Incubating a New Wave of Immigrants in Silicon Valley

Entrepreneurs from all over the world train at the incubator 500 Startups in Mountain View, learning to fine-tune their products and attract Silicon Valley investors.  (Beth Willon/KQED)

The newest immigrants in Silicon Valley are coming from countries where technology is just getting started -- countries in the Middle East and Latin America. They're young and hungry for success, and they've left their home countries to be entrepreneurs, with no guarantees they'll make it.

"Actually, it was a bit of a chance," says Yousef ElSammaa, one of the co-founders of ElWafeyat, an online alternative to paid newspaper obituaries in Cairo, Egypt. "We didn't think they would consider people from our market."

In September, ElSammaa was selected to bring his project to the Mountain View campus of the 500 Startups incubator. He's only the second entrepreneur from the Middle East to be accepted at the incubator. He's learning to pitch his company to investors, and plans to expand his business in the Arab world from Jordan to Dubai, and eventually the United States.

Cairo doesn't have a strong startup economy, so when ElSammaa quit a stable corporate job to launch a tech business, he says he disappointed family members.

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"It's not socially acceptable, and definitely you get a lot of peer pressure from your friends and your family. And it took a lot to get my family to accept what I'm doing," ElSammaa says. "Eventually, you have to block all that out and focus on what you want."

The 25-year-old is one of the entrepreneurs who is bringing Egypt into the digital age. He runs a website where family members can save digital memories of people who have died.

"Culturally in the Middle East, it is very important to honor that person who has passed away," ElSammaa says, noting that the tradition of honoring the dead goes all the way back to the Pyramids.

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In the Middle East, an average newspaper obituary announcement costs $1,500. But ElSammaa's app is free to download, and it's just $50 to post pictures and tributes on the website. So far, he says 200,000 customers have used it and he hasn't had trouble raising big money from investors in Cairo and the United States. That includes $100,000 in seed money from 500 Startups founding partner Dave McClure.

"We try to help them figure out their business model, work on product design and eventually try to help them raise capital," McClure says.

Dave McClure, founding partner of the tech incubator 500 Startups talks with staff members after a new batch of entrepreneurs arrive in his San Francisco office. 500 Startups has offices in Mountain View, San Francisco and Mexico City.
Dave McClure, founding partner of the tech incubator 500 Startups, talks with staff members after a new batch of entrepreneurs arrives in his San Francisco office. 500 Startups has offices in Mountain View, San Francisco and Mexico City. (Beth Willon/KQED)

McClure brings in new foreign-tech talent to the Bay Area every four months. He looks for successful entrepreneurs in countries where Internet technology is still emerging. These new tech businesses need Silicon Valley's smarts to expand, and investors like McClure want the booming population of consumers in these countries.

"Those are the places that have young populations that are growing rapidly," McClure says. "Many of them now have smartphones and Internet devices. But there's not as much business creation or not as much content and application creation as happens in the U.S."

Norway is one of those places. That's why 20-year-old Sebastian Almnes was selected by 500 Startups. His software company, Techpear, helps businesses find top job applicants.

For the past four months Almnes has exhausted himself talking to potential investors and customers.  So far, he's banked $300,000, and he's working to perfect his pitch because he plans to stay.

"We're actually going to focus on the U.S. market, ignore the Norwegian market and go directly to the Bay area," Almnes says.

Techpear CEO Sebastian Almnes of Norway works on his pitch to investors with a 500 Startups mentor
Techpear CEO Sebastian Almnes of Norway works on his pitch to investors with a mentor, Marvin Liao, a 500 Startups partner. (Beth Willon/KQED )

That's what San Jose startup investors like Rick Rasmussen want to hear.

"As an investor, I like to touch and feel and work with the companies that I invest in," Rasmussen says. "At a minimum, they have to have some kind of presence here, whether it's a sales office or actually move headquarters to the Silicon Valley."

ElSammaa plans to open an office in Silicon Valley in two years and will tailor his digital memory product to fit this market.

"First of all, we have a lot of Middle Eastern people living in the U.S. market who would use the same service," ElSammaa says. "And then you have other people who don't have the same culture or habits, yet they still have the same needs."

Like many new immigrant entrepreneurs, ElSammaa says the key to his success will be to operate simultaneously in America and his home country.

Curious about the boom/bust cycle that is reshaping the Bay Area? Check out our Boomtown series.