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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)

By John Lee.

Dubai's cloud-based POS and retail management software company Dukkantek has announced a strategic partnership with Lezzoo, a Y Combinator-backed superapp based in Iraq.

This collaboration aims to transform Iraq's food and beverage (F&B) supply chain by creating an end-to-end digital ecosystem for small-to-large retailers, enabling them to scale their operations and operate more efficiently.

Lezzoo, which recently expanded into the B2B marketplace, connects Iraqi retailers with suppliers. By combining the technology of both Dukkantek and Lezzoo, this partnership establishes a digital infrastructure for retailers, particularly in the F&B sector. The long-term goal is to make Dukkantek and Lezzoo integral components of Iraq's entire supply chain.

Sanad Yaghi, the CEO of Dukkantek, said:

"Together, Lezzo and Dukkantek are bigger than the sum of the parts; we are committed to setting new benchmarks in the e-commerce and on-demand services industry while driving positive change in the communities across Iraq."

Yadgar Merani, the CEO of Lezzoo, added:

"Dukkantek and Lezzoo share a common vision and we are passionate about the problem we are solving. Our visions are well-aligned, and we are confident that our partnership will develop a sustainable foundation for the country's retail sector. Apart from our technology solutions and capabilities, we also believe this collaboration will further integrate MENA startups with Iraq, unveiling the market fundamentals and opportunities of the Iraqi market."

Lezzoo has been expanding its service offerings and leveraging its merchant network, recently acquiring Saydo, the first B2B food marketplace in Iraq. Currently operating in four cities in Iraq, Lezzoo says it's on a mission to build a digital food supply chain for the country.

(Source: Lezzoo)

By Mustafa Saadoun for Al Monitor. Any opinions expressed here are those of the author(s) and do not necessarily reflect the views of Iraq Business News.

Iraqi startup Lezzoo expands with purchase of Saydo

The delivery startup is one of several in the autonomous Kurdistan Region, and the autonomous government is hoping to spur more startup growth.

Click here to read the full article.

By Olivia Bridge.

Iraq's global perception might not be optimistic, but the country is proving itself as an incubator for startups and small businesses.

Why startups and businesses are thriving in Iraq

To the uninformed, the idea of Iraq being capable of nurturing online businesses, start-ups and entrepreneurs might seem far-fetched. Disinformation and rumours haven't helped either, with one website going so far as to state that there is no internet in Iraq - a complete falsehood.  The fact of the matter is that, Iraq have had internet connectivity, tightly controlled internet connectivity 2 decades ago, but connectivity none the less. According to 2020 statistics, Iraq had roughly 30 million online users and currently has its fair share of ISP's. The fact of the matter is that Iraq has proper online infrastructure good enough to nurture the talents of small businesses, entrepreneurs and those looking to take their start-ups to the next level. The economic ramifications brought about by the global pandemic has forcefully changed the business and working landscape for almost everyone and while very few have gotten out unscathed,  opportunities have not dried up.  In fact, the online environment has gained more appeal than ever, with many realising its full potential and capabilities.

Why Iraq is on the up and up

Iraq's online community is a thriving one and many start-ups have already proven that they've got what it takes.  From food delivery apps to online education to B2B business solutions, Iraq is proving that it can hit as good as it can take.  And here's the thing, despite a false worldly perception of Iraq, it has proven itself to be an incubator for businesses and other associated endeavours.  The country's thirst to prove its credentials to the international community can be seen in various ways and means.  It's impossible to deny Iraq's history and the extent of how far back it goes; biblical scholars believe that Iraq was the location of the Garden of Eden - that's how far. The point is that Iraq has many valuable and historical monuments, of which some have been declared heritage sites. These sites now serve to drive tourisms into the country.  Despite having one of the largest oil reserves in the world, the people of Iraq have a vested interest in climate change and the positive proliferation of green initiatives and sustainability, going all the way to grass-root levels.  Iraq's online infrastructure is mainly wireless, providing an ideal breeding ground for apps as the majority of the population uses smartphones. The Iraq Stock Exchange has been open since 2006 and in combination with technology and knowledge of the Oil Industry, it has become a popular option to invest in international shares in big petroleum companies from countries such as United Kingdom, China and USA.

Successful online startups 

Iraq is truly making a name for itself in terms of small businesses and startups that have applied their tech skill to become highly successful.  In fact, there are quite a few notable mentions. There's Sandoog, a Baghdad-based nation-wide servicing logistics company with a B2B focus that covers everything from product handling to storage to payment processing.  Then there's Miswag, Iraq's very first e-commerce platform, launched back in 2014.  It may have been a startup then, but now it has an inventory of over 15 000 products and delivers quality products all around the country.  Thanks a to a large smartphone population, many startups have chosen to hone in software and the various solutions it can provide to a mobile population. A prime example of such ingenuity would be Fastwares, based in Erbil. This innovative startup has produced successful digital products such as Kawa & Khaje, a popular game based on Kurdish culture, and Lezzoo, an effective food delivery app.  The company is also responsible for the highly popular music streaming app - Awaza. The take away from all of this is that Iraq's growth and potential in the digital realm should not be underestimated.

Northern Gulf Partners, a frontier market investment firm, and California-based Pay It Forward Venture Capital, have led a seven-figure US dollar seed round investment in Lezzoo, a delivery and e-payment platform that aims to become Iraq's first super-app.

Lezzoo received a pre-seed investment from Silicon Valley's Y Combinator and is the only Iraqi start-up accepted into its well-known accelerator program. Angel investors and family offices in the USA, Europe and the Middle East joined the seed round.

Lezzoo delivers items such as prepared food, groceries and pharmaceuticals in several Iraqi cities. The recently launched Lezzoo Pay seeks to disrupt Iraq's predominantly cash-based society by bringing digital transactions to a population that is majority unbanked.

Lezzoo founder and CEO Yadgar Merani said:

"We are using technology to solve the biggest logistical challenges in people's daily lives. This investment will allow us to expand across the country while also rolling out new verticals. By integrating deliveries, transportation, payments and other services we are on our way to becoming the super-app for Iraqis."

Zaab Sethna, partner at Northern Gulf Partners, said:

"Lezzoo has a forward-thinking, creative and dynamic team of founders and we are excited to back them. Iraq is a country with a young, connected and increasingly sophisticated population. Incomes are rising but the barriers to entry remain high and this gives an advantage to home-grown firms."

Raaid Hossain, General Partner of Pay It Forward Venture Capital, said:

"We are proud and privileged to be able to back Lezzoo, a company that challenges the status quo by providing a best in class delivery experience for consumers, as well as drives the spirit of digital entrepreneurship in Iraq. We believe that a connected service industry, especially during times of restricted movement due to covid-19, is paramount to staying safe, healthy and feeling a sense of comfort. We truly believe Yadgar and the team are doing their part to make the world a better place.

(Source: NGP)

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.

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

Reflections on Investments in Iraq’s Tech Ecosystem

2019 showed an exciting development for Iraq's entrepreneurial ecosystem: the investments in two Iraqi tech startups - e-commerce company Miswag, which received investment from Iraq Tech Ventures, and Lezzoo, the first Iraqi startup to join Silicon Valley’s premier accelerator Y Combinator.

In October 2019 Five One Labs hosted its second delegation of regional and international investors to the Kurdistan Region to expand understanding of the Iraqi business environment and startup ecosystem; to build bridges between international and Iraq business communities; and to expose local entrepreneurs to global best practices.

Through conversations with both early- and growth-stage entrepreneurs and discussions with local businesses and government representatives, the group of 17 investors received first-hand information about the business environment and entrepreneurship ecosystem on the ground in Iraq.

We spoke with the investors from the trip and had conversations with Yadgar Merani, co-founder of Lezzoo, and Laura Olivier, Executive Director of Iraq Tech Ventures, to dive into key challenges and opportunities for investment in Iraq, from the investor and entrepreneur perspectives.

Iraq's lack of market data and challenging regulatory environment make it hard for investors and entrepreneurs to agree on the level of risk and opportunity.

According to Merani, one of the main challenges Lezzoo faced when speaking to investors outside of Iraq was convincing them of the country’s market size and providing them with accurate answers to specific market-sizing questions. Obtaining accurate estimates of the market is of course important for investors as it impacts projections of cash flow and potential valuation.

While data on numbers of pharmacies or schools, for example, are publicly available in other countries, the lack of easily-accessible market data and the reluctance of certain government ministries to provide this data has forced entrepreneurs in Iraq to rely on assumptions when sizing the market. Merani says that while Lezzoo tried to gather this information from various ministries, the team was often told that the information Lezzoo was seeking was either unavailable or confidential.

Additionally, the lack of general understanding of the Iraqi market and the risks of investing in a post-conflict environment mean that entrepreneurs may need to provide potential investors with additional information -- and this is a point that has been expressed by a number of Iraqi startups seeking to raise their seed rounds. Merani said that on multiple occasions when trying to raise funds in the US, he was repeatedly asked questions like, “What happens if the internet goes out in the whole country? What would you do?” And this uncertainty or concern over volatility in Iraq may result in lower valuations for startups.

This added scrutiny also extends to the investment itself. The syndicate of investors that invested in Miswag’s seed round (four angel investors and one institutional investor) experienced legal challenges from the outset. When trying to create a special purpose vehicle (SPV) for Miswag in the financial free zone Abu Dhabi Global Market (ADGM), ADGM repeatedly asked for more documentation given the startup was incorporated in Iraq. After several months, the investors eventually decided to invest directly into Miswag’s bank accounts in Iraq rather than through this SPV.

Olivier of Iraq Tech Ventures also mentioned another challenge:

“One difficulty we experienced recently was that many of the investors’ transfers were heavily delayed due to banks needing extra documentation due to the scrutiny that goes into processing transfers to Iraq.”

However, local and regional investors are willing to put in the work, and entrepreneurs are rising to the challenge.

One of the Five One Labs investor trip participants, Anas Elayyan, said:

“Since inception, iMENA Group has been on the lookout for extraordinary founders and startups operating in under-served markets. The new wave of founders and entrepreneurs that we met in Iraq in the last few months are the real assets for Iraq's future. Those entrepreneurs have been hustling in the system to mark a new digital era for Iraq. We, at iMENA Group, are very excited to be part of that era.” 

For Miswag, the success of the syndicate’s investment can likely be attributed in part to the fact that the investors were familiar with the market. Four of the five investors were Iraqis who work in Iraq but live outside of the country. Because of their knowledge of the operating environment, they were willing to invest directly rather than establishing an offshore entity.

Both on the investor and entrepreneur side, there are key innovators who are willing to take higher risks in order to show that high-growth startups can be built and grown in Iraq. “There are so many opportunities for entrepreneurs in Iraq to take the lead,” Merani says, “because Iraq needs so much.”

Looking ahead to 2020, we look forward to seeing more investments in Iraq’s tech startups and to welcoming another delegation of international investors to the Kurdistan Region later this year.

___________

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.