Riding the Black Swan: Why Entrepreneurship Is Even More Important in Crisis-prone Regions

Being half-Lebanese and half-Ukrainian, my life has been intertwined with crises from the very beginning. I was born in the Soviet Union, a land that crumbled before my eyes, leading my family to move to Lebanon. There, amidst the beautiful chaos of Beirut, I witnessed a nation piecing itself back together after a devastating 15-year civil war.

This was the nineties, yet the story of the MENA region is one of persistent upheaval and resilience. From the waves of the Arab Spring to currency devaluations, endemic corruption, and now the harrowing wars, the region has endured through it all.

I am not just an observer of these events. As the Head of Middle East for Endeavor Catalyst, Endeavor’s co-investment fund, I have a front-row seat to the incredible resilience and ingenuity of our region’s entrepreneurs. In times of crisis, some might argue that entrepreneurship should take a backseat, that this isn’t the time or place for building high-impact businesses. I strongly disagree.

People often ask me if we continue to invest in countries gripped by turmoil. Shouldn’t entrepreneurship wait until stability returns? My answer is a resounding no. Crises don’t diminish the importance of entrepreneurship; they amplify it. When a country’s systems fail its people, visionary and determined founders step in to fill the void.

Entrepreneurs are the unsung heroes who drive change from the ground up, especially when top-down solutions falter. They tackle the toughest problems head-on, proving that innovation and progress are possible even in the direst circumstances. They create jobs, foster economic growth, and understand the day-to-day needs of their communities better than any outsider ever could.

Let me share with you two compelling examples that illustrate this spirit of resilience and innovation.

When a coup attempt blows up your cap table

Barbaros Özbugutu was looking forward to a good day. His payments startup, iyzico, acquired in 2019 for $165M by PayU, had just received a crucial license from the Turkish Central Bank and had five investors lined up for a $20M investment round. The morning of July 15th, 2016, Barbaros’s team had a small party in the office to celebrate before Barbaros set off to spend the weekend with his family.

By that evening, troubling WhatsApp messages started popping up on Barbaros’s phone. Something was happening in Istanbul. The military was on the streets. A coup attempt was underway. In the morning, Barbaros was celebrating a business victory. By the evening, he was rushing out to get cash and supplies with his wife not knowing what his country would look like in the morning.

Yet Barbaros, raised in orderly Germany, was shocked by the resilience of those around him. By the next morning, Turks were out cleaning up the streets. On Monday, his whole team reported for work. “This is a point where I felt the resilience of the country,” he says.

Many of his investors, however, remained spooked. Three pulled back from the deal entirely. One “opportunistic” investor even suggested a huge decrease in the company’s valuation from the previous round. But another, who had experience investing in less stable countries, took a more measured view.

“He called me and said, make sure that your family’s safe, that you are safe,” reports Barbaros. A few days later, when things had settled down, they spoke again and the investor proposed discounting the company’s valuation based on how much the stock market fell. “I think this was a very logical and fair approach and this was what happened. So we waited one week, the stock markets got discounted by 30%, and then we applied the same to our valuation and signed the contracts in September,” says Barbaros.

And that investor, the one who tried to use national upheaval to force a lower valuation? “They came back and said, ‘Okay, we want to invest now.’ And we said, ‘Okay, you can only invest with a 10% premium on top of the valuation,” says Barbaros, perhaps with a touch of satisfaction.

For Barbaros, the experience underlined a pair of lessons about building businesses in uncertain markets. The first was the value of planning.

“Normally, Turks say there is so much change that it makes no sense to plan,” he says. But thanks to their more German outlook, the co-founders took the opposite approach. They developed a risk map for the business early on and did three forecasts each year, plotting different scenarios based on the larger economic situation. This helped them weather the unexpected.

The biggest takeaway for Barbaros, however, was just how essential entrepreneurs are in a country where other aspects of everyday life can be dysfunctional.

“What entrepreneurship does is change things, and normally in this region that never happens because the people in power don’t want to have change,” he explains. “Entrepreneurship is a kind of cultural revolution.” Startups act as small democracies that show other businesses that change is possible and there are better ways to do things.

Revolutions, economic crises, & Covid: It’s not easy being an Egyptian entrepreneur

Egypt is not an easy place to start a business. The country has weathered revolutions, macroeconomic crises, and drastic currency devaluations. Egyptian serial entrepreneur Mohamed Azab has been through it all.

He scaled his first diagnostics business just on the eve of the Arab Spring in 2011. “A couple of weeks in, suddenly the mindset shifted into how can I take cash from my bank account because banks were closed. How can I have more security in the labs?”

The company survived that initial revolution, but the challenges facing it were far from over. In 2013, unrest flared again and curfews were imposed in Cairo. With the company on the line, Mohamed and his team had to get creative.

“You always have to find a way to make it work. We had more guts, I guess, to adapt to what’s happening, I’m talking about very basic things,” he says. “The female staff were only doing morning shifts. The men were doing the night shifts just because of security reasons.”

The team’s courage and determination paid off. That first business was eventually sold to the chairman of Endeavor Morocco, and Mohamed moved on to his second venture, a chain of hospitals called Seha Healthcare. Just as the business was getting started, Covid struck.

“We had to shut down and then suddenly we had to hire a lot of people to be able to care for Covid patients. That was a very tough time,” he remembers. “We also battled a hostile takeover from investors in the business. Suddenly, they wanted to buy the whole company and they actually pushed me out of the business for nine months. I had to step down until I came back and bought them out.”

His current venture, Grinta, a healthtech company focused on drug distribution in sub-Saharan Africa, has had to contend with currency devaluations, regulatory snarls, and an incredibly challenging regional situation.

“Libya, situated on the west border of Egypt, still has an ongoing civil war. If you go further south to Sudan, another civil war. You go east, you have the whole Palestine-Israel issue and now it’s obviously very tough conditions for the Palestinians. Then you have Iraq, you have Yemen. So the whole region is not stable and that obviously affects your growth,” he observes.

Surviving so many crises has taught Mohamed extreme agility. “We have a playbook. How can you downsize quickly? How can you optimize the business? How can you become more aggressive? It’s not only one black swan for seven years. It’s kind of like a black swan every couple of years,” Mohamed explains.

He has also learned to surround himself with like-minded co-founders and investors and to choose to only build businesses that are worth the difficulty.

“I’m waking up every day because I want to help somebody in a small town to deliver good healthcare services. We believe that’s a blessing, what we call in Arabic, baraka. It gives you a feeling that you’re doing something good,” Mohamed said.

That satisfaction helps power him through difficult times, and there are plenty of them in Egypt. That makes for a wild ride for local companies, but it also builds incredibly tough and resourceful entrepreneurs.

“It’s not like you’re in the US and you have the financial crisis in 2008 and then you have 15 years of prosperity,” Mohamed continues. “It’s actually happening much faster. It affects the DNA of the founders. You need to be very adaptive to move much faster.”

And though entrepreneurs are even more essential in a country like Egypt. “If you’re in Sweden or in Switzerland, you have very few problems. But here we have problems every single day. So you need people to come up with opportunities to fix them. Entrepreneurship is the only way for these economies to rise and flourish,” he concludes.

The biggest lesson of all from stories like Barbaros and Mohamed’s, however, isn’t just how to survive a crisis, but why you should bother to build in these markets at all. It is hard to imagine the bravery these founders need to weather so many storms, but it is even more difficult to imagine what their countries would look like if high-impact entrepreneurs like them did not exist.

Where would the economies be? Which industries would never have been disrupted? How many fewer high-quality jobs would have been created? Endeavor Entrepreneurs in Egypt raised $320M alone in 2023 and generated revenue in excess of $1B. Together they have created a total of 200,000 jobs. Türkiye has produced 7 unicorns. In 2023 startups in the country pulled in $722M in investment.

This innovation and investment not only makes life better for ordinary people today, it also shows that change in these regions is possible. Entrepreneurship in unstable places may be a personal baraka for founders. It is also a light marking the way to a brighter future. A country in crisis isn’t an argument against entrepreneurship – it is an argument for it.