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Lebanon’s doppelgänger

The opening of Iran could be Lebanon’s ticket to startup success

by Samer Karam

Imagine a country with a mix of ancient and modern cultures and religions, and 6000 years of history. Imagine a country where women and men are equally educated, and where technology and innovation combine.

Imagine a country with some of the highest Human Development Indicators (HDI) in the region but with a labor potential that remains untapped, and a stifling brain drain.

Imagine a country where the diaspora is a vast, successful, powerful pillar of its economy and its fledgling startup ecosystem struggled for years until a critical event resulted in overnight capital abundance.

To every Lebanese, in Lebanon and its diaspora, this country is Lebanon.

To me, this is also Iran, Lebanon’s doppelgänger – not in all things for sure, but in entrepreneurship.

Lebanon’s startup ecosystem was born around 2010, with 2 Venture Capital (VC) funds, an accelerator, a tech conference, a startup weekend, and an angel network. For 4 years, the country struggled to attract direct foreign investment for its startup ecosystem, as the sovereign risk was considered far too high for venture capital. Then in 2013, Lebanon’s central bank intervened to stimulate the knowledge economy with BDL Circular 331. Overnight, over $400 million were made available to startups, VCs, and accelerators. Today, Lebanon’s startup ecosystem has transformed into the leading ecosystem in the Arab World, with a few international exits, over $250 million in 7 VC funds, 3 accelerators, 3 angel networks, 2 tech conferences, 1 international startup conference, well-funded support institutions, and hundreds of entrepreneurs.

Meanwhile, Iran’s fledgling startup scene has grown, despite sanctions, and been incrementally shaped by a few key stakeholders, including Avatech and Sarava, Iran’s first accelerator and VC fund respectively. Support institutions have been driving the entrepreneurial culture, particularly through local versions of international events such as Startup Weekend and FailCon. Avatech runs a six-month extended acceleration cycle, with 10 startups completing in each cycle. With just over 100 startups operating in the country, the community has tentatively come together despite the global circumstances. So far, it has operated without access to international markets and foreign investment. If these barriers were removed, the startup system could blossom in a country which has more than enough potential. Half of Iran’s population of over 80 million is under 30, with a high regional literacy rate. More than two thirds of Iranian homes have broadband access and mobile penetration is enormous, with a rate of 1.3 mobile connections per citizen. With these levels of connectivity, education and aptitude, Iran is an incredibly viable consumer market, particularly for startups.

The startup scene in both countries has evolved despite challenges. Government initiatives in Iran and Lebanon have been put in place to stimulate digital sectors. Iran set aside $1 billion for an innovation fund for entrepreneurs, and is upgrading its infrastructure to accommodate the wave of growth. The Lebanese Ministry of Telecommunications has pledged to deliver Fiber-to-the-Home within the next couple of years. The two countries therefore not only share similar socio-economic and geopolitical challenges, but also the determination to overcome such problems in an innovative way.

After years of negotiations, world powers reached a deal with Iran on limiting nuclear activity in return for the lifting of sanctions. The future relief and, hopefully, removal of these presents a golden opportunity for Lebanon. Beirut is the bridge between Iran and the world, and in turn Iran is the untapped market that Lebanon can reach. Entering the GCC and European markets incurs large travel and legal costs for Lebanese companies, but a lack of visa restrictions between Iran and Lebanon facilitate easy working conditions with potentially fewer expenses. Although Eastern Europe has come to be a significant talent resource for Lebanon, it is culturally too different to be a natural extension. Turkey also has proven to be a good destination, but due to its strong homegrown economy, doing business there is highly competitive and there are clear signs of a slowing economy. Iran, on the other hand, has both the cultural and geographical proximity which would benefit Lebanon.

Today, a shared common language isn’t a key requirement for economies to achieve top growth in their interaction. The primary driver of mutual economic benefits is knowledge industries, which require limited upfront capital investment.  Code and design are the new common ‘languages’ found in those industries, and they transcend borders and cultures seamlessly. With both coders and designers abundant in Iran and Lebanon, it seems that a common language has been found between the two countries.

Lebanon can provide the knowledge industry investment Iran needs, and together the countries can produce ventures which are no copycats of powerhouses, but instead are globally competitive based solely on their own merits. In terms of entrepreneurship, Lebanon’s future lies with its doppelgänger.

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Samer Karam

Samer Karam is founder and chairman of Startup Megaphone

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