In the mid 90s, tech startups were new and sexy. Bill Clinton was in the White House, and Monica too. Marrouche restaurant was still serving. All while American entrepreneurship was changing the world, generating trillions of dollars of value, pleasing clients and investors. The bubble that formed out of the frenzy burst in 2000. It was the end of the web sector’s first economic cycle and the beginning of another.
Six iPhone generations later, and Lebanon is yet to carbon copy Silicon Valley. In 2010, the year after Obama’s famous Cairo speech, Global Entrepreneurship Week and Endeavor came to Lebanon to share with us the American tips and hints for a successful ecosystem, but did we learn anything? Do we know how many jobs we want to create? How much wealth we want to generate? Could we even measure either, given the sad state of the government’s statistics?
Of all the money that poured into entrepreneurship funds and initiatives, what do we have to show for it? Nothing, really, with all due respect. How many of our startups have earned millions, or employed more than a few dozen people? How many startups were able to exit via a functioning Beirut Stock Exchange?
This — after the millions that flowed over the past four years through venture capital firms, central bank subsidies and the investments of friends, family and fools — is to me proof that we’ve squandered the investment. While I fully respect young Lebanese with bold ideas and a bright vision for the future, too many ‘entrepreneurs’ are copycats looking to strike it rich so they can leave this hellhole and never look back. We need a real return on this investment that will create revenues substantial enough to create jobs and provide for the next generation. And there simply aren’t enough tech entrepreneurs with real success stories to warrant the money we’re throwing at them. Out of the roughly $400 million made available by the central bank’s Circular 331 to support startups, a paltry $200,000 has been spent. The state needs to step back from emigration hungry techies and look at the broader definition of entrepreneurship.
The central bank is once again promising another $1 billion stimulus package that will keep housing loan interest rates down, provide investment capital for Lebanese innovators and, hopefully, increase consumer spending. This is a welcome step but support must target entrepreneurs focused on developing ideas that capitalize on existing craftsmanship and creativity.
It’s too late to become Silicon Valley, but it’s never too late to fund startups the right way.
I agree that the money being invested in the sector has to show returns in order to attract non-subsidized capital in the future. HOWEVER, I would argue that some of the points made in the article are unfair:
– Starting with the title, “20 years too late”. I would argue it is never too late to start investing in innovation. There are new waves of innovation every decade, and many markets have capitalized on them as well as missed them at various points in time. NYC was attracting the same criticism in the first internet wave; today it is a vibrant entrepreneurial market, second only to Silicon Valley. Successful ecosystems take time, capital and market participants collaboration to prosper. They also all require a success story to breed the next wave of entrepreneurs. Lebanon has not had its “home run” yet but many people including me are still betting it will come.
– The BDL initiative can certainly be refined over time, BUT should be applauded and embraced in the meantime. It unlocked the “chicken and the egg” problem and, if managed properly in the future, will be looked back on as visionary and a main catalyst to the market. I absolutely agree that the money to be deployed under 331 should generate returns to bring the next wave of capital; but we should not assume its failure to do so before it is given a chance. The Venture Capital portfolio management formula is a proven one; it relies on betting on home runs. If the funds follow this formula and “think big”, the money should generate returns.
– Finally, Lebanon should not try to copy Silicon Valley or any other markets; we should learn from successes and failures of other geographies and build our own differentiated and competitive industry.
Well we don’t want to imitate others….we need to be differentiated as long as there is a DEMAND. For instance, delaying the issue of Petroleum excavation in Lebanese sea board would confuse investors and suppliers. This sector alone will boost the Lebanese economy, government can subsidize more, more foreign direct investments and it will create a lot of job opportunities.
It is not about the availability of funds….it is all about corruption and parties who are backing those funds up to bolster their private NEEDS.
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