Expert Blog: Iraq's Start-Ups will Overcome Coronavirus

By Alice Bosley and Patricia Letayf, Co-Founders of Five One Labs. Any opinions expressed are those of the author(s), and do not necessarily reflect the views of Iraq Business News.

Iraq's Start-Ups will Overcome Coronavirus - And Be More Important Than Ever

Over the past months, coronavirus has changed the world as we know it. Almost every person's family, community, and livelihood has been affected. Societies have had to adapt to social distancing, and economies have suffered the consequences.

After forecasting that the world's economy would contract by 3% in 2020 - the worst downturn since the Great Depression - the Chief Economist at the IMF noted, "The magnitude and speed of collapse in activity that has followed is unlike anything experienced in our lifetimes."

As is happening across the world, startups in Iraq are suffering from the ripple effects of coronavirus and the country-wide lockdown, which, in Iraq, has included closing all non-essential businesses and restricting movement between and within cities. At the beginning of April, Five One Labs sent out a survey to all of our alumni, startups that have graduated from our full-time startup incubators, and community  to see how they were affected by coronavirus.

Out of the over 40 startups that responded, close to 60% of them were experiencing challenges with financing their businesses and funding delays. Another 60% were not able to sell or deliver their product because of the lockdowns, and around 40% responded that they either could not get the materials to make their products anymore or the demand for their products had suffered due to the lockdown and subsequent economic downturn.

In response to the needs of our entrepreneurs, Five One Labs recently published our "Startup Survival Kit: Rebuilding After Corona." The guide has resources and tools for managing a startup through crisis, but also has case studies and lessons learned from other startups in Iraq in terms of how they're adapting to the situation.

As the case studies in the Survival Kit and our recent Facebook Live interviews have shown, there's no end to the resilience of Iraqi entrepreneurs. Entrepreneurs are buckling down and doing what needs to be done to survive: 50% have reduced non-staff expenditures, and 10% laid off staff or reduced salaries to make ends meet. Entrepreneurs are reporting that they're spending more time communicating with their customers, learning new skills, and working on building out their strategy for the future.

With the lockdown also came an increased demand for delivery and app-based services. In Kurdistan, startups like CharaPlus in Sulaimani (a pharmacy-delivery service) or Tdallal in Erbil (grocery delivery) are experiencing a growth in demand. On-demand delivery service Lezzoo added new features, like delivery of water, gas, and groceries from Carrefour in both Sulaimani and Erbil. With even local governments sharing information about grocery delivery services to encourage their use, the lockdown has introduced a larger part of the population to e-commerce. This shift could have a lasting impact on the success of tech startups moving forward.

What we've seen in Iraq is that startups here are built to weather crisis and fluctuation. Many startups have approached growth as "camels," a new term coined to show a potentially smarter approach than the "unicorns" made famous in the Silicon Valley. Entrepreneurs in Iraq grow sustainably, ensuring that their costs in general don't exceed the revenue they're bringing in. They make sure they have reserves on hand to adapt to the ups and downs of the economy, and they're innovative in the face of obstacles.

This resilience after crises is more important now than ever. In Iraq, coronavirus comes on the heels of the economic hit caused by the global drop in oil prices along with growing regional instability. The coronavirus response has shown the ability of startups to adapt quickly to local challenges.

Moving forward, there's a chance for startups to have an outsized impact on Iraq's economy moving forward as they fill gaps in the market and help the country diversify its economy. So, to all the entrepreneurs out there - time to start rebuilding!

If you are interested in reading our Startup Survival Kit, you can find it here. Five One Labs published the Startup Survival Kit with the support of the German Federal Government through the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH. We will also be running a series of brainstorms and workshops for startups on how to rebuild after coronavirus. If you're interested in joining one of the workshops, please email us at [email protected].

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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.

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