Opportunites for new startups abound

An evolved but incomplete ecosystem

Near the center of Beirut sits the heart of Lebanon’s startup ecosystem, the Beirut Digital District. It is mainly here that Lebanon’s entrepreneurs gather to pitch and develop solutions to problems that are uniquely Lebanese, and others that are less so.

The country’s entrepreneurship ecosystem today faces challenges that are not insurmountable, and there are opportunities that may not be quite the stature of a “unicorn”—the rapid ascent to a  valuation of at least $1 billion—but are attractive and exciting nonetheless. Executive has examined the companies jostling for these opportunities in its profiles of this year’s batch of new startups, a survey the magazine conducts annually.

On the one hand, we see the ecosystem advancing and evolving in good ways. Interspersed with that is the fact that the entrepreneurship ecosystem is still incomplete. The sector’s most needed financial elements, in this magazine’s view, are more allocations of risk-friendly capital and better exit options, at the early and late stages, respectively, of a startup’s journey.

The ecosystem also needs stronger and more sophisticated regulatory support and improvement of rules, regulations, and arbitration. All stakeholders—from the ecosystem’s initiator, the central bank, to commercial banks and venture capitalists, all the way to entrepreneurs—understand the pattern and readiness to “fail fast,” but learn faster out of failures than anyone else, but this ethos has yet to be fully incorporated into the ecosystem’s cultural DNA. Lebanon’s first significant homegrown proof that entrepreneurship is indeed risky, the Bookwitty collapse, demonstrates the importance of improving the acceptance of failure, as much as it shows the perils of ego, and highlights the value of investing in sincere and honest dialog. This should be a priority for all stakeholders.

On the other side of our entrepreneurial landscape, Executive adds its voice to the call for increased commitments from academic institutions. We can see progress when we compare the involvement of universities today with two years ago, but, in the eyes of Executive editors, more could be done. It is crucially important for the future of the Lebanese economy that we develop and exponentially increase the ability of our entrepreneurs to nurture Lebanon’s digital economy transformation, and understand that tech entrepreneurship is the natural core driver for Lebanon’s transitioning into a digital future. 

The urgency of transitioning the Lebanese economy into a digital economy has been acknowledged, but there must be renewed vigor and support on the part of the state. While we have seen some progress—for example an e-transactions law that should help expand Lebanon’s online commerce—there is still much to be done.

The next government, yet to be formed when Executive went to print, must renew efforts to upgrade infrastructure necessary for the success of local startups, the ecosystem as a whole, and Lebanon’s transformation to a digital economy. Public stakeholders have indicated support for the digital economy and building infrastructures, but this can really only happen if Lebanon has a government equipped to meet its obligations to the country and national economy, and not the parochial interests of some actor, party or group.

The digital economy, just like the entrepreneurship ecosystem, will surely develop better going forward if the impulse to cohesion is emphasized over and above that of ego and partialities. If, instead, young Lebanese entrepreneurs can bury any such lingering mentalities and turn them into the legacy corporate environment and public sector decision making, then the ecosystem can aspire to be a cultural rocket with the power to propel the national transformation into a digital economy—a transformation much needed for Lebanon, in 2018 and beyond.

There are indications, or stated intentions at least, that a civil registry, health card digitization, and other examples of digital infrastructure rollout are coming. But long overdue initiatives also linger—such as the Beirut Stock Exchange’s electronic trading platform, an overhaul of the Capital Markets Authority’s regulatory capability to oversee capital markets, as well as legal frameworks and judiciary infrastructures to enable the digitization of the economy.

It is also necessary to reassure the private sector, and further connect it with the digital economy. One project that could solidify the relationship is the planned national data center, which is still undergoing technical preparations as a public-private partnership. This center, and other projects, would allow the private sector to expand the mindset that considers the digital economy not an impossible mission, but something that Lebanon has the human capital to work on and achieve.

Lebanon has so much knowhow in the digital sphere and ITC sector that could be applied to the transformation to a digital economy, but it has not fully realized or applied this expertise at home. There is some political will within the government, from certain actors, but overall this political energy is still lacking. All state entities need to work together to continue nurturing the ecosystem and set the country on a path to digitalization. On this path, there is much to be done.

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