Startups actually

A selection of 2020’s best

Success is a perfect measure of life. Yet this perfect measure is never in itself perfect. Money, knowledge, passion, experience of gain, learning from failure… All can be successes and each can be a tremendous hurt that changes life’s trajectory. It depends on our objectives and circumstances.

Success of entrepreneurial startups and young tech enterprises in the 2020 setting of abysmal politics and their economic havoc, can be as wide as learning from failure and keeping the Lebanese entrepreneurial spirit despite everything, to a new idea that has become viable exactly because of the major changes 2020 has presented.

The yeas has been a pivot-point worldwide, changing the conditions that shape digital and tech entrepreneurship. E-commerce and gaming are teeming with market potential, boosted by new limitations of physical mobility that have seamlessly translated into increased digital mobility, shopping, and social interaction. 

The changes reverberated into retail – as brick and mortar vendors were rattled by the realization that they need full digital presence to compete. This may well have sparked a sudden demand for digital services and construction of e-commerce shopping platforms that qualifies as demand shock. 

Such a shock will quite predictably have upward distorting effects on formation of tech startups with aspirations to tackle this market for building and managing the digital real estate that is now under development – but it nonetheless is a boon for tech ventures, which already have experience in this realm and a hope and opportunity for new startups in a tech entrepreneurship ecosystem such as the Lebanese one.  

Change drivers on the meta level of financial markets globally are continued disruption of traditional banking and credit; the emerging acceptance of digital currencies by central banks (at least in conceptual terms and as far as they themselves can create those central bank digital currencies, or CBDCs); consumer acceptance of cash-free and card-less smartphone payment solutions (exemplified in the huge demand to buy into China’s Ant Financial / Alipay original initial IPO proposition of a $34 billion flotation that was halted in November); and last but not least the diversification of the regional fintech startup scene and rise of Middle Eastern fintechs (see comment by Mirna Sleiman). 

In medicine, apps in telemedicine are thriving worldwide, far beyond the spike of Covid tracking; and in education, the digital transformation of the classroom has also been flying high internationally.  From early in the lockdown days, investor and user interest alike has naturally zoomed in on communication and connectivity providers. All in all, it seems that the year 2020 could go down in history as the year when digital living acquired its virtual wings.  

Challenges and advantages of covid induced global changes

Set against the background of global economic uncertainty and local economic misery, the Lebanese environment for tech entrepreneurship is first of all that what it always was – a small ecosystem, equipped with a laboratory-sized native market and enticing regional opportunities, but nowhere near able to emulate the market mass that startups would find themselves surrounded by in Europe, the United States, or the Far East. 

However, players in this ecosystem can latch onto the global opportunities of this entirely atypical period in the global economy and thus transcend not only the traditional restraints of the small local market (as has been every successful startup’s vision since the conception of the entrepreneurship ecosystem in the early 2010s), but also the heavy chains of the country’s confounded economic crises that are ongoing and must be expected to last for years. 

The mounting risks for entrepreneurs are impossible to ignore. Fintech startups in particular, while needed and in principle better positioned than ever in the distressed Lebanese context of finance and banking, seem to not only – like everyone in the entrepreneurial landscape – have to fight the exchange rate and local ecosystem’s funding problems, but moreover still face uphill mentality battles and regulatory cliffs of restrictive public thinking when they even want to incorporate advisory services. 

This all means that global and regional markets are today the saving hope for the entrepreneurs of Lebanon. To cite one example from the cluster of new export-oriented ventures in the organic cosmetics realm, the past few months of Covid-related challenges appear to have actually enlarged market opportunities in the Gulf. 

As Neelam Keswani, co-founder and managing director of Dubai-based online fashion and beauty online store Glambizle.com, tells Executive, she saw her customers shift from purchases of appearance-enhancing makeup to spending their money on organic cosmetics such as hair, nail, and skin care products from indie and clean beauty brands. 

Her 2015 e-commerce startup, which experienced the typical trajectory of fast initial monthly growth followed by a plateau phase after three years, saw a serious growth spurt in 2020 – because customers focused on pampering themselves with organic cosmetics.  “In 2019 we took a flight up and 2020 was exuberant. People had a lot more time for developing a skin care and clean beauty routine,” Keswani says, attributing her venture’s exceeding of sales targets by double-digit percentages all throughout this year to the changes of lifestyles that were triggered by the corona virus crisis. 

Hard-earned business success

 Also Ayman Demachkieh, chief commercial officer of digital agency Webneoo in Lebanon (a maturing startup, see profile below) tells us that the company witnessed its results and its turnover go up by double-digit percentages over the course of the past 12 months. “Focusing on our e-commerce projects and not digital projects in general, there has been an increase of at least 15 to 20 percent comparing 2020 to last year. Covid-19 played in my opinion a huge role in raising awareness with every business owner of the importance of their digital presence,” he tells Executive. 

The  2020 cohort of new Lebanese startup successes is certainly not large in number (it never really has been and is even smaller than average this year) but large in entrepreneurial spirit nonetheless. Among them, Executive’s entrepreneurship radar picked up hopeful pings from two enterprises that are engaged with the ecosystem – Potion Kitchen just graduated from the SMART ESA accelerator and Cloud Sale recently signed on with the Nucleus Ventures startup support – and two standalone startup enterprises that this year have not directly been involved with the ecosystem, Webneoo and The Good Thymes.

For this snapshot at the end of the year, we bring you these four examples of entrepreneurial spirit that succeed against depression, capitalize on local products, monetize new solutions and regional opportunities, or are embarking with unbridled determination on finding the new opportunities hidden in crises.  

  • The cohort of new start-up successes in not large in number, but large in entrepreneurial spirit nonetheless.

THE GOOD THYMES

THE GOOD THYMES

Year of incorporation: 2018

Activity brief: Production, marketing, local sales and direct e-commerce sales of own niche brand products based on thyme and sumac, two spices native to Lebanon. Supply chain entails local sumac and thyme, plus importation of ingredients such as fruits and nuts used in proprietary product mixes.

Current markets: Lebanon, limited US presence, Kuwait and Dubai 

Founder(s): Fady Aziz

Team size: 7

Economic targets and markets of expansion:  

US, Saudi Arabia, Qatar, and European markets

Business model: B2C with some B2B

Funding stage: Bootstrapping

Current funding target: Not applicable

The Good Thymes is the 2017 brainchild of entrepreneur and designer Fady Aziz. The 2018-incorporated company has carved out a niche with its stylish products, which enabled it to have a year that begun hard, but then turned to be “not very good, but good,” as Aziz tells Executive. Exports are happening, to Kuwait, the United Arab Emirates and the heavily Lebanon-affine state of Michigan in the United States. 

Export incomes are allowing the firm to currently operate under a strategy of selling at or occasionally below cost in the Lebanese market. 

Locally, the company relies on select presence at 80 points of sales, third-party online retail platforms and seasonal stands to enhance its brand awareness. 

Fortuitously, Thymes was e-commerce ready with its own platform when the crisis hit and sales via this channel in the past quarter reached an estimated 30 percent of total sales.  

“It was in small quantities but we started exporting our products; this helps us to have balance from a financial perspective,” says Aziz. 

The existing narrow but logical export niche in the US state of Michigan is by the company’s strategy slated for expansion into the wider American market. Regional targets are Saudi Arabia and Qatar.  

POTION KITCHEN

Year of incorporation: 2018

Activity brief: Research and development, production and marketing of natural skin care and slow products in clean beauty niche. Patents for formulas are under preparation. Supply chain is composed of own production of essential oils and hydrosols, in addition to imported materials.

Current markets: Lebanon via e-commerce and resellers, expanding sales through proprietary e-commerce platform

Founder(s): Rafa Hojeij 

Team size: 4

Economic targets and markets of expansion: 

Near-term growth through exporting to West African markets beginning with Ivory Coast and Senegal

Business model: B2C

Funding stage: Looking for angel investors

Current funding sought: $65,000 to develop exports 

Establishing Potion Kitchen was Rafa Hojeij’s life-long dream. “Since I was a child I used to draw up skin care products, design labels and formulate them in our kitchen.” 

Raja has been changing her lifestyle to be as natural and healthy as possible. “I switched to a vegetarian [diet] and started to slow down my habits of consumerism,” she explains. This need to slow down and be more mindful fed her brand, leading Hojeij to create a slow beauty brand that cares about the environment and is opposed to mass production and consumerism. 

The strategy of Potion Kitchen is to be a clean beauty indie brand that is affordable to the middle class consumer in Lebanon and export markets, beginning with West Africa, where Hojeij can rely on family networks. 

“I wanted to create something affordable for people who are aware and have consciousness about their health, but don’t have such options available to them amongst imported brands that are very high in price.” 

The venture sources some of its essential oils and hydrosols by extracting them under own supervision in her home village but imports other ingredients. 

Sales channels are functioning well and include re=sellers as well as a proprietary e-commerce platform that became operational at the end of 2019. 

Having been accelerated at Smart ESA as part of the 2020 startup cohort, Potion Kitchen is looking for an angel investor.

CLOUD SALE

Year of incorporation: 2018

Activity brief: Online wholesale platform and e-commerce enabler. Digital services include four pillars: content development, branding, digital marketing strategy, and technology. 

Current markets: Pilot operation in Lebanon

Founder(s): Mohamad and Hani el-Hoss 

Team size: Two founders plus three part-timers 

Economic targets and expansion markets: Francophone and anglophone countries in Europe

Business model: B2B

Funding stage: Obtained seed funding 

Current funding target: To be determined

Cloud Sale graduated from the acceleration program of Flat6 Labs in Beirut, and pitched for investments at the second Flat6 demo day in fall of 2018. Commencing operations in January of 2019, the marketplace according to founder Mohamad El-Hoss, achieved turnover of more than $260,000 over the course of the year – up to the month of October. 

With heavy concentration of its hospitality sector client base in the trendy Gemmayzeh district of Beirut, the startup encountered a first wave of difficulties when the combination of social protests in the thawra and the mounting inability to set prices for imported supplies due to the sudden fluctuations in the exchange rate impaired the rising business. 

In response, the startup pivoted away from its B2B marketplace business model to a B2C model in the hospitality sector. Financing and operations were already becoming increasingly challenging throughout the first half of 2020. The ultimate blow came with the physical destruction of most restaurants and pubs in Gemmayzeh on August 4. 

The startup decided to reinvent itself from running marketplaces with a hospitality sector focus, to become an e-commerce enabler. Cloud sale enrolled in the Nucleus Ventures program, obtaining perspectives of seed funding and potential matching funds via the Nucleus network and its Lebanon Enterprise and Employment Programme (LEEP) partner program from the UK. 

Cloud Sale has just designed its manifesto of the digital services that it is going to offer. The new main target market is Europe rather than the GCC, which according to Hoss are crowded with competitors from the Indian subcontinent and the Far East. “We will position ourselves for the European market,” Hoss tells Executive.  

Webneoo

Year of incorporation: 2012

Activity brief: Software company, provision of e-commerce advisory and platform building

Current markets: Clients in Europe and Lebanon 

Founder(s): Michel Achkar and Nour Fakhoury 

Team size: 8

Economic targets and expansion markets: Be a global player in facilitating communication between digital services providers and their clients 

Business model: B2B

Funding stage: Bootstrapping 

Current funding target: To be determined

Webneoo is the most mature tech venture in our list of interesting startups at the end of 2020. The company has achieved business growth in terms of turnover and results this year and used the virus factor to its favor, chief commercial officer Ayman Demachkieh tells Executive. The coming years in his view will see continued growth in the demand for building of e-commerce platforms, advisory on digital strategy, and provision of digital management of social media. 

“All businesses that have physical shops and cannot sell online discovered that they have inventory that they could not move under the crisis. They realized the importance of having digital presence and online market action,” explains Demachkieh who says he joined Webneoo because he found it to be a digital agency that combines a startup culture with a highly professional way of doing things. 

He was not authorized to disclose revenue or profit information but volunteered to say that “the company is doing well, especially this year.” 

Having launched a new line in 2019 that is in the domain of digital applications, the company is strategizing for further expansion and ultimately global presence by offering “a custom designed application to make communication and work easier between any digital agency and their client. We actually target international clients, the whole world. However, we are currently focusing on building our portfolio in the GCC,” Demachkieh adds. 

 Webneoo is not currently engaged with fundraising but is contemplating to launch a new round of equity seeking in the second or third quarter of 2021.

Thomas Schellen

Thomas Schellen is Executive's editor-at-large. He has been reporting on Middle Eastern business and economy for over 20 years. Send mail

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