When Yahoo bought Jordan-based Maktoob.com in August 2009 for a reported $85 million, it barely made a ripple in U.S. technology circles. But the deal for the leading Arabic online community had a seismic effect on the fledgling startup economy in the Middle East.
And it's just one of several examples of how Silicon Valley has helped jump-start the region's innovation economy.
There's a lot at stake. Silicon Valley is on the hunt for new markets and new sources of ideas. The Middle East needs to generate jobs at a far greater pace for its unusually young population. And the U.S. government has launched efforts to help Middle Eastern entrepreneurs in hopes of rebooting the difficult relationship between the two regions.
There is a huge opportunity here for everybody — but also some huge hurdles. There's so little startup activity in the Middle East, for instance, that most firms that track venture capital spending don't even monitor the region.
The one source I could find, the Zawya Private Equity Monitor, reported that Arab private equity funds allocated only $72 million to venture capital funds. And according to Renaissance Capital, the Middle East — excluding Israel — has accounted for only 3 percent of the world's 197 initial public offerings so far in 2010.
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