An “American Idol” for entrepreneurs; that’s how the first round of selection for Beirut-based business accelerator Seeqnce could be called. The 436 applicants — ranging from designers, developers to business people from 30 countries and places as far apart as California and Romania — had three minutes to pitch their idea to the three-person jury of Seeqnce program directors. Their dream? To become the next DropBox or AirBnb, ideas that found financing from Y Combinator, a renowned Silicon Valley-based accelerator.
All you needed was an Internet business idea, or techie aptitudes as a developer or web designer, and you could have applied to the program to be part of one of the eight startups that were recently selected. There was just one condition. You had to commit to being in Lebanon for six months, the duration of the program, which started on September 25. The 150 candidates selected after the first screening process had to partake in “shuffles” (where participants worked in teams on assigned projects), and “mixers” (Saturday night rooftop parties to network and share ideas). The aim was for the participants to eventually form their own teams.
They then went on to partake in Seeqnce’s four-day “hackathon” workshops. Some teams fell apart and other opportunities surfaced. Rawad Hajj, cofounder of Rikbit, an online platform for group outings and one of the selected startups, started off with two Romanians who left the program because of the August kidnapping spree that struck Lebanon. He then joined another team that was working on a similar idea. Finally the teams had to participate in the “challenge”, whereby they had 48 hours to pitch their business ideas to the Seeqnce directors. Eight startups were finally selected [see box], of which seven are from Lebanon and one from Egypt.
Funding the startups
Nine investors with links to Lebanon — high net-worth individuals, angel investors and a venture capitalist whose names were not disclosed — are betting on the success of these newly formed startups, each investing $68,000 to deploy a total of $612,000, of which $306,000 will be directly injected into the startups in cash and the remainder will be given in the form of Seeqnce services. Each startup receives $38,250 in cash and an equal amount in form of usage of the Seeqnce space for six months, mentorship from the five program directors, access to the accelerator’s network, and workshops provided by “successful businesspeople and excellent designers,” according to Fadi Bizri, one of the founding members. He did not disclose the names of those providing the workshops, as the roster was not yet confirmed as Executive went to print. In exchange for this amount, founders of the startups have to give up a hefty 30 percent stake in their newborn company to Seeqnce and the nine investors, which will each receive a three percent stake, valuing the startups at $121,000 each (by taking into account the cash component). Accelerators in the United States and in the region that offer a similar program normally take a lower stake when investing in startups, as two of the most famed US accelerators, Y Combinator and TechStars, both take an average 8 percent stake and value the startups at $300,000; Jordan-based Oasis 500 and Dubai-based SeedStartup both take a 10 percent stake and value their startups at $140,000 and $200,000, respectively.
Cedric Maalouf, founder of et3arraf.com, an online dating site for the Arab world selected by the Seeqnce program, does not believe that the 30 percent stake is too much. “I just had an idea,” he says. “I didn’t have a team or a prototype. I really had nothing.”
The real work begins
According to Michel el-Meouchi, one of the founding members of Seeqnce, “It’s a different environment. We were going for the best balance between investors and startups. It had to be attractive on both sides and had to take into account the risk of the country and the region.” Venture capitalists were not too keen to participate in the program, according to Bizri. “The general attitude was that ‘we love the Seeqnce program and would love to meet the startups when they are out,’” he says. “We told them to get them out, we need to fund the program. Some are getting to a point that they understand that the upstream is necessary, it’s essentially their downstream.”
After the six-month program, the startups are expected to have a product out with at least early users and clear monetization options. At the end of the program, they will have the opportunity to pitch their ideas to investors for a round of financing, though after giving up 30 percent, handing over more equity might seem daunting for some. “It’s a jungle out there so not all the startups might get financing,” says Bizri.
After two rounds of financing, they have the option of buying back 10 percent of their startup. “If they make it big, they can take out some ownership” adds Meouchi. Holding their first run this year, Seeqnce aims to have it annually. “If we are still alive, we will do it again,” joked Bizri, still recovering from the rooftop party they threw in Hamra to announce the eight startups. Now selected, however, the party is over and the real work begins for these startup founders.
If these startups succeed, the market will likely open to other business accelerators, meaning a more competitive environment; one where the terms are less demanding on the entrepreneurs yet still attractive for investors.
Where Seeqnce invested
Similar to Chicago-based Threadless, elManshar is an online community for Arab designers to upload and sell their work. Starting off with T-shirt designs, elManshar will allow its viewers to ‘like’ designs and popular ones will go into production.
An online real estate website for the Middle East, Bayt Baytak will start by listing residential real estate for sale and for rent in Lebanon, with an aim to expand and cover the region. It will be map-based, whereby real estate owners and agents can locate their properties on the site.
To-do lists for “how to certify your baccalaureate diploma” or “how to handle government bureaucracy” are what Kactus aims to provide. It will be an online community-generated collection of to-do lists, or Kacts, that would be easy to manage and to share.
et3arraf is an online dating website for the Arab world in Arabic. It will introduce affinity matchmaking, whereby subscribers need to complete an in-depth questionnaire and matches with blurred pictures will be proposed initially. Following interaction between the matches, a progressive sharing occurs whereby the relationship can be taken to the next level.
Presella is a web platform that guarantees a specific number of attendees for an event before it is paid for. Once the desired number of tickets is pre-sold, the event is officially confirmed.
eTobb is an e-health platform in Arabic and English. Similar to WebMD, eTobb allows checking for symptoms online and finding information on medical conditions. It will also list doctors’ and hospitals’ information and allow for ratings and reviews like ZocDoc.
Yoofers is a social gifting platform. It will list a selection of products and users can request from their friends and family to contribute a small amount to a specific gift, and the person with the highest amount pledged wins the gift.
Rikbit is an online platform for group outings. Starting off with outdoor events and gradually branching out, Rikbit aims to allow users to create group events or browse for events that their friends or other Rikbit users can take part in.