Following the success of Circular 331 funding, Lebanon's start-up scene is growing fast, but not without some speed bumps.
Across the world, tech start-ups are helping economies grow and providing critical job growth for the next generation of entrepreneurs while serving diverse markets with innovative solutions for localized needs. Nowhere is the growth more apparent than in the Middle East, where in 2016, 33% of companies reached an advanced level of digitization, and this number is expected reach 72% by 2020.
A report released ahead of the World Economic Forum on MENA found USD900 million had been invested across the region in 2018, with much of it funneled toward technology-centered ventures. According to Mirek Dusek, deputy head of the Centre for Geopolitical and Regional Affairs at the World Economic Forum, such a trend will have exponentially positive impact on youth employment throughout MENA markets.
“The Arab world will need its private sector to address youth unemployment, the current skills gap for the Fourth Industrial Revolution, and the inclusion of women in the workforce,” Dusek said. “Start-ups, and the entrepreneurs building them, are key to a strategic public-private dialogue on these issues and to creating corresponding new opportunities in society.” The same holds true for Lebanon, where a robust start-up scene has blossomed since 2014, when the Banque du Liban (BDL) began the Circular 331 funding initiative to inject local tech companies with USD400 million of investment capital. In effort to reverse Lebanon’s chronic brain drain, in which the most educated and talented individuals emigrate from the country in search of job opportunities abroad, Circular 331 has helped create the foundation for healthy tech ecosystem to grow in a nation long mired by political instability.
Since its launch, Circular 331 has increased the number of local startups, co-working spaces, incubators, and accelerators, by providing critical financial incentives to develop the local tech scene. Combined with previous funding initiatives, including the Berytech fund of USD30 million and the Middle East Venture Partners program of USD50 million, such financial support has brought about talk that Beirut could one day assume the role of a Middle Eastern Silicon Valley. In recent years, several Lebanese start-up companies have drawn headlines around the world, affirming venture capital investors’ inclinations that a vibrant, talented pool of entrepreneurs was laying dormant in the country, only needing some Kickstarter funding to spring into the action. Among the most celebrated Lebanese start-ups is Proximie, a virtual surgical tool that could revolutionize healthcare around the world.
Co-founded by surgeon Dr. Nadine Hachach-Haram, Proximie uses augmented reality to connect doctors in developed countries with those operating in less accessible areas, such as conflict zones or isolated rural areas. Through Proximie, surgeons can oversee operations from start to finish, advising staff on site and significantly reducing healthcare costs for areas that normally rely on limited humanitarian assistance.
In the footsteps of popular MENA food delivery apps like Talabat, a homegrown Lebanese version called Toters is taking off with great success in the nation’s urban and suburban areas. With thousands of orders per month, Toters has helped connect clients with their favorite local restaurants, by creating a localized delivery network through the convenience of a mobile phone app. Another ‘Made in Lebanon’ success story is Diwanee, a content distribution app offering its mostly female readership a unique mix of Arabic-language websites focusing on beauty, fashion, health, entertainment, retail, and the latest in social media trends. Though the company is based in Dubai, the majority of the Diwanee team is based in Lebanon, and its founders recently announced a majority acquisition by the Paris-based digital media publishing company Webedia, which injected USD5 million in expansion capital into the venture.
While such stories will continue to make headlines, several steps will need to be taken by Lebanese political and business leaders to ensure the start-up scene continues along the path to prosperity. Lack of know-how, flawed financial strategies, and a lack of support for established tech companies may create obstacles for growing startups. “After meeting multiple start-up CEOs, it is pretty apparent that Lebanese entrepreneurs can create great technologies,” Marc Suidan, a Lebanese entrepreneur leading Mergers and Acquisitions at PwC, told Lebnet. “The main limitations are really scaling up and building strong go-to market capabilities, resulting in slow growth businesses with lower valuations … The main gaps are access to more experienced and seasoned executives in areas of sales and operational scale-up, and board members.”