Running a startup in Palestine is no easy task. In addition to the fact that over 90 percent of startups anywhere fail, with financial shortages being the most common reason, those in Palestine face additional barriers: the country is still under Israeli occupation and doesn’t have full control over its market infrastructure and economy.

Below are six often insuperable obstacles that startups in Palestine must contend with, and a glimpse at how they affect business models.

Financial transactions

Besan Abu Joudeh of Ramallah-based Buildpalestine, a crowdfunding platform for social impact projects, remarked that one of the barriers her startup (and others) faced is the difficulty of conducting financial transactions.

“There is a risk associated with any and all financial transactions [for startups],” she told Wamda.

Naturally, this is of particular importance to a crowdfunding platform, and the choppy waters have proven difficult for the Buildpal team to navigate. Abu Joudeh and colleagues are still experimenting with possible solutions.

One conceivable way out of the impasse was blocked before anyone even had a chance to try it. Last year, a startup community movement launched a campaign to convince Paypal to begin operating in Palestine (Paypal does not allow Palestinian-based accounts to use its services). Despite the popular support garnered by the campaign, Paypal refused to budge, keeping its exclusionary policy in place.

Liquidity

“Ahmed,” the owner of a tech-based business in Palestine who preferred to use a pseudonym, told Wamda that his startup saw good growth over its first few years. However, it then began to lose much of its capital as a direct result of not securing necessary liquidity for its operations.

“We have renowned business customers who have unfortunately failed to keep up and pay our service fees in time,” Ahmed lamented, “which has forced us to nearly fall apart due to lack of financial liquidity.”

Ahmed added that, owing to financial losses, he was obliged to temporarily close his startup. He has since decided to redesign his business model so as to make pre-payment a requirement and avoid running into the same problem in the future.

Securing investment

Fosha is a social marketing network/startup dedicated to promoting online and offline marketing in the Gaza Strip, in addition to providing cultural services and selling gifts. Cofounder Muhannad Al-Nounou told Wamda that Fosha’s success brought with it a new challenge.

“Our growing business and new projects need capital so that we are able to grow naturally,” he pointed out. “It is very difficult to secure such an investment in Gaza these days.”

A paucity of thriving investment firms means that many entrepreneurs, both budding and experienced, face the same hurdle in the Gaza Strip in particular, and in Palestine in general.

Palestine, it should be noted, does have startup-investment firms. However, their limited wherewithal cannot match the needs of an array of rapidly growing startups.

In the meantime, Fosha and startups like it soldier on...and cast about for investors.

Ecosystem growth

Salah Amleh, the director of Bethlehem Business Incubator (BBI), said that one of the main barriers faced by their 10 incubated startups is the fragile infrastructure. The startup ecosystem in Palestine still needs to grow culturally, technically, and financially, according to Amleh. A sturdier technological infrastructure, an investment-friendly and smooth financial system to support startup operations are essential, he remarked. On the cultural level, he stressed cultivating awareness of entrepreneurship as an undertaking with specific requirements.

"The startup ecosystem in Palestine is still in its early stages and is not fully robust. We also have the challenge of poorly trained entrepreneurs,” he said. Amleh added that this does not mean that entrepreneurs lack talent or the innovative spark, but specialized business skills, something that BBI provides with its mentors and coaches, alongside other business incubators in Palestine.

Entrepreneurship skills

Munasabat is a Gaza-based startup whose services enable the Palestinian diaspora to send gifts (such as chocolate, flowers, stationery, and other consumables) to local families.

Founder Dina Abu Shaban revealed that one of Munasabat’s main challenges is acquiring specialized knowledge. She emphasized that it was critical for her team, which is hungry but relatively inexperienced, to learn the finer points of accounting, strategic planning, and management, skills she has honed through training and self-development.

Market compatibility

Abu Joudeh and Amleh both highlighted the fact that startups in Palestine come up against imposing barriers related to the overall business market.

The most apparent of these are the market’s relatively small size and limited purchasing power.

Another hurdle to overcome is poor technical infrastructure. For example, 3G coverage is still being introduced to the West Bank. Meanwhile, in Gaza, Israel has forbidden it, despite its claims that it no longer occupies or controls the Strip.

Feature image via Pixabay.