Despite its smaller size, Jordan has enjoyed some success as a destination for both late-stage private equity money as well as, more recently, venture capital funding. A relatively open economy, free trade agreements with over a billion people globally, and a lack of capital has made the country a destination for regional private equity investors.
The interest in Jordan by later-stage funds is well documented, with investments from, among others, Jordan Dubai Capital, Abraaj, Keystone and EuroMena, in addition to Foursan's own focus on the country.
Yet it is in resolving the vexing problem of helping entrepreneurs find seed-stage funding that Jordan has started experimenting with original solutions. At the head of these is Oasis 500, a fund which began life when His Majesty King Abdullah II challenged Jordanian investors in the ICT sector to replicate the success of Maktoob.com, which had recently been sold to Yahoo! for USD 170 million, and to do so in an accelerated manner by funding and mentoring promising young entrepreneurs. The key was acceleration: His Majesty did not want 10 years to pass before he saw the next Jordanian technology superstar.
Oasis 500 achieves these objectives by putting entrepreneurs with business ideas through a boot camp. This provides them with skills needed to be successful as business owners but also gives the Oasis 500 team a deep look at the entrepreneurs, their ideas and, more importantly, their mettle. From a typical training class, Oasis 500 may invest USD 14,000 in a handful of companies, purchasing 10% of each company.
Those not selected for investment may try again later, but in any case have received training useful for their future business success. In this manner, in its first year, Oasis 500 trained 225 (versus an initial plan of 100) young people on business basics and, in an interesting twist, has done so at little cost to itself: each training wave is sponsored by a corporation or a development aid agency. Within five years, Oasis 500 will have trained 5,000 entrepreneurs.
Oasis 500 not only incubates the companies it selects for investment but also accelerates their forward path by agreeing with entrepreneurs on certain goals to be achieved over the next 100 days. These achievements are monitored on a daily, weekly and monthly basis. Entrepreneurs participate in mini board meetings where they share experiences, setbacks, and successes with others as they collectively work toward meeting monthly revenue, product, team growth and marketing/sales targets.
Equally importantly, Oasis 500 introduces its portfolio companies to mentors. Mentorship is key to the Oasis 500 success story, helping companies benefit from the advice of successful businesspersons. The mentors - who donate their time as a way of giving back to the community - are global and regional, not just Jordanian. They include senior managers at firms such as Google and Yahoo!, a treasure trove of experience for the entrepreneurs.
Once a company has achieved sufficient success, Oasis 500 introduces it to its angel network through an angel event at which six companies pitch their ideas to the assembled investors.
And how well did the entrepreneurs do during their pitches to the angel network? Well, shortly before the first angel network event, they were told that they would be making their pitches before His Majesty the King, who had decided to attend the event! They did so with extraordinary grace under pressure. In fact, all six companies present at the first angel network event have received follow-on angel funding (with a minimum of three investment offers each) at a 3x to 5x multiple of the original investment valuation, a testament to the creativity of entrepreneurs, the hard work of the Oasis 500 team in helping make the ideas credible from a business perspective, and the dedication of mentors. The outlook for the companies that participated in the second angel network event also looks promising. Companies received between five and 19 investor leads and three have closed funding rounds already.
The name "Oasis" derives from the idea that Oasis 500 provides entrepreneurs with relief from the desert of seed-stage funding in the region. It does that and much more: it provides boot camp training, seed-stage funding, mentorship, and access to an angel network. By leveraging the good citizenship of corporations, who sponsor training waves and angel events, and mentors, who donate their time, Oasis 500 achieves all this in a cost-effective manner.
Ultimately, however, the true accomplishment of Oasis 500 will be measured in how it accelerates the success of promising start-ups, creating jobs and economic value. And once regional governments recognize the value of closing the seed funding gap that exists across the region, the Oasis 500 model will surely expand to benefit entrepreneurs everywhere.
Nashat T. Masri
Nashat is a Founder and Partner of Foursan Group. He joined Foursan from J.P. Morgan, where he was a Vice President in the Investment Banking Group, with a focus on financial institutions. His experience includes mergers, acquisitions and advisory assignments in the US, Europe and Latin America.
Nashat is a Director of Foursan Capital Partners I, the Jordan Fund, Al-Isra Education & Investment Plc, the Aqaba Development Corporation, Cairo Amman Bank, Estarta Solutions and XPress Telecom.
Nashat received a Masters of Public Policy from the Harvard Kennedy School, and a Bachelors of Arts in Economics from Harvard University.
© Zawya 2011
