Dubai Gets Y Combinator Style Incubator: SeedStartup [Interview]

10 startups will get up to $25k USD for for a period of 3 months come next September from SeedStartup, a Dubai based incubator that plans on graduating 40 startups from Dubai, burning $1 million over a 12 month period.

Dubai is mostly known for it’s position in the region as a major trade and logistics hub. A description you won’t normally hear, is it being fertile startup environment for nurturing ideas & entrepreneurs. SeedStartup plans on changing that, at least for some.

The push for entrepreneurship in the region is relatively new and being lead by private equity firms and governments to create more jobs, more money, and possibly less political revolutions while they’re at it.

Over the span of 3 months entrepreneurs with ideas for web or mobile apps will grind and bump to develop a marketable product as long as they have the technical & business know how to pull it off. Or at least the technical skills.

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SeedStartup as adequately described by blogger Mohammad Al-Sahli follows in the footsteps of Silicon Valley based incubator Y Combinator, an incubator that brought the world services such as Dropbox & Disqus using a similar investment model of a maximum of $20k USD in each startup they accept, which happens twice a year.

Seed Funding helps startups develop the idea, then create & market the first product. Entrepreneurs targeted by Angel Investors and Private Equity for Seed Funding usually don’t yet have a product or service ready for commercial sale for lack of funding or business maturity.

SeedStartup was founded by Rony El-Nashar, with investors covering a broad spectrum of expertise from CEO’s to Angel Investors with deep pockets and an entrepreneurship lining.

Beginning with Rony El-Nashar who currently holds the title ‘Head of Direct Investments’ for Khalifa Fund for Enterprise Development in Dubai, UAE as well as having founded multiple successful startups, SeedStartup’s founder understands the importance of finances, and even more importantly mentorship to foster entrepreneurship.

Gathering an impressive list of mentors and entrepreneurs SeedStartup is bolstered with experience from the likes of Khaldoon Tabaza, Ahmed Takatkah of N2V, Habib Haddad of Yamli, Dan Stuart of GoNabit, and the list goes on and on providing experience on everything from product expertise to investment. You can find the names here.

We contacted Rony El-Nashar to get a better understanding of the incubator and asked him a couple of questions, here’s what he had to say:

TNW ME: How much capital have you allocated for seeding for the first 4 batches?

RE: $1 million is earmarked to provide seed investment for the first four batches of startups. Accepted teams consisting of 2 founders will receive an investment of $20k. Teams with 3 or 4 founders will receive $25k. We believe the ideal founding team consists of 2 or 3 founders. We will not accept applications from single founders, so if you’re on your own go out and find a co-founder with complementary skill sets before applying.

We’re also in the process of fund raising for a larger seed fund which will allow us to provide follow-on investment of up to $250k in selected graduates of the SeedStartup program.

TNW ME: Why make this project personal? How is this different from Khalifa Fund?

RE: Khalifa Fund and SeedStartup are very different. I don’t think it makes sense to compare them. Khalifa Fund is a UAE government development organization whose mission is to foster entrepreneurship in the UAE. Khalifa Fund only funds businesses that are

1. Based in the UAE and
2. 100% Emarati owned

Khalifa Fund is a generalist fund and provides mostly debt-based funding to businesses across a variety of sectors, from small scale lifestyle businesses (handicrafts, retail, cafes, etc) to larger industrial projects.

On the other hand, SeedStartup is a privately held investment fund and focuses solely on technology startups – specifically, those whose products are web apps or mobile apps. We are open to entrepreneurs from any country, residing in any country. However, we require that they are able to live in the UAE for the duration of the 3 month program. Although we’re open to entrepreneurs globally, given our location I would expect most applications to come in from countries of the Middle East and North Africa (MENA). So far we’ve received applications from Egypt, Jordan, UAE, Saudi Arabia, Qatar, Spain, and the U.K.

TNW ME: SeedStartup gets 10% of successful startups, why is the initial seeding period 3 months?

RE: I think this is a fair equity stake given the stage of the startups we’ll be investing in. In addition to being an investor, I’m also an entrepreneur. And as an entrepreneur, I understand the importance of both parties feeling they are getting a fair deal. This is critical in order to have a fruitful, long term relationship. The founders have to remain incentivized and the investors have to be compensated for the risk they take. The 10% stake accomplishes both.

SeedStartup is a startup accelerator. 3 months is enough time to refine your idea, get feedback from potential customers, build your product, go to market, and iterate several times – all the while getting critical input from experienced mentors. It will be intense, but you’ll be surprised how much you can accomplish in 3 months. Within this timeframe we’ll help the founders take what is essentially just an idea or early prototype and turn it into a market-validated, fundable business that the founders will pitch to investors at investor demo day.

TNW ME: Will things like office space/hardware/logistics be provided to successful applicants or will they be facilitated and deducted from the 25K?

RE: SeedStartup is not an incubator in the traditional sense. Although we will have a large shared space the founders are able to work out of if they choose to, they’re free to work from wherever they want. If you want to code in your underwear at home, go for it. If you want to work out of a coffee shop, feel free. We’ll be holding regular office hours where the entrepreneurs are free to come in and get advice about any aspect of their business. In addition, we’ll be having weekly masterclasses and panel sessions by successful entrepreneurs, investors, and product experts from SeedStartup’s mentor network.

The core value of our program isn’t the office space of even the investment itself. It’s the access to our incredible network of mentors who can really maximize a young startup’s chances of success. The face time with venture capitalists and angel investors who may eventually invest in your startup doesn’t hurt either.

TNW ME: What are the type of projects you expect to get applications for the most? What type of projects do you hope on getting most?

RE: SeedStartup will only consider startups whose products are web applications or mobile applications. I don’t want to frame people’s thinking into specific types of apps. We’re open to B2B and B2C. Anywhere there is innovation (even incremental innovation) is interesting.

This even includes taking proven concepts in other parts of the world and localizing for the regional markets. This to me is incremental innovation and many of the successful web startups in the region have done exactly this. If you’re solving a real customer pain, in a large market, with a differentiated offering, I’d love to take a look at what you’re working on.

TNW ME: Why insist on having the entrepreneurs physically be in Dubai?

RE: It’s important for the founding teams to be physically present in the UAE to really get the most out of the SeedStartup experience. We’re going to be having weekly meetings where each team presents the progress they’ve made throughout the week to their peers and mentors.

This is an important chance to get frequent feedback and advice. The mentors will also be pushing the founders they’re paired up with to consistently show them tangible progress. It’s going to be intense but very rewarding at the end. Plus it’s also going to be a whole lot of fun! As a comparable example, consider the value you get from taking an online virtual class compared to physically attending the exact same class and interacting with your peers and professors. Night and day.

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Close followers of the incubator scene realize it’s not just location that makes a good incubator, it’s the atmosphere & people. And since Dubai certainly has a large number of Venture Capitalists and Equity firms it does seem reasonable to place SeedStartup there.

While other incubators in the region usually go for countries like Egypt & Jordan, where fresh graduate engineers and technical talent is more of abundant resource than in Dubai, the latter does have its financial advantage few would dispute.

It will be interesting to follow SeedStartups progress as we plan on doing, but wonder what it is entrepreneurs in the region would prefer, close to home? Or close to the cash? Let us know in the comments.