2018 has been a better year for startups

From seed to growth

Lebanon’s startup ecosystem is in much better shape today than 10 years ago, thanks in large part to Circular 331 from Banque du Liban (BDL), Lebanon’s central bank. We at B&Y Venture Partners have invested in some fantastic companies with exceptional founders and are very pleased with the quality of our portfolio to date. Most of our Lebanese portfolio companies are tackling global markets, and some of them have recently captured the interest of leading European and US venture capital funds. Circular 331 has made capital available across different stages of startup development (from seed to growth), which is key to developing a self-sustaining cycle of success. Entrepreneurs today also have access to a wider network of support with the recent growth in accelerators, incubators, matching funds, and angel groups. Having an active and engaged pool of angel investors is crucial to building a healthy ecosystem.

Going forward, it is important to deepen the level of support from the private sector. Local corporations across different industries often have major pain points that our startups can solve for them. For that reason, an increasing number of family offices and privately held companies are investing in our startups, and many are adopting and becoming customers of our local startups. This trend needs to continue.

The right legal reforms

Our government has shown willingness to play a bigger role in helping build our startup ecosystem. We are confident that the new government, when it comes, will soon pass new ecosystem friendly laws and update the country’s commercial code.

While there are always some workarounds, the legal infrastructure is too rigid for startups today. For example, there is no simple way of creating an employee stock option plan to attract top talent to Lebanese startups. Also convertible notes, which are allowed by Circular 331 and are one of the most commonly used instruments in startup financing across the globe, cannot be easily used today by Lebanese funds because of Ministry of Finance restrictions.

Along with improving broadband speeds, I believe that easing legal hurdles is one of the most important long-term investments our government should make in this sector. The right legal reforms can help Lebanon become the main hub for regional startups as well as an attractive incorporation destination.

Abdallah Yafi is a Managing Partner at B&Y Venture Partners

One Comment;

  1. Leo said:

    Is this a self posted ad for a VC firm? And a wishful title?

    These VC firms are the main problem of why there hasn’t been real progress in the country with one bankruptcy after the other in the tens of millions at a time. No surprise when all they care about are there exit strategies and imaginary unicorns.
    Not to mention their lack of judgement.

    Where is Matt Nash? That guy had interesting articles at least, he probably left but I think not before seeing the light, his last article “Still starting up” had the grains of truth.

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