Accelerating Startups Under Blockade in the 'Gaza Challenge'

Outside, horses and donkeys pull creaking wooden carts of vegetables down the street. Inside, dozens of people are hunched over laptops, working out the code for mobile apps that they hope to take public within the year.

This is the "Gaza Challenge," a five-day tryout event for Palestinian entrepreneurs in the Gaza Strip, a Philadelphia-sized enclave in the Middle East that's been under an Israeli- and Egyptian-imposed blockade for the past nine years.

The organization behind the Gaza Challenge is Gaza Sky Geeks, a startup accelerator that mentors new tech startups in the Gaza Strip.

Nuwar Abu Awwad, 21, is here to present her idea for a web platform that will provide new entrepreneurs in the Middle East with Arabic-language resources that they can use to solve problems they may encounter with starting a business.

Abu Awwad, who is from a neighborhood in Gaza City called Al Twam, where the roads are made of sand, told Motherboard she had the idea for the platform a year-and-a-half ago while working for a different Gazan startup.

"I noticed there was a lack of Arabic resources for people who want to start their own company," she said. "Like, 'how can I make a business plan? Or a financial study?' or 'How can I best manage my team?'"

She said the information online is in English, which presents difficulties for Arabic speakers, of which there are 300 million in the Middle East.

Users will have to pay a small monthly fee ($9.00 or $10.00 per month) to use the service, said the university student, who is clad in a neon-patterned dress and a green hijab.

The service will be called Tashbeak, which means "making connections" in Arabic.

Of course, this is still theoretical: Abu Awwad and her three partners are just one of 46 teams here at the Gaza Challenge, and only 10 to 12 of those teams will proceed to the next phase, a five-month "incubation" period where products are actually deployed online to see if people use them and like them and why.

Gaza Sky Geeks is a project of the Oregon-based charity Mercy Corps, and is based out of a loft and co-working space in central Gaza City, a chaotic, lively city that is still being rebuilt from the 2014 war with Israel.

The accelerator, which is the only one in Gaza, was founded in 2011 with a $900,000 grant from Google.org, Google's philanthropic arm.

Its bigger mission in Gaza is to grow the Strip's nascent tech sector, which it sees as an area with great potential. The siege of Gaza means that starting a traditional business is fraught with myriad obstacles, first and foremost the movement of goods and people, on which tight restrictions are placed by both Israel and Egypt. Both countries consider Hamas, the ruling regime in Gaza, to be a terrorist organization, they restrict what comes and goes from the 25-mile Palestinian Territory.

The blockade has had disastrous effects on Gaza's economy: the Strip's gross domestic product (GDP) has fallen by 50 percent since the blockade was put in place in 2007. Unemployment in Gaza is now higher than anywhere in the world.

But the beauty of the internet is that it can soar above the fortified walls and naval blockades that hem Gaza in. And since technical talent in Gaza is plentiful, and fiber internet here is strong (even in the absence of 3G), creative or tech-savvy people can invent web services and apps the same way they can anywhere else in the world and then target them at lucrative markets elsewhere in the region.

"All the companies we work with are working on products that can maybe be tested in Gaza, but the real market opportunity is in places like Egypt or Saudi Arabia, where people have money, and where smartphone penetration is one of the highest in the world," Gaza Sky Geeks director Ryan Sturgill told Motherboard.

The 10-12 teams that are chosen to undergo Gaza Sky Geeks' five-month incubation phase are then subjected to a further winnowing. "If teams don't hit their milestones, we'll filter them out," said Sturgill, who is 31 years old.

By February, Gaza Sky Geeks directors will have selected three to four teams to undergo an "acceleration" phase, which also lasts five months. At this point, the teams' apps are already online, people are already using them, and the focus is on growth.

This is the period when the investments start rolling in. Last year, four of the teams that went through Gaza Sky Geeks' acceleration period got investments of between $20,000-$65,000 right off the bat. Investment comes from venture capital funds in the Palestinian West Bank as well as other parts of the Middle East and also from Europe and the United Kingdom, Sturgill said.

Though some of the investors who are giving their cash to Gazan tech companies are doing it for philanthropic reasons, all of them are profit-oriented, Sturgill said.

And that's a good thing.

"It's very important to teach people [in Gaza] that this is actually disciplined money coming in, that's also going to help you. It's not just grant money that's being thrown out the window. This is money that's going to be returned one day, and then some. And that discipline leads to real growth. That's really important for the growth of the [tech] ecosystem here."

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