By Alice Bosley and Patricia Letayf, Co-Founders of Five One Labs.

At Five One Labs, we work with idea or early-stage entrepreneurs from diverse communities to launch scalable, innovative businesses. We’ve had the privilege to work with tech startups like Dada, PHARX, Khanoo and more, and deeply understand the struggles that entrepreneurs who pursue apps, SaaS (software as a service), e-commerce solutions and more face in Iraq’s context.

Based on our work in the Kurdistan Region of Iraq (KRI) over the past two years, we have been able to identify some of the most pressing challenges tech entrepreneurs and the startup community encounter.

The top five challenges are described below:

Challenge 1: Online-based businesses don’t legally exist in Iraq.

Registering businesses in Iraq is a costly and time-intensive process in the best of times, but it is made even more difficult because of the lack of law regulating online or technology businesses. E-commerce sites, SaaS, applications etc are not legally considered businesses, and cannot be registered as such. Entrepreneurs establishing tech startups are often left without the protection and freedom provided by being legally registered.

When entrepreneurs choose to register their tech businesses, they must register as a traditional business and open a brick and mortar location. They could choose to register as an “office,” which is the least expensive choice, but an ‘office’ registration could negatively impact the entrepreneur’s ability to take equity in the future. Other registration choices are more expensive and time-intensive.

The registration challenges that both tech and non-tech business face have been recognized by many, including Orange Corners, an initiative launched by the Dutch Government. In November Five One Labs and Orange Corners will release a “Roadmap” for business registration in the KRI, which will also highlight the registration experience of tech businesses. A similar roadmap will be published by KAPITA on the business registration process for Federal Iraq.

Challenge 2: The digital skills gap in Iraq increases the time and cost of launching a tech startup.

Launching a tech business, be it a mobile application or a website, requires a certain level of digital and technical skills, particularly as the business grows past its initial stages. And if an entrepreneur building a tech startup does not have the technical skills herself, she will need to enlist the support of developers and coders to build more complex prototypes to be able to test her product.

While digital skills and literacy are important for entrepreneurs — be they inside Iraq or outside — the skills gap in the Middle East, especially in Iraq, creates challenges for startup founders in the country. Data on computer programming education and skills are not readily available in Iraq, our experience working working with startups and anecdotal evidence suggests that the shortage of coders in Iraq has increased the time and cost of launching an app- or website-based business.

A number of non-technical founders that have gone through Five One Labs’ incubator program have found that coders and developers can be expensive, which increases their startup costs and causes delays in launching their businesses.

Additionally, a number have had to work remotely with developers, either in other parts of Iraq, or outside of the country entirely, to have their technical needs met, and many have gone through multiple freelance coders or developers in the early stages of the development of their products. Some non-technical founders also delay the hiring of CTOs, either because of the cost or because of a lack of understanding of the importance of having one on board from the outset.

The good news is that this reality is changing quickly, thanks to some amazing organizations across Iraq. Re:Coded, FikraSpace, and Preemptive Love Coalition’s WorkWell Program have been offering high-quality digital skill-building programs across the country to ensure that moving forward, the country’s youth are well-equipped to participate in the digital economy.

Challenge 3: The cost of launching a business is high — and there aren’t many ways that entrepreneurs can find financing to cover these costs.

In addition to the fact that the costs of building apps in Iraq can be high, tech founders also face high legal startup costs.

The lack of regulation regulating tech businesses can make registration more expensive, as entrepreneurs are forced to consult with and shuttle back and forth between multiple ministries and chambers of commerce who may interpret their startup as a different type of business, which impacts the cost.

Regulations also stipulate that businesses must have a physical office, and a lawyer and an accountant on retainer, which are immense costs for someone looking to launch a startup. Around the world many early-stage entrepreneurs, particularly tech founders, operate their registered businesses from home or from coworking spaces, but regulations in the KRI stipulate that an office (with four walls) is required, and so renting an office whereby a business can register from will likely add several hundred (if not thousands) of dollars in expenses for a new business depending on where in the country they are located.

Given these high costs — the million dollar question for tech founders (and entrepreneurs more generally) is where do they go to offset these expenses and find enough capital to build their business? While we will discuss this in more detail in future posts, options for financing in Iraq are extremely limited. For instance, Arabnet’s State of Digital Investments in MENA report for 2013-2018 shows no publicly-reported investments in digital business in Iraq during that period.

Many entrepreneurs thus self-finance or look to family and friends for funding, and for those who are able to find angel investors, the terms can often be stringent, or investors may seek a majority, rather than minority, stake in the company.

Challenge 4: Cash on delivery is still the norm.

Mobile and e-payment options are growing in Iraq. Asia Hawala, Zain Cash and Fast Pay are mobile payment methods that can and will change the way businesses in the country operate. Pre-paid credit cards, like Qi Card and Zain WalletCard, are starting to allow Iraqis to purchase things online that they were previously unable to purchase. However, there are still a number of challenges with e-payments that cause headaches and risk to technology entrepreneurs.

Nevertheless, mobile payment methods are not as widely used as in other countries. Debit card penetration remains low and only 11% of Iraqis have bank accounts, which means that the majority of online purchases still happen through cash on delivery. Cash on delivery causes a number of problems: first, there’s the risk that customers will not actually pay for what they ordered, and the startup will be left with the burden. Some startups, like ShopYoBrand, a startup that purchases and delivers items from international brands like Zara, IKEA and Amazon to Iraq, makes customers pay a small amount of the total up front to provide some insurance.

ShopYoBrand founder Randi Barzinji said:

“Cash is hard to manage… there are a lot of transactions on a daily basis to be calculated manually instead of having an automatic system do it for you. And this is because the majority does not use an e-payment method yet on a daily basis…The challenge is to convince people for them to gain our trust, so that they’ll pay us ahead of time [to reduce risk]…It’s also important that the customer understands that we can’t order anything either without knowing the customer [and trusting them].”

The lack of e-payments makes expansion extremely challenging as well. Startups operating across the country, like grocery delivery app Miswag or last-mile delivery service Sandoog, have to transport cash from across the country to their headquarters, which is dangerous and time consuming. Balancing budgets can take months, with delays in customer payments and then additional delays in cash transportation.

Challenge 5: Lack of international e-payment options makes international expansion challenging without a foreign bank account.

Iraq, to all intents and purposes, is still disconnected from the international financial system for reasons relating to sanctions and the risk of money laundering. While Iraqis can use prepaid cards to pay for some services – like freelance coders – online (though often these cards do not work), it is very hard to receive money from abroad in Iraq.

OFAC lifted the majority of country-wide sanctions against Iraq in 2003, but the risk of somehow funding proscribed groups is still enough of a barrier that most international e-payment methods do not connect to Iraq. Paypal and Stripe, among other payment services, have restrictions against operating in Iraq. This means that freelancers based in Iraq cannot be paid by foreign clients, and it also means that Iraqi entrepreneurs cannot easily provide their products or services to customers in other countries.

Conclusion

We are optimists, and understand the magnitude of the impact that these startups will have if they are able to succeed. It is up to us and other members of the ecosystem in Iraq (and globally) to better understand the obstacles that cause technology startups in the country to stumble, so that we can ensure that we provide them with the support necessary to overcome them. Our job is to ensure that our early stage entrepreneurs have the support necessary to launch scalable, innovative businesses.

This Sunday, we launched our first incubator in Sulaimani that is fully focused on tech startups. This program is only possible through the generous support of GIZ, and in partnership with IOM and AsiaCell, who will be providing seed funding and services to our entrepreneurs.

Donors and actors across the country are excited about tech entrepreneurship, and we are looking forward to positive improvements in the ecosystem as more people work hard to make meaningful change.

___________

Five One Labs is a start-up incubator that helps refugees and conflict-affected entrepreneurs launch and grow their businesses in the Middle East. Launching first in the Kurdistan Region of Iraq, we aim to empower individuals to rebuild their lives and livelihoods and to contribute to the economic growth of their communities.

Five One Labs entrepreneurs are provided with training; mentorship by world class entrepreneurs from the USA and the Middle East; and a community of creative changemakers to share their experiences with. 

Our vision is to develop an inclusive network of innovators and entrepreneurs that have the support, skills, and connections to positively change their communities and countries. 

By Alice Bosley and Patricia Letayf, Co-Founders of Five One Labs.

At Five One Labs, we work with idea or early-stage entrepreneurs from diverse communities to launch scalable, innovative businesses. We’ve had the privilege to work with tech startups like Dada, PHARX, Khanoo and more, and deeply understand the struggles that entrepreneurs who pursue apps, SaaS (software as a service), e-commerce solutions and more face in Iraq’s context.

Based on our work in the Kurdistan Region of Iraq (KRI) over the past two years, we have been able to identify some of the most pressing challenges tech entrepreneurs and the startup community encounter.

The top five challenges are described below:

Challenge 1: Online-based businesses don’t legally exist in Iraq.

Registering businesses in Iraq is a costly and time-intensive process in the best of times, but it is made even more difficult because of the lack of law regulating online or technology businesses. E-commerce sites, SaaS, applications etc are not legally considered businesses, and cannot be registered as such. Entrepreneurs establishing tech startups are often left without the protection and freedom provided by being legally registered.

When entrepreneurs choose to register their tech businesses, they must register as a traditional business and open a brick and mortar location. They could choose to register as an “office,” which is the least expensive choice, but an ‘office’ registration could negatively impact the entrepreneur’s ability to take equity in the future. Other registration choices are more expensive and time-intensive.

The registration challenges that both tech and non-tech business face have been recognized by many, including Orange Corners, an initiative launched by the Dutch Government. In November Five One Labs and Orange Corners will release a “Roadmap” for business registration in the KRI, which will also highlight the registration experience of tech businesses. A similar roadmap will be published by KAPITA on the business registration process for Federal Iraq.

Challenge 2: The digital skills gap in Iraq increases the time and cost of launching a tech startup.

Launching a tech business, be it a mobile application or a website, requires a certain level of digital and technical skills, particularly as the business grows past its initial stages. And if an entrepreneur building a tech startup does not have the technical skills herself, she will need to enlist the support of developers and coders to build more complex prototypes to be able to test her product.

While digital skills and literacy are important for entrepreneurs — be they inside Iraq or outside — the skills gap in the Middle East, especially in Iraq, creates challenges for startup founders in the country. Data on computer programming education and skills are not readily available in Iraq, our experience working working with startups and anecdotal evidence suggests that the shortage of coders in Iraq has increased the time and cost of launching an app- or website-based business.

A number of non-technical founders that have gone through Five One Labs’ incubator program have found that coders and developers can be expensive, which increases their startup costs and causes delays in launching their businesses.

Additionally, a number have had to work remotely with developers, either in other parts of Iraq, or outside of the country entirely, to have their technical needs met, and many have gone through multiple freelance coders or developers in the early stages of the development of their products. Some non-technical founders also delay the hiring of CTOs, either because of the cost or because of a lack of understanding of the importance of having one on board from the outset.

The good news is that this reality is changing quickly, thanks to some amazing organizations across Iraq. Re:Coded, FikraSpace, and Preemptive Love Coalition’s WorkWell Program have been offering high-quality digital skill-building programs across the country to ensure that moving forward, the country’s youth are well-equipped to participate in the digital economy.

Challenge 3: The cost of launching a business is high — and there aren’t many ways that entrepreneurs can find financing to cover these costs.

In addition to the fact that the costs of building apps in Iraq can be high, tech founders also face high legal startup costs.

The lack of regulation regulating tech businesses can make registration more expensive, as entrepreneurs are forced to consult with and shuttle back and forth between multiple ministries and chambers of commerce who may interpret their startup as a different type of business, which impacts the cost.

Regulations also stipulate that businesses must have a physical office, and a lawyer and an accountant on retainer, which are immense costs for someone looking to launch a startup. Around the world many early-stage entrepreneurs, particularly tech founders, operate their registered businesses from home or from coworking spaces, but regulations in the KRI stipulate that an office (with four walls) is required, and so renting an office whereby a business can register from will likely add several hundred (if not thousands) of dollars in expenses for a new business depending on where in the country they are located.

Given these high costs — the million dollar question for tech founders (and entrepreneurs more generally) is where do they go to offset these expenses and find enough capital to build their business? While we will discuss this in more detail in future posts, options for financing in Iraq are extremely limited. For instance, Arabnet’s State of Digital Investments in MENA report for 2013-2018 shows no publicly-reported investments in digital business in Iraq during that period.

Many entrepreneurs thus self-finance or look to family and friends for funding, and for those who are able to find angel investors, the terms can often be stringent, or investors may seek a majority, rather than minority, stake in the company.

Challenge 4: Cash on delivery is still the norm.

Mobile and e-payment options are growing in Iraq. Asia Hawala, Zain Cash and Fast Pay are mobile payment methods that can and will change the way businesses in the country operate. Pre-paid credit cards, like Qi Card and Zain WalletCard, are starting to allow Iraqis to purchase things online that they were previously unable to purchase. However, there are still a number of challenges with e-payments that cause headaches and risk to technology entrepreneurs.

Nevertheless, mobile payment methods are not as widely used as in other countries. Debit card penetration remains low and only 11% of Iraqis have bank accounts, which means that the majority of online purchases still happen through cash on delivery. Cash on delivery causes a number of problems: first, there’s the risk that customers will not actually pay for what they ordered, and the startup will be left with the burden. Some startups, like ShopYoBrand, a startup that purchases and delivers items from international brands like Zara, IKEA and Amazon to Iraq, makes customers pay a small amount of the total up front to provide some insurance.

ShopYoBrand founder Randi Barzinji said:

“Cash is hard to manage… there are a lot of transactions on a daily basis to be calculated manually instead of having an automatic system do it for you. And this is because the majority does not use an e-payment method yet on a daily basis…The challenge is to convince people for them to gain our trust, so that they’ll pay us ahead of time [to reduce risk]…It’s also important that the customer understands that we can’t order anything either without knowing the customer [and trusting them].”

The lack of e-payments makes expansion extremely challenging as well. Startups operating across the country, like grocery delivery app Miswag or last-mile delivery service Sandoog, have to transport cash from across the country to their headquarters, which is dangerous and time consuming. Balancing budgets can take months, with delays in customer payments and then additional delays in cash transportation.

Challenge 5: Lack of international e-payment options makes international expansion challenging without a foreign bank account.

Iraq, to all intents and purposes, is still disconnected from the international financial system for reasons relating to sanctions and the risk of money laundering. While Iraqis can use prepaid cards to pay for some services – like freelance coders – online (though often these cards do not work), it is very hard to receive money from abroad in Iraq.

OFAC lifted the majority of country-wide sanctions against Iraq in 2003, but the risk of somehow funding proscribed groups is still enough of a barrier that most international e-payment methods do not connect to Iraq. Paypal and Stripe, among other payment services, have restrictions against operating in Iraq. This means that freelancers based in Iraq cannot be paid by foreign clients, and it also means that Iraqi entrepreneurs cannot easily provide their products or services to customers in other countries.

Conclusion

We are optimists, and understand the magnitude of the impact that these startups will have if they are able to succeed. It is up to us and other members of the ecosystem in Iraq (and globally) to better understand the obstacles that cause technology startups in the country to stumble, so that we can ensure that we provide them with the support necessary to overcome them. Our job is to ensure that our early stage entrepreneurs have the support necessary to launch scalable, innovative businesses.

This Sunday, we launched our first incubator in Sulaimani that is fully focused on tech startups. This program is only possible through the generous support of GIZ, and in partnership with IOM and AsiaCell, who will be providing seed funding and services to our entrepreneurs.

Donors and actors across the country are excited about tech entrepreneurship, and we are looking forward to positive improvements in the ecosystem as more people work hard to make meaningful change.

___________

Five One Labs is a start-up incubator that helps refugees and conflict-affected entrepreneurs launch and grow their businesses in the Middle East. Launching first in the Kurdistan Region of Iraq, we aim to empower individuals to rebuild their lives and livelihoods and to contribute to the economic growth of their communities.

Five One Labs entrepreneurs are provided with training; mentorship by world class entrepreneurs from the USA and the Middle East; and a community of creative changemakers to share their experiences with. 

Our vision is to develop an inclusive network of innovators and entrepreneurs that have the support, skills, and connections to positively change their communities and countries. 

By John Lee.

The United Nations has advertised new positions in Iraq:

(Source: UN)

(Picture: Finger pressing a new career start button, from Olivier Le Moal/Shutterstock)

By John Lee.

The United Nations has advertised new positions in Iraq:

(Source: UN)

(Picture: Finger pressing a new career start button, from Olivier Le Moal/Shutterstock)

The Iraq Britain Business Council (IBBC) held Iraq’s first International Tech Conference in Baghdad at the Babylon Rotana Baghdad Hotel on 30 April, hosting government ministers, private industry, entrepreneurs, investors, and representatives from the leading UK and Iraq Tech companies.

The purpose of the Conference was to drive confidence, investment and awareness of the power of the new tech economy and how it can benefit Iraq.

The event – Iraq Tech Conference – was led by Ashley Goodall, IBBC’s Marketing Adviser. Keynote addresses were given by H.E. Dr Sami Al Araji, Chairman of the National Investment Commission and Mr Ashraf Al Dahan, Chairman of the CMC Board of Commissioners.

The agenda for the day comprised four panels: Consumer Tech panel, E-Government Panel, Business Fintech and a Consumer Fintech Panel.

Fintech in particular is making strides forward with the blessing of the Central Bank of Iraq (CBI), as Mr Waleed Eidi, Advisor to the Governor of the Central Bank, explained and encouraged the adoption of steps to include Women, those excluded from banking and the digital economy and young people.

The CBI is being ambitious in encouraging banks and financial institutions to modernise and offer new ways to distribute the flow of funds for investment and those who need it. This will also have a big impact on the overall economy and growth.

Ahmed Elkady of EY echoed the importance of Fintech as he led the Consumer FinTech Panel discussion onto technical infrastructure and what needs to happen to grow the opportunity for financial transactions. He was ably supported by National Bank of Iraq’s Eyad Mahmoud and Roger Abboud of Arab Payment Systems – who are modernising banking transactions – and Douglas Way of Almaseer Insurance – who are enabling business to reduce risks and transact insurance products rapidly and scalably.

The conference also embodied eight presentations:

  • “How technology is driving the business and consumer world in Iraq and Internationally” by Zain Iraq;
  • Online Literacy” by Dr Victoria Lindsay, Country Director – Iraq for the British Council;
  • Automating & digitising BP and Iraq” by Zaid Elyaseri, Country Manager-Iraq for BP;
  • Restrata Product Announcement” by Botan Osman, CEO for Restrata;
  • “Five One Labs” by Patricia Letayf, Co-Founder and Director of Operations for Five One Labs;
  • Blockchain and AI – The Future Talk” by Muhana Almrahleh, Director – Head of Information Technology Advisory for KPMG (Jordan); and,
  • How Re:Coded are Training the Next Generation of Technology Leaders in Iraq” by Zahra Shah, Country Manager-Iraq for Re:Coded.

Attendees were able to enjoy one-to-one meetings and conversations.

As part of the Tech Conference on April 30, IBBC hosted an Evening Reception for Entrepreneurs and Start-ups at The Station, Baghdad, the evening prior on 29 April. The evening, planned in partnership with Iraq Tech Ventures and Arabnet, showcased the growing tech community in the country and gave an outstanding platform for some of the leading start-ups and entrepreneurs in a more informal setting.

The participating start-ups pitched their business in 5 minutes to a panel of seven judges composed by: Mohammed Khudairi, Managing Partner of Khudairi Group and Founder of Iraq Tech Ventures; Hal Miran, CEO of MSelect and Founder of Bite.Tech and TechHub; Richard Greer, Venture Capital Investor in Asia, Middle East, & UK and Philanthropist in Northern Iraq; Zahra Shah, Iraq Country Manager for Re:Coded; Ali Ismail, Co-Founder of Fikraspace and Co-Founder & Partner of Solo Creative Studio; Patricia Letayf, Co-Founder and Director of Operations for Five One Labs and Maryam Allami, Advisor for Deutsche Gesellschaft fuer Internationale Zusammenarbeit (GIZ) GmbH.

Through this first international Tech Conference in Iraq, IBBC aims to provide a foundation, a platform and focus for Tech in Iraq and give inspiration and confidence to those building a modern Iraq.

For more information on the Iraq Britain Business Council, visit our website at https://www.iraqbritainbusiness.org/

To contact IBBC for Interviews, registration and sponsorship please contact london@webuildiraq.org

(Source: IBBC)

Top Mountain LLC hosted the first annual Business Canvas Erbil conference which was attended by 120 participants and took place in the Dedeman hotel.

The conference was funded by the European Union and German Federal Ministry for Economic Cooperation and Development through GIZ.

The event was also sponsored by GroFin Iraq, a financing organization that provides loans of up to $2 million to SMEs in Iraq.

The goal of the conference was to inform the audience about the future of economic development in the Kurdistan Region and promote the services of Top Mountain Business Incubator.

Throughout the conference, speakers and panelists reviewed the challenges and opportunities related to the job market and entrepreneurship.

During his presentation on the future of the startup ecosystem in Iraq, one of the Co-founders of Top Mountain explained that within the next few years startups in Iraq will begin to rapidly multiply and grow as financing and technical skills become more widely available.

This predication is based on the rapid growth in startups that has occurred throughout the MENA region over the last 3 years. Some of the key conclusions reached by panelist and speakers are that companies in Iraq must expand their internship programs to help train the next generation of skilled workers.

Panelists also noted that lack of access to finance is the most critical challenge to SME growth. Despite the challenges facing businesses in Iraq, most of the attendees and panelists remain optimistic and anticipate a bright future for Iraq’s economy.

(Source: Top Mountain LLC)

By John Lee.

The United Nations has advertised new positions in Iraqi Kurdistan:

(Source: UN)

(Picture: Success, growth, career, development signpost from 3D_Creation/Shutterstock)

By John Lee.

The United Nations has advertised new positions in Iraq:

(Source: UN)

(Picture: Finger pressing a new career start button, from Olivier Le Moal/Shutterstock)

By John Lee.

The United Nations has advertised new positions in Iraqi Kurdistan:

(Source: UN)

(Picture: Success, growth, career, development signpost from 3D_Creation/Shutterstock)

By John Lee.

The United Nations has advertised new positions in Iraq:

(Source: UN)

(Picture: Finger pressing a new career start button, from Olivier Le Moal/Shutterstock)