Jordan: The Middle East's Overlooked Tech and Innovation Hub

The startup scene in Jordan has been growing steadily over the last decade. Investments in the country’s ecosystem have been picking up as more entrepreneurs are being recognized both regionally and internationally for their innovation and tech savviness. 

Prominent Jordanian tech startups like ArabiaWeather, Maktoob, Tamatem, Luminus Education, Jamalon, and 21 other companies made it to the World Economic Forum’s (WEF) top 100 Arabian startups. And more Jordanian startups are expected to make headway as the ecosystem continues to support its local entrepreneurs.

Despite only receiving $119 million in startup funding in 2021, Jordan is one of the fastest growing startup ecosystems in the Middle East. It witnessed a 499% growth in startup funding in 2021 compared to 2020, according to a recent market report by Magnitt. And with Abu Dhabi and the Jordanian Ministry of Digital Economy and Entrepreneurship’s recent launch of a $100 million tech fund, it will further reinforce the Kingdom’s place on the world technology map.

“Jordan was one of the first ecosystems to develop in the region,” Rasha Manna, General Manager at Flat6Labs Jordan, a leading venture capital firm in the Middle East, tells StartupScene. “One of the first tech IPOs in the region was from Jordan, and the first notable tech exit was also from Jordan. Although we are a small market, we still generate a lot of tech startup entrepreneurship activity in the region.”

RISING YOUTH TALENT

One of the reasons for Jordan’s entrepreneurial success is its rising tech talent. About 27% of all tech entrepreneurs in the Middle East and North Africa (MENA) are Jordanian, despite the country accounting for only 3% of the region's total population.

“We are very focused on the knowledge economy,” Manna says. “We have a big pool of natural talent, and some of the big corporations in the region have their engines in Jordan.”

Jordan’s talented and technically skilled youth are key to driving innovative business solutions. “They are the ones directing businesses into solutions they need to be providing, creating more frictionless interaction, more online banking solutions, and more virtual solutions,” Manna adds.

However, Jordan’s talented youth seems to be a double-edged sword for young startups.

When Marwan Abu Sakha and Abdullah Al-Absi, co-founders of Kitchefy, launched their cloud kitchen startup in 2021, they struggled to find the right talent - a challenge they had to overcome before they were able to gain traction and earn a $350,000 pre-seed investment.

“We grew at the same time as a lot of technology companies in Jordan,” Abu Sakha says. “This created a lack of talent locally, because a lot of the good talent is exported to other countries, and even to local companies. So, the supply is high, but demand is also much higher.”

Hussam Hammo, who founded Arabic mobile games publisher Tamatem in 2013, also recalls the struggle of hiring talent during the early days of his startup. “In the past, the majority of people would usually shy away from working at startups and go for the more ‘secure’ corporate jobs due to the lack of awareness or knowledge of the startup world and its possibilities,” Hammo says. “But now that more startups are succeeding in the region and becoming major success stories, people are turning their eyes towards the startup environment and leaning less towards the corporate world.”

EXPANDING ACROSS BORDERS

Meanwhile, Jordan’s startups look like they’re poised for continued growth, regionally and internationally.

Tamatem grew exponentially during the pandemic. When the world was in lockdown, many resorted to playing games on their phones to keep themselves entertained. That’s when Tamatem witnessed its largest gaming audience and started expanding with support from investors. It raised $11 million in a Series B funding round in December last year, and announced its expansion to China earlier this month. 

“We are expanding more internationally and regionally,” Hammo says. “We are planning to work more with the Chinese mobile games market and companies to bring more mobile games to our region.”

Tamatem is not the only startup expanding across its borders. Mrayti, a Jordanian-based beauty e-commerce store founded in 2016, is also setting up shop in Riyadh. After re-inventing her startup during the height of the pandemic from a mobile beauty salon to an e-commerce beauty store, founder Romouz Sadeq expanded her market reach across the Arab world. She now has customers in the US, Egypt and across the GCC, and has raised $120,000 in early 2022.

“The world is changing,” Sadeq shares. “Shipping rates are continuously increasing and will continue to increase, which will kill any startup shipping from one country. We therefore want to establish ourselves in Riyadh to be closer to our customers, and so we can serve them better.”  

Startups in Jordan have to think about expansion even before launching their business. With a population of only 10 million people, entrepreneurs are forced to think beyond their borders to grow their business and, more importantly, secure investments.

“Our selection criteria is that, if you’re offering a solution for only Jordan, you’re already too small,” Manna from Flat6Labs Jordan continues. “Our founders are forced to think of regional or international expansion from day one. It’s too small of a market to be attractive to any investors.”

KEEPING THE MOMENTUM

Record high inflation and rising interest rates could impact startups across the globe, and Jordan is no exception. With its currency pegged to the US dollar, Jordan follows the Federal Reserve’s moves rather consistently. It recently raised its interest rates following the Fed’s latest rate hike. And rate hikes could affect startups where it hurts the most: funding. High interest rates combined with high inflation will make investors less likely to support risky startups. 

But so far, Jordan’s startups don’t seem to be impacted by this economic development. There seems to be enough funding in the funnel to keep the startup momentum going.

Abdullah Al-Absi, CFO and Co-Founder of Kitchefy, believes that the launch of the $100 million tech fund by Abu Dhabi and the Ministry of Digital Economy and Entrepreneurship couldn’t have come at a better time. “This gives comfort to people who are thinking of starting a startup,” Al-Absi says. “With what’s happening in the world, you might feel discouraged, but this gives a push to entrepreneurs to go ahead and get investments and do what they’re thinking of.”

In the meantime, to help startups get through these challenging times, Marwan Abu Sakha, CEO and Co-Founder of Kitchefy, advises founders to re-examine their growth strategy.  “The main motive for startups was to grow at any cost,” Abu Sakha says. “They didn’t focus on the units of economics or if they were profitable. As long as they were growing revenue, they kept growing even if incurring losses. But with what’s happening, we need to shift the mindset of entrepreneurs. So, instead of growing without focusing on profit, grow while focusing on profit as well.”

Meanwhile, Sadeq from Mrayti seems unfazed by the economic downturn. “If we look at history, we see that after every recession, there was a wave of startups with incredible success. All it takes is to create something that actually meets peoples’ needs,” Sadeq says. All economies are bound to experience periods of growth and decline, but it is the strongest and most adaptable businesses that will succeed - and Jordan is set up to have many such successes in its ecosystem.