Should you invest in tech startups in a post-conflict zone?
More than two billion people live in countries categorized as conflict zones. Despite the challenges faced by entrepreneurs in these regions, the untapped markets of these post conflict zones representing many business opportunities. However, the question every investor faces is will tech startups in Iraq succeed and make money? This article highlights the key reasons why an investor should think of investing in tech startups in a post-conflict zone like Iraq.
Generating Employment Opportunities
Economic experts agree that empowering entrepreneurs can create employment opportunities in any post-conflict zones which leads to improved overall security. Not only do tech startups have the potential for growth and long-term innovation, but they can also play a great role to sustain peace after a long era of violence and instability. Keeping youth busy through employment is the only solution. More and more local tech startups are launching in Iraq; creating jobs, serving communities, providing income-generating sources and contributing to the local economy. Post-conflict zones can present lucrative business opportunities, especially in untapped markets. There is also the first-mover advantage for the more risk inclined investor.
Gaining Faster Growth
For many entrepreneurs, establishing a tech startup in an unstable environment is not about making returns quickly, but also about being patient enough to wait for potential. Investing in a tech startup in such a region requires patience; and not for the faint hearted as things can quickly change as we have seen over the years. One of the recent studies conducted in Syria during the times of war reported that more than 50 percent of people believed in innovation, entrepreneurship, and technology as a way to meet local challenges including unavailability of global brands, high-quality products and services, and employment opportunities.
Foreign investment in frontier economies does wonders for local markets whilst also presenting investors with potential high returns. There are also many more opportunities in a country like Iraq compared to a more developed/saturated country. The lower cost of business such as labour and taxes etc is also helpful to startups.
Due to the poor economic situation in post-conflict zones, the unemployment rate usually tends to be higher, leaving a big percentage of the skilled labor force out of jobs. Startups offering sustainable employment in these regions are able to choose from a talented pool of candidates. Iraq is currently an employers market due to the lack of jobs available meaning there is a large pool of unemployed talent.
The final thoughts
Post-conflict zones like Iraq, despite of the challenges, present an attractive investment opportunity due to their unsaturated, untapped market and high demand for products and services. Tech entrepreneurs, whether local or foreign, are expected to contribute their part in rebuilding the country. With the right attitude and technical knowledge, tech entrepreneurs can take advantage in being the first-mover in their respective industry.
Sana naz is A business management academic with corporate sector experience. Sana has been writing for over six years now fand is a keen blogger!