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By John Lee.

Iraq's Minister of Electricity, Ziyad Ali Fadel, has overseen the signing of a new contract with Turkish company Alifrin to double the capacity of the Iraq-Turkey electricity interconnection line from 300 to 600 megawatts.

Under the agreement, the first phase will see the supply of 300 MW via the Jazira-Kesk 400kV line in Nineveh province, with full capacity expected within a month. The Ministry has already completed all required technical preparations, including stations and transmission lines.

The project will directly enhance electricity supply to northern regions and provides strategic benefits by linking Iraq's grid with the European energy network, of which Turkey is a key member.

Importantly, the agreement adopts a "Take and Pay" model, meaning Iraq will pay only for consumed power-offering financial flexibility and avoiding waste.

This initiative is part of the Ministry's broader strategy to diversify energy sources and reduce dependency on a single supply channel, while strengthening cooperation with neighbouring countries and the EU.

(Source: Ministry of Electricity)

By John Lee.

Five Iraqi start-ups are reported to be among the 24 new businesses selected to take part in Flat6Labs' StartMashreq Growth Track programme.

The programme, which started in June and will run until December 2024, is part of StartMashreq's broader vision to inspire and support displaced entrepreneurs and empower female-led startups in the Mashreq Region.

According to WAMDA, the five start-ups are:

• KESK: which describes itself as a "green solutions company".
• Lezzoo: offers delivery, e-commerce and payment services.
• Midient/Padash: According to Daily News Egypt, a cloud kitchen platform that enables food entrepreneurs to launch online brands.
• Orderii: An online marketplace.
• Toolmart: An e-commerce platform that sells tools and hardware products.

StartMashreq was founded to create economic opportunity and facilitate growth through focused entrepreneurship support programs. The initiative is a partnership between Egypt-based Flat6Labs and the International Finance Corporation (IFC), who joined efforts to create an accessible ecosystem that factors in the socioeconomic realities of communities across the Mashreq, with displaced and marginalized people and minorities at the center.

(Sources: Daily News Egypt, WAMDA)

From Five One Invest. Re-published with permission by Iraq Business News.

ECOSYSTEM OVERVIEW

The Iraqi startup ecosystem started with a bang this year. In Q1 of 2022, we witnessed an unprecedented $10.5M investment round (Baly) and $5M (TipTop). The excitement revolved not only around investment value but also around the investor profile.

Specifically, Baly's round was a testament to regional and international investor appetite in Iraq. The investors were diverse - from China (MSA Novo), UAE (March Holding), and Sweden (Vostok Ventures). Another interesting attribute is that both startups were early stage.

Unfortunately, the initial thrill of Q1 seemed to fizzle out by mid-year. The expected ripple effect of those two initial deals did not materialize. During Q2 of 2022, there was no publicly reported investment activity. The remainder of 2022's rounds were six-figure or less. With only one public round in 2022 (Nakhla), Euphrates Ventures seemed to have disappeared from the scene.

Although the dollar amounts of 2022 surpassed last year, 2021 displayed consistency in value, investor profile, and disbursement of funds across all four quarters. So, what happened to the investment buzz? Were Baly and TipTop just one-off anomalies?

BENCHMARKING AGAINST INVESTMENTS IN MENA

For a more holistic view, let us dig deeper and see how Iraq's investment trends stack up against MENA's. According to Wamda and Digital Digest's October 2022 report, the value of deals in the region witnessed a 331% year-on-year increase compared to October 2021. As of today and based on our conservative estimates, Iraq is on a similar positive trajectory. Iraq's year-on-year investment value increased by around three-quarters (72%) - mainly attributed to Baly's and TipTop's groundbreaking rounds. While seed and pre-seed activity witnessed a drop in the MENA region, the value and number of seed-stage rounds in Iraq remained relatively stable.

MENA investors poured money into two main industries - cleantech and fintech. Fintech startups received the most attention, with startups such as MoneyFellows ($31M), Telda ($20M), and MaxAB ($40M). Meanwhile, cleantech startup, Yellow Door Energy, led the biggest raise with a mega-round of $400M. Iraq's investment landscape observed very divergent sectoral inclinations. Ecommerce continues to reign as king. Historically, cleantech in Iraq received its share of attention.

New contenders have sprouted, notably agritech (Nakhla) and edtech (IoT Kids). This sectoral interest is consistent with social and economic needs. Fintech, on the other hand, is still nascent. Mohammed Koperly from Al Nesoor Law firm attributes this to "complex ambiguous laws and regulations applying to banks, financial institutions, and insurance companies if they carry out such regulated activities." And that is why we notice a proliferation of wallet and prepaid solutions. Interestingly enough, ecommerce platforms are exploring new and innovative methods of circumventing the lack of fintech solutions, particularly startups such as Orderii, Simma, and ToolMart.

LOOKING FORWARD: SOLUTIONS AND NEXT STEPS

Last month, Five One Invest buckled down and organized a roundtable session to uncover the gaps facing investors...what were the missing pieces of the puzzle? The online roundtable invited fifteen international, regional, and local investors to discuss investment barriers and potential solutions.

The discussion uncovered four main steps to be taken to facilitate involvement in the Iraqi ecosystem:.

• Addressing startups' investment readiness gaps such as basic accounting.

• Contextualizing Iraq's ecosystem by providing a holistic overview of the investment and entrepreneurial landscape.

• Presenting Iraq's startups at regional events (such as Step, Rise Up, Gitex, etc.).

• Building trust among regional and local investors through investor networking, relationship building, and knowledge sharing.

• Supporting the survival of later-stage startups by increasing the ticket size and de-risking through co-investment and the participation of larger investors.

Quite a few ecosystem players have taken measures to champion the ecosystem further. Earlier this year, Iraq Venture Partners (IVP) and Five One Invest launched a joint pilot investment readiness program. The joint pilot program provides startups tailored support through Five One Invest that addresses gaps before the IVP investment transpires. The type of support includes financial modeling, pitch deck readiness, due diligence, and customer experience evaluation. Other entities in the market run similar programs, such as The Station, Kapita, and Cross-Boundary. However, there is still space for development.

Within Iraq, there is no shortage of educational and informative content. Local players such as Iraqi Innovators, Kapita, and Five One Invest produce articles, reports, and content with in-depth analysis of the ecosystem landscape. Engaging the international and regional content houses, however, is what warrants attention. A few regional players, such as Wamda and Magnitt, report on Iraq's entrepreneurial scene, but it is still insufficient to attract regional attention.

These past two years have presented Iraq's startups with regional and international exposure. In 2021, Rabee Securities, a well-established Iraq-based securities brokerage firm, hosted five Iraqi startups (Miswag, AlSaree3, KESK, IQ Cars, and Zaytoon) to represent at the Iraq Pavilion EXPO 2020. Earlier this year IQ Cars, an automotive marketplace app, flew out to Websummit, an annual technology conference in Portugal. Also, four startups, JobStudio, Orderii, STEMile, and Eduba ايدوبـــا, showcased and networked with regional investors during the MENA ICT Forum, a two-day forum focused on tech in the MENA. It is refreshing to see opportunities opening up, albeit slowly and far between.

The two other main challenges, developing relationships between regional and local investors and supporting later-stage startups through co-investment, remains tricky. But that is what we are here for...watch this space!

By John Lee.

KESK, which describes itself as a "green solutions company", has announced that it has secured six-figure seed funding from Euphrates Venture Capital Fund.

Founder and CEO, Basima Abdulrahman (pictured), said:

"My vision is to make smart green solutions trustable, accessible, and affordable. We simply want to make the green way, the easy way.

"This investment is a great step towards bringing KESK's innovative solutions to customers' doorsteps."

According to a statement from the company, the investment will be used to expand KESK's operations to all of Iraq and to roll out the company's proprietary solar AC units. It will also provide KESK with industry expertise and technical support to be able to overcome a lot of the challenges of growing a business in Iraq.

(Source: KESK)

Five One Labs, a start-up incubator for entrepreneurs based in the Kurdistan Region of Iraq (KRI), has announced the grant recipients of its Growth Funding Project (GFP).

The program aims to support early- and later-stage startups that were impacted by COVID-19 with seed funding grants to grow their businesses, as well as business advisory from Five One Labs' Startup Support team through the fall.

FIve One Labs received over 1,300 applications for the inaugural round of the Growth Funding Project. From this competitive set, 11 startups were selected to receive a total of $150,000 in grant funding provided by the German Agency for International Cooperation (GIZ). Of the 11 companies, five are led by women entrepreneurs.

"The startup landscape in Iraq is ripe with opportunity, as evident through the over one thousand applicants for the Growth Fund," said Shwan Qaradaghi, Head of Expansion at Five One Labs. "We are excited to support these 11 startups who have remained resilient in the face of the challenges presented by COVID-19, and through their success we hope to continue to grow the evolving ecosystem of startups across the region."

Winners were selected by a panel of Five One Labs entrepreneurship experts based on the following criteria: value proposition, traction, growth plans, financial management, team.

"Narrowing down this incredibly strong group of applications to the 11 winners was an incredibly challenging process," explained Qaradaghi, who was on the judging panel. "We were impressed not only by the range of startups from new ideas to quickly growing, established businesses, but also by the variety of sectors and businesses included in the applications - from technology startups to furniture companies."

Startups like Erbil-based green building consulting company KESK will leverage this capital to propel their growth and overcome barriers imposed by the COVID-19 pandemic.

Basima Abdulrahman, KESK's founder said: "COVID-19 was a mass extinction event for startups that are already facing fundamental challenges in Iraq...The unexpected arrival of the pandemic has resulted in a major slump in consumer demand. Lack of funding is one of the key reasons why startups fail. Five One Labs' GFP funding will help us achieve key milestones to acquire customers and drive sales and revenues."

A full list of the grant recipients includes:

• KESK (Erbil)
• IoT KIDS (Baghdad)
• Lala Candles (Erbil)
• 3D PRINT IRAQ (Basra)
• Techgigz (Baghdad)
• ShopAsar (Sulaimani)
• Bareo Adventure (Sulaimani)
• Bedayat Platform (Erbil)
• Ihgiz Tabbebak (Mosul)
• Seven Professions (Baghdad)
• Nakhsh (Sulaimani)

(Source: Five One Labs)