills, you can design it yourself
  • There are a number of free logo design tools available online.  From my experience with them, I haven’t found any that are even half decent
  • Hire a designer to create a professional looking logo.  This can be someone from within your network, or you could probably find people on elance or other freelance sites.  This option will probably set you back a few hundred dollars.
  • Start a competition using sites like www.99designs.com

Now that you’ve picked out a name and your logo design is ready, create a quick website.  It doesn’t have to be anything fancy at the moment, as long as it’s not an “Under construction” page.  The last thing you want is someone to be interested in learning a bit about your company, only to find that your site is under construction for weeks or months.  There are a number of tools, such as wix or even WordPress, that will help you quickly create professional looking sites.  For a start, have some basic information about your product, your target market and some way for people to contact you.

If you have a designer, I would also suggest having them design business cards for you and your future team.  Again, it doesn’t have to be anything complex; your name, company name and logo, phone, email and website should be enough.  You can throw in an address, a QR code, your Skype ID or anything else you think is important or nice to have on your card, but I definitely wouldn’t overdo it.  In Ramallah, I found that iPrint does a great job and we use them for our printing needs.  The quality of their work is great, they’ll usually finish the work for you same day or the next, and their prices are reasonable.

2. The co-founder: What to look for? The Story of a Startup in Palestine

I’ve been dreaming of starting my own company ever since I was 17, maybe even before that time.  There have been numerous attempts to execute on the great ideas that pop into my head while I’m lying in bed at night or staring at the television in the evening.  The one common theme is that all these ideas ended up fading away, some in as little as 15 minutes and some took weeks before they left.  In some cases, I would actually register a domain name and start working on a prototype and try to write up a brief business plan.  Looking back, one of the reasons that I didn’t pursue these ideas wasn’t that they were bad ideas or they didn’t have a market, but what I feel were due to a lack of a co-founder.  We all need someone to talk to when the going gets tough, which it definitely will, someone to bounce ideas off of, and someone to help carry the burden of creating and running a company.

While I had known my co-founder, Ibrahim, for a while, we never really thought of starting a company together.  Like me, he had a lot of ideas that he was trying to bring to life.  We would sit together every once in a while and discuss ideas and talk about how we each individually wanted to create something for ourselves.  It wasn’t until one evening that we were sitting down together that he said he had this idea and asked if I was interested in joining.  He had the name and the idea, but still hadn’t really started execution.  He had validated the idea with a few people and saw this as a pain that we can address.  As we began to talk about the idea, we both saw amazing possibilities.  We both agreed that we’ll work on this together, and that’s how the partnership was born.

In my view, having a co-founder is a must. Many investors won’t, or are at least hesitant, to invest in a startup with only one founder.  Having more than four is usually a bit too much as well.  Even the big names that we think of like Yahoo, Microsoft, Apple, Google and Facebook all had more than founder.

If I had to look for a co-founder all over again, here’s a quick checklist that I would use:

Not a “Yes man”, someone to challenge you

The last thing anyone needs when starting a company is people around them agreeing to everything they say.  It’s crucial that someone plays the role of devil’s advocate and brings up all the what-if situations.  Remember, that if the co-founders themselves aren’t 100% convinced of what they’re building, it will be extremely difficult to convince customers.  Having someone to challenge you can cause serious headaches, but will also result in a much better product.

We have had many discussions where the whole team wanted to pull their hair out.  I think that’s normal as long as people know how to resolve their differences and not be sensitive if someone critiques their ideas.

Someone you can get along with

As co-founders, the two (or more) of you, are going to spend a lot of time together, and when the real work begins, such as incorporating the company and getting an investment, a split-up is a nasty thing that could destroy many things, including the company.  Having someone that you can get along with is crucial.  If you can’t stand the person while you’re still starting the company, chances are you’ll hate them even more in the coming weeks or months.  Save yourselves from the agony and headache and think of other people you could partner with.

Someone who you can rely on

Building a company is hard enough as it is.  Having to hold someone’s hand along the way will most likely cripple the company you’re trying to start.  A clear telltale sign that the co-founder isn’t right for you is if you have to tell them what they need to do and assign tasks to them.  If your co-founder treats the startup as a job, chances are they’ll leave you the moment things take a turn for the worst, or when they get a better offer somewhere else.  You need to be able to trust that your co-founder will take care of their part and help you carry the company in the same direction that you both agreed to.

In our case, we decided to divide our roles.  My focus would be outside the company and Ibrahim would focus more on the internal operations.  I’m more involved in sales and marketing, talking with customers and the finances, while Ibrahim is taking more responsibility over product development, working with the team and making sure the inner house is in order.  This doesn’t mean that I don’t know what’s happening with the team or Ibrahim doesn’t know where we are terms of finances or doesn’t help out with marketing.  Quite the contrary, we’re both aware of and involved in all aspects of the company, however each person has a different list of tasks that they need to complete.  It’s very important that, as co-founders, we’re each aware of what’s happening in the company.

Someone with experience who can complement your skillset

If you’re a developer, finding another developer as a co-founder will probably help you create a well-structured application, but you’ll have a hard time building something customers will buy and you’ll probably find it difficult to sell to customers that don’t understand how great your product is.  If you’re a marketing expert, finding another marketing person as a co-founder can help you sell like crazy, but you probably won’t have anything to sell.  It’s very important that you find someone with skills that compliment your skills, and you’re each able to focus on different areas.

One of the problems that we ran into was that we would do everything together.  When we were meeting with potential customers, we would both work on the presentation, then we would realize that we needed to work on the platform, so we would both run off to development for the next couple of weeks. If we were talking with a potential investor, we would both leave everything and spending the next week or more preparing answers and spreadsheets for the investor.  We quickly realized that when we start to work on one thing, everything else gets left behind.  That’s when we decided to split the work, agree on tasks and have each one of us focus most of their time on specific areas.

1. The Idea – The Story of a Startup in Palestine

This post is a continuation of the previous post.  The title of this series of blog posts is “The Story of a Startup in Palestine: What I’ve learned in the past 16 months”

The idea itself is useless

While we read it over and over and hear about it so many times, some people here still have the notion that their ideas alone are valuable.  That’s the reason they never share their ideas and protect them as if their lives depended on it.  No one cares about your idea.  No one is going to steal it, and even if they do, it doesn’t matter.

So why doesn’t it matter? If you share idea with others, this doesn’t mean you’ll execute on it, so if you don’t, you really have nothing to lose if they actually use it to build a company.  You just inspired someone else to build something and it didn’t cost you anything except saying a few words.  If you do execute on it, then you run the risk of competition.  However, if someone has the intention of “stealing” your idea, they can just as easily “steal” it after you’ve gone through all the trouble of building your company.  So, after you spend months and months trying to build your company, the moment you announce it to the world, someone else could build something similar and better.  It’s BS that just because you’re first to market you will remain number one.  There are many examples of where being first to market did not result in the company surviving.  Some simple examples from our present time are:

  • Yahoo, Alta Vista (who?) and Google.
  • MySpace, Friendster and Facebook
  • Blackberry, iOS and Android
  • Netscape, IE, Firefox and Chrome

I’m sure some people had never heard of Alta Vista, which at one point of time was the best search engine available.

Validate, validate, validate: It doesn’t matter what you think, you must validate, challenge them to hate your product. 

The upside to sharing your idea is that you can get constructive criticism on it.  Many people will tell you that it sucks if they think it does.  Don’t take this is an insult and never try to defend your idea.  Instead, ask why they think it sucks and what they would change to make it better.  In the end, it doesn’t matter if you have the best idea in the world, the best team, the best market and the best product.  If your product or service doesn’t sell, you won’t last for very long.  And the only way to sell is to have people who are willing to pay for what you offer.

Customer validation is key to determining whether people are interested in your product or not. It’s important to try to find people who are willing to give their honest feedback, and to spend more time listening to their problems rather than talking about your solution.  If everyone you speak to tells you your product is great, that means you’re not asking the right questions or you’re not talking to the right people.  Go out and challenge people to find problems with your product or service.  Ask them why they wouldn’t pay for it rather than trying to get a good feeling that you’re amazing.

Don’t be afraid of change

As a result of customer validation, it’s almost guaranteed that your initial idea isn’t the best thing you can build or offer customers.  Many people will give you advice on what to build and how to make your product better.  Listen carefully to these comments, think about them and try to validate them with customers.  Many entrepreneurs feel that changing their idea is an insult to their intelligence.  It shouldn’t be like that.  The main reason you started a business is to sell to customers.  If most people agree that they would rather buy a modified version of what you’re trying to build, it would make more sense to at least consider the idea.

When we first started, the idea had nothing to do with what we’re building today.  We started off as a database of tenders and Requests for Proposals (RFPs), and we initially called the company Propozal.com.  We then went out to try to validate our idea.  During one of our first meetings, we heard a comment that we’re trying to do too much, and a suggestion to focus on one sector, such as the non-profit sector, which we thought was a good idea.  We continued to brainstorm and thought we would add more features, like a proposal builder, since the RFPs are already there.  We then thought of adding a project implementation module to capture the entire cycle from requesting proposals, to writing and submitting them, to project execution.  For the non-profit sector, one of the most important aspects of project implementation is monitoring and evaluation (M&E).  So, we created our slide deck and went around presenting our idea of a complete end-to-end platform, RFP database, proposal builder and M&E tool.  During one of our meetings, we received a comment that all the services we’re providing are great features to have, however the most important one by far is the M&E tool.  Using this knowledge, we went around some more and asked people what the most important feature was in their view.  In all the cases I could remember, it was the monitoring and evaluation tool.

Clearly, we found something here and there was some sort of need.  We redesigned the slides showing only the M&E component and again started asking around.  The feedback we received showed us that there really is a need for a dynamic M&E tool.  When we saw that we’re moving away from both the RFP database and proposal builder, we realized that the name Propozal.com didn’t reflect what we were building, so we decided to change it to AidBits.  I’ll talk about how we chose the name in a later blog post.

On the other hand, had we stubbornly stuck to our initial idea, we would have built a great product that no one was willing to use or pay for.  Companies die because no one is willing to pay for the products or services they sell.  It doesn’t matter how good or even amazing your product is, if you can’t make at least enough money to cover your expenses, eventually your company will cease to exist.

Bottom line: who is your customer and why should they care

This is one of the more challenging areas, because many people have the wrong impression that if your market is everyone, then you’ve just increased your chances of selling.  On the contrary, if everyone is your customer, no one will buy from you.  Simply put, you can’t market and sell to an athletic male teenager, the same way you would to a 40-something rich business man, the same way you would to a 70-year old grandmother.  You stand a much greater chance of success by focusing a segment (or few segments) of customers and identifying what your ideal customer segment (or segments, but don’t choose more than 3 at first) looks like, talks like and how and why they would buy your product.

When you figure out who your customer is, then you can jump to the next step of determining why they should care about you, your company or your product.  Just because you believe you’ve found the miracle product of the 21st century doesn’t mean anyone else feels the same way.  The best way to really know whether they actually like what you offer and are willing to pay for it is through customer validation.  If you get to a point where you think that you’ve exhausted all possible questions and the person you’re talking to likes the product, then you should go ahead and ask them to buy it.  Whether it’s discounted or not, if someone (other than a friend or relative) is willing to pay you for your product, that means you’re on to something.  If you can repeat this a dozen or more times, then it’s likely that you’re on the right path.  If you really, really want to test if there is a need for your product, after you have them completely convinced of your product, try to persuade them not to buy it and that it’s not a good fit for them.  This isn’t something I recommend you do frequently, but would be interesting to try and see the reaction.

The Story of a Startup in Palestine: What I’ve learned in the past 16 months – Introduction

What this series of blog posts is all about

It’s been 16 months since we started AidBits. While it definitely doesn’t feel that long, going back through the first emails we had about AidBits (or Propozal as it was called at the time) shows that time moves on and it’s up to us to make the most of it.  While there are tons and tons of resources, both online and offline, that discuss entrepreneurship and how to build a startup, I found very little experiences shared about building a startup in Palestine.  While there are many successful entrepreneurs here, I felt that what is missing is a guide for entrepreneurs in Palestine.  While I won’t claim that this series of blog posts is a complete guide for startups in Palestine, it is a collection of the experiences I went through during these past 16 months.  I hope that the stories I share will help other entrepreneurs avoid some of the mistakes we made.  I welcome comments, questions and advice, as I would be extremely delighted if this series turned into an interactive discussion.

Creating and running a startup involves many different aspects, and while I won’t be able to dive deep into every single aspect of what we’ve been through in the past 16 months, I will try to organize my content in 11 blog posts.  For the first post, I’ll start out by talking about the idea and the process we went through.  Next, I’ll talk about finding a co-founder or co-founders and what to look for and what to avoid.  In blog post 3, I’ll discuss how we got started with AidBits and some of the things we had to do in the beginning.  Then, how to find and acquire customers, and building the team that will help you deliver your product or service to your customers.  Along the way, there were opportunities for contracts or jobs that I was offered, and blog post 6 discusses saying no to these opportunities.  The next blog post talks about financing your startup and then I walk about some of the legal challenges we went through.  Perhaps one of the more difficult aspects of creating a startup is the psychological and social pressures, which I’ll cover in blog post 9.  I’m leaving the investment post until near the end, as I feel I’ll have a lot more experience in this area by the time I launch post 10.  I’ll end off with some final thoughts about what we feel is next for us and the company.

My goal is to release a post every Monday.  While reading this, please let me know if there are certain areas that I haven’t planned to cover.  While I’m in no means an expert, my goal is to share what I’ve learned so far.  I’m hoping that we can not only learn from each other, but also use our collective knowledge and experiences to really improve the startup ecosystem in Palestine.

Why we started AidBits

“To change the world” or “to become a millionaire” seem like the more common answers to this question.  While everyone has aspirations of having a large influence and financial stability, these should never be the reasons to build a startup.  The real reason we started AidBits was because we wanted to build something great that we can be proud of, both as a product that we can offer our clients and as a company that we can call our own.  More importantly for us, we go to sleep every night and wake up every morning thinking about how we can make AidBits a great company.

I left my very-nice-paying day job because, although the money was good, I wasn’t satisfied.  I didn’t feel that we were building an amazing company.  I didn’t feel that we could sustain ourselves for the long-term.  Back then, it was difficult for me to stand up and tell people why we’re better than anyone else and why customers should come to us.  I felt that I really couldn’t shape the company or my future in the way I wanted.  So after having spent over 14 years in a number of technical, leadership and managerial positions in Palestine and Canada, I felt that now is the right time to take the plunge and start something of my own.

Starting and running a company is very, very hard, but don’t lose hope.

The reason I mentioned my experience is because I believe this is something that is almost always overlooked. There is a tendency to believe that startups are created by college drop-outs or young, energetic new graduates.  Hence, most organizations are focusing their efforts on how they can help young entrepreneurs.  While I definitely think it’s extremely important to focus and train new graduates, the majority of startups are built by 30-somethings who have built products, worked with customers, managed teams and eventually reached a point where they’re sick of their current situation and they believe they can build something much better.

Despite my 14+ years of experience, I found that building a company is extremely hard.  There are so many things you have to think of and account for, and so few resources available.  I find it very strange that people believe in the idea that someone who just graduated from university and who has never worked a day in their life, can start and run a company successfully.  It can happen, but this is not the norm.  I don’t want to get ahead of myself and will talk about some of these challenges in the upcoming weeks.

Still, if a team is focused, committed and willing to listen, creating a successful company is definitely possible.  It does however take time, so don’t expect any overnight successes.

Palestine isn’t the easiest place to run a business

The last I checked, Palestine was number 138 on the World Bank’s ease of doing business list.  Unfortunately, that’s no surprise and there are a lot of issues that discourage investors and entrepreneurs to create something in Palestine.  While there are many discussions on how to encourage and train entrepreneurs, a main problem appears when entrepreneurs actually take their first steps, only to find that they’re alone and no one is there to help them during their early days when they need help the most.  I’ll discuss some of the legal challenges we faced along the way, and how we overcome some of them and how we had to cope with others.

No one to blame but yourself. The Bottom line: build a successful company

Many people try to justify why things didn’t work out or how it was someone else’s fault that the company is failing, or how they did everything they were supposed to do and everything is fine but they can’t make any money.  Whatever the situation, if you’re truly set on creating a successful company, that should be your main focus.  The tools you use, how you manage your people, the investors you bring in, and everything else, should revolve around how you’re going to make your company successful.  It requires a lot of hard work, but it’s definitely something that can be achieved.

I’m writing this series of blog posts while we’re deep in startup phase. It remains to be seen whether AidBits succeeds and becomes a hit or whether we use the experiences of AidBits to learn from our failures.

Hi Tech Hub in Ramallah – First meeting evaluation Part 1

Close to 500 people showed up for the first Hi Tech Hub event in Ramallah on Wednesday, September 12, 2012.  The room was packed with students, IT professional, university professors, managers, CEOs, government officials and those interested in the Palestinian tech startup community.

We had two amazing speakers, Wael Manasra and Sami Shalabi, who both traveled from the US  to be with us.  The crowd loved them and after the meeting, it seemed that the two weren’t only entrepreneurs, but more like celebrities with people surrounding them trying to get a few words in and exchange business cards or emails.  The speeches were both fantastic and inspiring and for the most part, I would say that the event was a huge success.

However, I think it’s important to note that nothing is perfect and even the best event can have a few glitches that we can improve for next time.  I wanted to start with the areas for improvement and later write another article describing the strong points of the event.  In my view, the areas that we could improve are:

1. Sound: the hall was large, there were a lot of people and the speakers weren’t distributed/working properly.  The doors were open and there was a lot of sound coming from outside, especially in the back. The speakers were each holding a microphone which I quickly realized wasn’t the best choice.  Every movement and the volume would change.  If the speaker moved hands or shook his head, the voice would fade.  Next time, I think it’s very important that we try to replace the mics with the headpiece mics, it will give people the freedom of both hands as well a constant volume.  While we’re at it, there should have also been a clicker for the PowerPoint slides so that the speakers could control their slides without having to go back and forth to the laptop.

2. Organization: While great efforts were made to make sure that everything was planned properly, we started a little late, the pitching section got way out of control.  Next time, startups pitching will be told they have two minutes and understand there is a timer in front of them who will hold up cards to show them how much time has passed.  Anyone over 2.5 minutes will be disqualified from any prizes.  The intent was for the event to be informal, that doesn’t mean it has to be unorganized.

Other comments I heard:

3. The voting wasn’t fair:  I don’t really understand it when someone says that the voting wasn’t fair.  It was open, democratic and transparent.  Anyone could vote for whoever they wanted and everyone was given one vote.  Many times it is a popularity contest or those with the greatest supporters win.  That’s one of the facts of life, it doesn’t have to be fair because life isn’t fair and most of the time, neither is business.  So what can we do about it?  We need to do a better job of attracting customers/votes and show them why our product or service deserves their support.  The other option for voting was to have a committee evaluate the startups and then we would have an even larger number of people telling us that the voting wasn’t fair.

4. The selection of startups to pitch wasn’t fair: I can understand this point.  The only option we had at the moment was to get nominations of startups and ask them to pitch during the event.  We will need to find a better criteria for selecting startups, but unfortunately, the time and space are limited, whereas there are a lot of startups that would like the opportunity to pitch their ideas.

5. Better content was needed: I think the content delivered by the two speakers was great, we just needed a better sound system with the crowded room.  For the pitching, I think better organization of the event could have cut the pitches into two minutes each like they were supposed to be.  I don’t know if that would have solved the problem, but I’ll have to ask more about this point and get more feedback.

I’ll write another article soon to describe what I think are the strong points of the meeting.  In all cases, I’d be really happy to get feedback and comments on other things that we can improve.

The Palestinian Entrepreneurial Spirit – Part 3 Education

Continuing on to my third post on the Palestinian entrepreneurial spirit with a focus this time on the education system in Palestine and how it contributes to the startup culture.  In brief, I don’t think it does whether we’re talking about grade school or college/university.

First of all, for most of us, we’re educated/trained/raised to believe that the best outcome we can achieve after graduation is to get a good job at a respectable company.  Unfortunately “good” usually refers to salary and/or stability when it comes to getting a job.  While I have no objections to people finding stable, well-paying jobs, I feel there are a lot of people who can do much more and that they’re limiting themselves by taking the easy way out in life.  I also believe that, as a result of this mentality, most people don’t like what they do.  They don’t enjoy it and they don’t find value in it, and as a result, they don’t innovate, they don’t try to go above and beyond what they’re asked to do.  They do the bare minimum to keep their bosses happy and not lose their jobs in hopes that another stable, better paying job comes along.

Second, our education system, unfortunately, is still based on memorization rather than innovation.  In most universities, I have no problem with the courses that are taught, but rather with the method of teaching.   We don’t push our students’ imaginations and we keep them in a very comfortable environment.  Instead of pushing our students and helping them reach and exceed their limits, we keep both professors and students in their comfort zones.  As a result, after graduation, students lack many of the soft skills that they should have gained during university, especially in terms of soft skills (i.e. communication, presentation, time management, etc…).  Students spend four to five years in university and yet end up with a lot of information/knowledge that really isn’t practical or useful in real life.  Sure it’s important for students to evolve their way of thinking, but eventually it all becomes just how much information a person can store in their head.  Information which really is useless in most real-life situations.

Third, the application of university research is an area where there’s a lot of talk and little action.  Universities should utilize their professors and students to conduct research.  Research that the private sector can benefit from either by existing companies or startups that spinoff from a particular research.  The private sector and economy would greatly benefit from such actions, but I think there also needs to be a loop where benefit also returns to the university professors, who hire more students to do more research and encourage other professors to conduct research.  This will generate more ideas for the private sector and the loop continues and grows.  The main problem is that university professors aren’t incentivized to conduct research.  There’s nothing in it for them, it isn’t required for them to keep their jobs.  They don’t make more money, they don’t get funding.  For them, it’s just a cause for a headache while they could be doing something more gratifying for them.

What we really need is to evolve our teaching methods in Palestinian universities (and hopefully even grade schools).  We should train students on solving real problems, not just storing information in their heads.  I think most university exams should now be open-Internet (very few are open-book), because if it’s available on the Internet, why bother storing it in a student’s head.  Give them access to the tools and push their limits, ask them difficult real-life questions.  Questions that don’t necessarily have one correct answer.  Have them present their findings, defend their ideas and pitch their initiatives.  Let’s treat universities like the industry, when it’s not just about doing the bare minimum, where a software application has to actually run and do what it’s supposed to, with minimal problems.  Let’s raise the bar for our students and they will follow our lead.

We need to encourage professors to conduct new research.  Give them the tools and funding they need to hire research assistants, purchase material and equipment and pay for seminars and workshops.  Since the Palestinian private sector will benefit most from their research, I think the private sector should be the leader in providing research funding.  Given the government’s financial situation, we’ll be waiting for a long, long time before we see any commitments to support and fund new research.

Impacting the education system in Palestine is probably one of the most difficult things to do, but I think there are a couple of universities who are adventurous and ambitious enough to actually try something new.  Getting a couple of success stories is usually the spark needed to get the innovation engine going.  But it needs to be planned, it needs to organized and it needs to happen soon, before Palestine is left too far behind in terms of innovation.

The Palestinian Entrepreneurial Spirit – Part 1 Funding

Lately, I have become extremely interested with the Palestinian entrepreneurial scene and am trying to understand where the problems are.  There’s so much talk about encouraging Palestinian startups.  I’ve even heard that there are 78 organizations within the Palestinian areas that support Palestinian startups.  I’ve heard this number mentioned in a meeting once, so I’m entirely sure how accurate it is, although I don’t think it’s far fetched.  It also seems that not a week goes by without some event talking about startups and entrepreneurship.  My question is with all these events, initiatives and organizations dedicated to supporting aspiring entrepreneurs, why haven’t we heard of any success stories?  Assuming there are 78 organizations dedicated to supporting startups, why haven’t we seen 78 success stories, or seven or even one really successful story?

Now there are a lot of factors that come into play here and I’ll try to go over each one and I would really appreciate any feedback, comments or questions to make this a lively discussion.  While I probably won’t discuss all the factors, I’ll try to cover the main ones I can think of, namely: funding, ideas, business environment and education.

In this first part, I’ll talk about investment options and funding for Palestinian startups.

Funding: I’ve heard over and over again that there aren’t enough investors in Palestine that could support the startup community. There are actually two problems here, one that people don’t believe there is investor money and the second is that most would-be entrepreneurs don’t want to give up part of their company when they take outside investments.

What I’ve seen so far is that there are a lot of investors here in Palestine.  I believe that from many of the 78 organizations that support startups, many would be more willing to support them financially.  However, the assistance they receive usually isn’t more than $20,000 USD, which in most cases should be sufficient to help a smart startup run for up to 6 months.  From what I’ve also heard is that these funds are usually grants, i.e. the entrepreneur doesn’t have to give up part of his company.  But what if someone needs much more than$20k?  Well, there are VCs, Private Equity funds, angel investors and more.  While the number may not be equivalent to that in the US or Israel, demand will generate supply.  If we start to see a huge demand for VCs, others will start to appear.  Angel investors are out there, but they don’t label themselves as such, so they can be a bit harder to find.  There are many people/organizations that would be more than happy to invest in a startup team with a great business model.  But it is the responsibility of the startup to pitch the idea properly and get the interest of the investor.  I don’t think it’s fair to conclude that no one will give money when you haven’t really approached enough people or there are serious flaws in your business model.  I’m sure that if one is really persistent, they could also find outside investors who would be willing to help (again assuming that they have a solid business model).

You can’t have your cake and eat it too:  The second problem related to funding is that startups don’t want to give up a stake in their companies.  While understandable that we would all like to keep as much as we can of the company, an investor’s interest is to maximize return on their investment.  They’re not a charity giving out money, and they won’t invest unless they truly believe in the business idea and the team around it.  That’s how the investment system works, they invest and buy a portion of your company.  Usually, the bigger the risk the more of a stake they’ll take.  If you can de-risk your startup, you might be able to get more money or get to keep more of your company.  So I don’t switch focus of this blog post, I’ll try and talk about de-risking in another post.

Personally, I would prefer to have 70% or 50% or 30% of a company that’s worth $1 million rather than have 100% of a company that’s worth $1000.  Investors are partners in the company and one has to choose them accordingly.  You shouldn’t just look at the amount of money they’re offering, but also ask, can this investor add value to my startup?  Will they be helpful in promoting the company and discussing the vision/strategy and helping tackle the problems we face?  If not, then maybe you need to keep looking for other investors who will.

Of course, there are two other options when it comes to funding, FFF (friends, family and fools), but from my experience, while this maybe easy at first, it gets more difficult later on when you’ve borrowed from everyone you know and unless you have some really rich friends/family or fools that you are close to, the amount each person gives won’t cover much.  In some cases, I know people have treated FFF as investors and given them a small amount of shares in their company.  The second option is bootstrapping and tightening the belt (more than it already is).  This can be a powerful method if you have a side job, which can serve as your primary source of income until the startup is able to walk on its own, or if your startup is already bringing in revenue and you don’t need vast amounts of funding to grow your operations.  The bright side here of course, is that the entrepreneurs get to keep all of the company of themselves.  I think that startups differ in their financial requirements and each startup should determine how much they need and when they need it.

There’s more money than we think, but again these are investment funds, not giveaways, so for someone looking for investors in Palestine, be prepared to give up part of your company, and more important keep pitching.  If one investor doesn’t like your idea, that doesn’t mean others won’t.  Keep pitching to anything that moves, listen to feedback on your business and continuously evaluate.