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Gaza Sky Geeks is a startup accelerator that provides money and training to promising technology firms in one of the world’s least hospitable environments.

It is not exactly Silicon Valley, but Hadeel Elsafadi and Eid Naji are well on the way towards building successful Internet businesses amid the chaos and poverty that is Gaza City.

The two young Palestinian women — Elsafadi, 24, and Naji, 26 — are examples of how self-made entrepreneurs are creating jobs and carving out a small middle class in one of the most unstable, violent and poverty-stricken areas on earth. It's an innovative solution to poverty that could have application in other parts of the world.

In Gaza City, which has a population of 1.8 million, the average annual income is $5,158, and unemployment stands at 41 percent. By a host of measures — the rate of poverty, Israel’s tight border control and the persistent political instability that plagues the region — Gaza is one of the most difficult places in the Middle East to make a living.

And yet Elsafadi and Naji are bucking those odds. Elsafadi runs a digital animation startup called Newtoon, while Naji is setting up Lilac, an interior design app that enables users to see what furniture they can buy for a specific budget.

Elsafadi is able to nurture her startup thanks to an innovative program called Gaza Sky Geeks — a startup accelerator that provides money and training to promising technology firms. Naji doesn’t receive any funding from Gaza Sky Geeks but routinely uses the organization’s office space, which is available at no charge to Gazan entrepreneurs.

From Google to Gaza

Gaza Sky Geeks is the brainchild of Mercy Corp., a Portland-based nonprofit that is working to make Gaza an innovative tech hub. Supported by grants from companies like Google and Rogue Venture Partners, Gaza Sky Geeks was set up in 2011. Besides Newtoon and Lilac, the group has also given birth to Gaza startups like Wasselni and Tevy. Wasselni is an app that enables users to hail cabs, communicate with each other, find friends and share taxis. Tevy allows users to connect with viewers who are watching the same television show in real time — the idea is to link people with the same tastes.

Tom Sperry, co-founder and managing director of Rogue Venture Partners, a Portland-based private equity fund that invests in Gaza Sky Geeks, says organizations like Gaza Sky Geeks help address the problem of poverty and lack of job opportunities in Gaza.

“If folks create companies that create jobs, that stimulates the local economy. Besides helping companies grow from the idea to actual businesses, that is what incubators like GSG really do — they stimulate local economies.”

Last June, Gaza Sky Geeks hosted its first Startup weekend in Gaza City. Over 600 people applied to take part. The organization picked 150 of the most promising applicants, half of whom were women, to compete and present their startup ideas to investors and mentors from around the globe.

“Gaza faces a real problem in terms of unemployment and poverty and, generally speaking, IT incubators are important in enhancing the entrepreneurship in Gaza …incubators help create jobs and offer sustainability for some families," said Mohammed Ibrahim Migdad, a professor at the Islamic University of Gaza.

That said, the problem of poverty in Gaza cannot simply be addressed by creating tech companies that only help a portion of the population, Migdad said. Truly tackling the issue of poverty requires addressing “the main problem in Gaza,” which is the “siege and closure that face Gaza for nine years," Migdad said. "This closure prevents the ability to import raw materials for business or even export products.”

A tech startup in a war zone

Gaza Sky Geeks has its office on the third floor of a six-story building on a dirt road not far from the shore of the Mediterranean Sea and a popular beach. While the physical space is far from the biggest North American incubators that typically boast hardwood floors, glass walls and are wired with the latest technology — the daily work and exchange of ideas happening inside is not much different from any Silicon Valley incubator. The young entrepreneurs have access to desks, whiteboards and Internet. As one expects almost anywhere else in the world, T-shirts and jeans are the standard uniform, though most women wear hijabs.

Sperry of Rogue Venture Partners has firsthand experience of the obstacles that face Gazan entrepreneurs. Last year, as he landed in Tel Aviv on one of his numerous visits to Gaza, Israeli security forces surrounded the plane. He was interrogated for 12 hours about his activity in Gaza and about the sources of Rogue’s own funding. The experience didn’t stop him from returning to Gaza again this past summer.

Sperry says Gaza is full of “highly skilled people trying to build great companies.” He sees the day-to-day challenges of doing business there as just a fact of everyday life. “Like any good entrepreneur, you can figure out a way to solve these problems.”

Building a tech startup in a middle of a war zone isn’t easy. Along with all the normal challenges of starting a business, Gazan entrepreneurs must cope with power disruptions, isolation from the business centers of Europe and North America, and tight travel restrictions.

Elsafadi says that she typically has electricity for only about eight hours a day. “Sometimes, I go back to my house and turn on my computer to finish my work, and all of a sudden the electricity will cut off.”

These challenges, however, haven’t deterred her from pursuing her dream of owning the largest digital animation firm in the Middle East. In Gaza, an individual’s “ambition comes from his or her big dreams,” she says. Elsafadi has already worked with clients in Jordan, Egypt and Saudi Arabia. Without getting into financial details, she says her business is growing.

According to Elsafadi, Gaza Sky Geeks is providing Newtoon and other startups with the “appropriate place and appropriate counseling” to develop their projects. Newtoon uses digital animals to make commercials for companies.

Naji’s Lilac project won first prize at the Gaza 4.0. Startup Weekend this past summer, which was sponsored by Gaza Sky Geeks, the Google Developer Groups in Gaza and the Business Technology Incubator. BTI is part of the Islamic University of Gaza and aims to offer business development services to Palestinian entrepreneurs. The prize has enabled her to tap into BTI’s mentoring resources as well as a $2,500 USD grant tied to specific goals.

But she turned down the prize. “We realized that the prize came with a lot of conditions that we disagreed with — like copyrights to everything about the idea. We decided to work on Lilac ourselves to build out the idea."

Entrepreneurs like Naji face daunting obstacles in finding private funding outside Gaza. U.S. law makes it difficult for individuals to send money to Gaza to discourage funding for Hamas, which controls the territory but is listed as a terrorist organization by most Western countries.

Under the U.S. Antiterrorism and Effective Death Penalty Act, it is a crime to “knowingly provide material support or resources to a foreign terrorist organization.” The U.S. authorities interpret the law broadly and have closely scrutinized donations to Palestinian schools and other causes.

Naji’s team consists of a Web developer, architecture engineer, interior designer, a marketing manager and individuals who head up other key roles. They meet once a week, either at a local restaurant or at the Sky Geeks office, checking progress and setting out tasks that need to be completed by the next meeting.

Sky Geeks launched a fundraising campaign on Indiegogo in November with the goal of raising $70,000 to support more startups in the territory and pay for spiffier offices. The campaign had pulled in $118,000 by early December. The long-term goal is to raise $1.5 million.

As Sperry notes, even though Gaza Sky Geeks operates in one of the “most difficult, if not the most difficult living situations in the world, people are still showing up and working on their companies.”

Samar Warsi is a fellow in global journalism at the Munk School, University of Toronto. Follow her on Twitter: @swarsi