FROM CRADLE TO BOARDROOM

Lebanon 2013 | ICT & MEDIA | FOCUS: START-UPS

Signs that Lebanon is developing a flourishing tech community are on the rise thanks to improving internet connectivity, a skilled workforce, and angel investors.

The entrepreneurial spirit is gaining force, and young entrepreneurs are determined their country is ready for a tech start-up boom. One of the main motors behind the rapid increase in start-ups is the Banque du Liban (BDL). According to a recent circular, $400 million is now 75% guaranteed by the BDL for Lebanese banks' equity investment in start-ups, incubators, accelerators, and funds. Through his Twitter account, Telecommunications Minister Nicolas Sehnaoui announced that through this guarantee, the BDL has, overnight, brought Lebanon's sovereign financial risk profile to roughly the same level as San Francisco, New York, and London; “this is enough funding to kick off and boost a huge number of young Lebanese entrepreneurs trying to build from Lebanon a global success story," he tweeted.

According to a study by Shikhar Ghosh, a senior lecturer at Harvard Business School, 75% of start-ups fail. Beirut-based NGO Berytech, an incubator that mentors new businesses, is contributing to changing the culture to one that tolerates failure, something crucial for the success of start-ups. According to Sami Beydoun, Managing Partner of the Berytech Technology Fund, the first of its kind in Lebanon, there are more young entrepreneurs in Lebanon willing to take a risk and start their own companies with the help and support of Berytech and other funds; “this is accelerating the development of the sector and we are lucky to have entrepreneurs that are determined, resourceful, optimistic, and resilient," he said. Berytech has invested in 15 companies in the ICT and related technology sector so far. It has now started to work on a second fund, larger than the first one, estimated at $20 million to $30 million, which is expected to be launched around the beginning of 2014.

An example of a successful start-up is Anghami, a digital music app launched in 2012 that offers listeners in the Middle East unlimited Arabic and international music for streaming and downloading. It is the first mobile and web music-streaming platform in the Arab world. Anghami is now the number one music app at app stores across the MENA region, with almost 4 million tracks available, and it is targeting 8 million by end-2013. In an interview with TBY, Elie Habib, Co-founder of Anghami, explained there was a need they observed, when travelling abroad, for music services, which are available across the world but are not present in the Middle East. With the smartphone industry growing and 3G penetration on the rise, “it is clear that there was a need and we grabbed that opportunity," he said. According to Habib, the increase in start-ups in Lebanon stems from the lack of opportunity; people want to create better opportunities, and the strong human capital in Lebanon is contributing to the creation of start-ups. The total initial investment for Anghami was around $1.5 million. According to Middle East Venture Partners (MEVP), a Middle East-focused venture capital firm that invests in the early and growth stages of innovative companies, the amount of capital needed to start an ICT company is relatively small. As Walid Mansour, Managing Director of MEVP, told TBY, for $1 million, which is the size of investment the firm makes, you can achieve many things by being based in Lebanon. In addition to the excellent engineers and marketers in the country, the cost of business is relatively cheap and you are exposed to the Arab world, he said. Therefore, “with $1 million you can build a business that has an extensive reach right from the beginning," he concluded.