Entrepreneurship: Beware a bubble

Last August, after much speculation Banque du Liban – Lebanon’s central bank – released Circular 331. The $400 million plan aimed at encouraging the country’s start-up sector by guaranteeing 75 percent of commercial banks’ investments in fledgling companies. The long-term aim was to boost Lebanon’s ‘knowledge economy’. Many in the startup world greeted it with enthusiasm as a move that could potentially revolutionize the ecosystem, but others were more skeptical of how banks would go about investing in startups. In recent months, as the mechanisms have become clearer, banks have begun to make deals with venture capital firms that will invest the money into startups on their behalf. Several funds already have money pledged from banks and are waiting to invest (see full article). While documents structuring the funds are still waiting for approval from the central bank, Lebanese startups are faced with a lot more money than ever before.