Understading the Investment Landscape in Lebanon

Standard

Lebanon is undergoing a favorable change when it comes to investments and especially for the information and Communication Technology (ICT) segment.

The Central Bank of Lebanon (known as BDL – Banque Du Liban) issued a circular on August 22, 2013 known as Circular 331 that reduces risk to Venture Capital Firms (VCs)  which guarantees 75% of their investment either directly into startups or into startup funds. This move is encouraging for fund managers and VCs to spend more money on startups in Lebanon.

According to an article title “Let the investment game begine” by Livia Muarry from Exevutive Magazine, there are four known funds taking advantage of this new circular.

  • Berytech Fund which just closed its second fund with $30M-$35M is planning to invest in 10-20 companies in the next 4 years with individual investments up to $3M per company.
  • MEVP Fund which reports a fund of $50M from several banks in Lebanon is planning to invest in 20 companies in the next 4 years with individual investments up to $2M per company.
  • Wamds Fund with $75M.
  • Leap Ventures (Comgest) announced a $50M-$100M fund planning to invest in 10 companies and geared at companies that are in the last mile before exiting by investing $5M-$10M per company.

Funds are also noticing that many startups need help so there is a plan to setup an accelerator to help entrepreneurs quickly go from an idea to a stage that they are ready for investment by these funds or incubators.  A previously setup accelerator called seeqnce exited the market shortly it started in 2012, from the eight companies that went through seeqnce five are still active, however it is not clear how the investment has played out.

It is planned that the accelerator will handle 5 to 10 companies every 6 months, providing cash infusion, advice, consulting, training and space in return for an equity interest in the accelerated startup. It is unclear what the percentage, valuation and terms of the accelerator will be however historically they have been as follows:

  • Seeqnce (Lebanon) 30% share at $121,000 valuation.
  • Oasis 500 (Jordan) 10% share at $140,000 valuation.
  • UAE Accelerators 10% share at $160,000 valuation.
  • US Accelerators 8% share at $300,000 valuation.

In summary, it is a good time for small and medium ICT entrepreneurs, the “ecosystem” is ready for both entrepreneurs and investors, the next missing link are local business customers, otherwise these companies are forced to market and create solutions purely for foreign markets, making local market unprofitable.

Adonis El Fakih, CEO and CTO of Ayna Corporation, 15+ years experience deploying PHP powered solutions ranging from CMS, eCommerce to search engines and Omni-channel marketing platforms.  ( Open Adonis’ LinkedIn Profile )

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s