Executive Magazine

In need of nurture

by Livia Murray December 16, 2013

written by Livia Murray

“The best thing a government can do when things are going well is not to do anything,” says Salam Yamout, national information and communication technology strategy coordinator at the Council of Ministers. “Governments move when markets fail,” she says. Yamout’s attitude reflects Lebanon’s laissez-faire economic style when it comes to matters of government intervention in the private sector.

But with an economy ravaged by domestic and regional tensions, paired with a growing unemployment rate, the country could use some government intrusion. Nowhere is this more true than in the budding entrepreneurial ecosystem, which has seen the creation of several successful startups but is still facing many barriers. Lebanon’s score on the World Bank’s “Doing Business” report for 2014 underlines the need for some government action to bolster the business environment for entrepreneurship. Out of 189 economies, Lebanon ranked 120th for starting a business, 109th for getting credit, 98th for protecting investors, and 126th for enforcing contracts.

Waiting on parliament

This need is not completely lost on the various branches of government. A United Nations Development Program (UNDP) project at the presidency of the Council of Ministers is working on removing various barriers to setting up a business in Lebanon. According to economic officer Yasmina el- Khoury Raphael, they currently have recommendations for the code of commerce sitting at parliament awaiting approval. They also recently completed a draft law on secure lending, which would help entrepreneurs take out loans on moveable assets — as many small and medium enterprises (SMEs) don’t have fixed assets. Both initiatives need to be passed by parliament before becoming law. However Lebanon’s parliament has not met since the resignation of Prime Minister Najib Mikati in March.

“There has been a problem in legislating quickly in Lebanon. Some laws have been waiting many years,” says Salam Yamout. “We have very low grades when it comes to governments passing policies and regulations.”

Shallow respite

A proposal from the Ministry of Economy and Trade facilitating early-stage financing to entrepreneurs is also waiting for the parliament to convene to be passed. The Innovation in Small and Medium Enterprises (iSME) project hinges on a $30 million loan from the World Bank. Though the World Bank has approved the loan, the Lebanese government requires the approval of parliament to borrow money.

The project could address a salient issue in the entrepreneurial ecosystem. “Access to finance for smaller firms is still a problem,” says Zeina el-Khoury, head of the enterprise team for the UNDP project at the Ministry of Economy and Trade. Despite programs geared toward entrepreneurship, such as the guaranteed loan service Kafalat, only 16 percent of small and medium enterprises in Lebanon have access to loans, compared to a global average of 26, says Khoury.

The money from the World Bank would be deployed through two channels to boost the development of early stage companies. First, it would be awarded to entrepreneurs for concept development grants, in which they can receive up to $10,000 to develop an idea. Second, the bulk of the program’s spending would be a fund that would match investments from venture capital firms. This program would be implemented through Kafalat.

Meanwhile, over at the Investment Development Authority of Lebanon (IDAL), attempts to improve the business climate are similarly pending parliamentary approval, though no one is holding their breath. IDAL submitted a proposal to the council of ministers to amend Investment Law No. 360 which would lower the eligibility criteria for enterprises to benefit from financial exemptions offered through the program to make the business environment more conducive to the development of startups.

Currently the criteria to access such programs are too high for fresh entrepreneurs starting a business. The criteria to benefit from its programs varies by sector, but, for example, the information technology (IT) sector requires a minimum investment of $400,000 and the creation of 25 jobs, and a project in the tourism sector requires a minimum $15 million investment and 200 jobs. The current proposal suggests lowering some of these barriers to eligibility. In the IT sector, for instance, it proposes lowering the job creation minimum to receive incentives. If IT companies can create five jobs in two years, they could benefit from some of the incentives offered through IDAL such as exemption from corporate taxes for five years.

Circular 331

Not all policies regarding entrepreneurs need parliamentary approval to be passed. In a bold move for action in August, the central bank passed Circular 331, intended to stimulate the economy and create jobs, which created a lot of buzz in the startup ecosystem.

The circular takes advantage of Lebanon’s loan-to-deposit ratio of 34 percent — low compared to the global average — meaning Lebanese banks are sitting on a lot of money that could be invested in the startup ecosystem.

It creates incentives for commercial banks to make investments in startups or bodies in the startup ecosystem such as incubators or venture capital firms by guaranteeing 75 percent of their investments. With only 25 percent of the risk, commercial banks are incentivized to make investments in startups, otherwise seen as notoriously risky. In lieu of a functioning government to implement policies that would create a favorable environment for budding businesses to operate in, some members of the ecosystem have hailed the central bank initiative. Others have questioned the ability of banks, who have little experience in investing in startups, to be able to invest in them in a smart way.

Yet initiatives such as Circular 331 cannot replace the government’s role. After all, many of the structures from which entrepreneurs benefit today have been the government’s doing. It was a government initiative that established Kafalat, currently one of the greatest financial resources for entrepreneurs operating startup companies or SMEs. Similarly, Lebanon’s three incubators — Berytech, BIAT, and SouthBIC — came out of a joint project between the Ministry of Economy and Trade’s SME unit and the European Union.

Lack of coordination

The plethora of initiatives coming from all sides shows the awareness shared by members of Lebanon’s political and economic institutions of the importance of encouraging the sector, but it also highlights the discontinuity and lack of coordination between different bodies. The Central Bank’s initiative and the iSME project bear many similarities, which make some members of the different branches question the need for two separate initiatives. “There are a lot of initiatives in Lebanon but they need to be packed in one thing,” says Khoury, “The government can help by playing a connecting role.”

While a coherent policy vis-a-vis entrepreneurship would greatly benefit the business ecosystem, the responsibility cannot fall on the government alone. Members behind the government’s policy making have called for more involvement on the part of the private sector. “The government doesn’t always have to generate policies,” says Yamout. Private sector actors are better placed to propose initiatives that target their direct needs. “But the private sector in Lebanon rarely comes up with a plan,” says Khoury. With a deadlocked government that moves slowly in the best of times, it is certainly difficult to have faith in the system.

December 16, 2013 0 comments

The Buzz

Business briefing: 16 Dec 2013

by Executive Staff December 16, 2013

written by Executive Staff

Economics and Policy

An Israeli soldier has been killed by a Lebanese army sniper from across the border, the Israeli military has said.

Throw me a loan

by Livia Murray December 16, 2013

written by Livia Murray

The steady decrease in Kafalat loans, which dropped by 17.2 percent in the first 10 months of the year compared to the same period of time in 2012 is likely to increase even further by the end of year due to the instable security situation in Lebanon, according to Kafalat chairman Dr. Khater Abi Habib. This comes off the back of a 16.4 percent drop between 2011 and 2012.

However, the decrease in Kafalat loans is one of the country’s few maladies that cannot be dismissed as just another instance of Lebanon’s dire economic circumstances. While most sectors have experienced a slight or significant decrease in extended loans, many have remained constant, while the high technology sector actually saw a fair increase.

Kafalat has presented an extraordinary resource for entrepreneurs since its inception in 1999 at the initiative of the government, the Association of Banks, the central bank, and the National Institute for the Guarantee of Deposits. Through Kafalat’s program, entrepreneurs of small- and medium-enterprises including startups can take out a collateral-free loan from commercial banks based on the feasibility of their business plans. The program has created an incentive for banks to lend by guaranteeing 90 percent of the bank’s loan for amounts of up to $200,000 and has broadened the sphere of who can open a business. Many entrepreneurs in Executive’s top 20 Lebanese entrepreneurs have been beneficiaries of the scheme.

Sectoral discrepancies

The economic downturn has not hit all sectors to the same extent, tourism reflects the most significant fall from grace. As President of the Association of Hotel Owners Pierre Achkar told Executive in September, “all hotels are partially closed.” News like this may make entrepreneurs in the tourism industry think twice before expanding their businesses, or delving into startup projects.

The tourism sector received 122 loans by the end of October 2013, compared to 166 in the same period in 2012, a 26.5 percent decrease. As the number of tourists travelling to Lebanon has decreased, particularly with the hesitation of lucrative Gulf tourism, banks are understandably tightening their loans to this sector, blocking even the bravest of entrepreneurs adventurous enough to start a business in these turbulent times. Banks have increasingly refrained from offering the Kafalat Plus program — a completely collateral-free loan — to the sector, says Abi Habib, and have favoured the Kafalat Basic program, where they can take up to 50 percent of the value of the loan in collateral.

Closely following tourism’s misfortunes was the industrial sector, with a decrease of 25.7 percent in the number of loans. Remaining comparatively constant however were the agriculture and crafts sectors.

In contrast, the number of loans to the high technology sector actually saw an increase, showing that not all entrepreneurship is hindered by the economic downturn. Though still not making up a great percentage of Kafalat’s loans, the number of loans extended in the technology sector actually increased by 23.5 percent from 13 to 17 projects between October 2012 and October 2013.

Trends and guarantees

Lebanon’s entrepreneurs have been fairly resilient to the various stresses the country has witnessed. “[Economists] wonder why our economic activity in this country hasn’t dropped further,” says Abi Habib. He ventures that Lebanese entrepreneurs being so accustomed to civil instability is a central reason the country has not witnessed a number closer to an 80 percent drop in loans. But as long as hard times continue, he adds, people will be more skeptical of launching or expanding their enterprises.

A similar resilience can be attributed to the banks, who continue to lend. Although banks are not required to share with the program the number of Kafalat loans they refuse, Kafalat has not been made aware from the side of the entrepreneurs of a higher than average number of rejections.

Nonetheless, the banks would more likely be conservative if it were not for Kafalat’s guarantees, particularly when lending to startups, for whom Kafalat’s incentives guarantee 90 percent of the loan, given that only one or two out of 10 are likely to succeed. In fact, Kafalat’s program for startups is operating at a loss, and is subsidized by more profitable programs that handle less risky businesses.

Despite a general decrease in Kafalat loans, the small but growing high-tech sector presents a glimmer of hope for economic growth, however limited, through entrepreneurship.

December 16, 2013 0 comments

Real Estate

Concrete ambition

by Thomas Schellen December 16, 2013

written by Thomas Schellen

Statistically, by almost all indicators available to Executive, activity in the field of real estate development and building construction in Lebanon is in a slump. In the first nine months of 2013, the indicators of property transactions, construction permits, engineering insurance premiums and morale among construction managers concerning their businesses were down compared with the same period in 2012. The only exception is that cement deliveries were up.

Recorded property transactions were lower by 5.2 percent in volume and by 4.5 percent in value: with slightly fewer than 50,000 transactions from the start of the year until September 30, with a total value of $6 billion. Within the overall contraction of deals, the share of property sales to non-Lebanese also exhibited continued weakness, regressing from 1.86 percent in 2012 to 1.81 percent in 2013.

The issuing of construction permits during the first nine months in the lower two thirds of Lebanon receded for the third year in a row, with 7.8 million square meters (sqm) licensed by end of September, a drop of 14 percent, a similar contraction to that witnessed between 2011-2012.

The Order of Engineers in North Lebanon allotted permits totaling 9.7 million sqm for the first nine months of 2013 compared with 10.7 million sqm in the same period in 2012, translating into a narrower contraction of 9.3 percent year-on-year.

Meanwhile, insurance premiums in the engineering industry fell 7 percent to $8.2 million in cumulative revenue for the first three quarters in 2013, according to figures provided to Executive by the Association des Compagnies d’Assurances au Liban (ACAL). In the third quarter of 2013, engineering premiums dropped to about $1.75 million, the lowest quarterly amount since the fourth quarter of 2011.

Development activity shifted in 2013 to outlying areas of the capital and farther into the provinces where land and development costs are more compatible with end buyers’ financial means. The Beirut governorate represented no more than 5 to 6 percent of building permit issuance in the year’s first three quarters.

A slow year has contributed to an atmosphere of pessimism among many industry leaders.
In a second quarter survey conducted by Banque du Liban (BDL) in which enterprise managers were asked to assess the evolution of their businesses, the majority expressed that 2013 had been a year of decline rather than improvement.

Moreover, the survey revealed that managers of enterprises dealing with construction and public works saw the most recent quarter as having reduced activity versus all 11 quarters between Q4 2010 and Q2 2013.

A manageable challenge

Statistics on cement deliveries — which are correlated during the middle and later implementation phases of construction projects — provided an exception to the downtrend.

Cumulative deliveries of cement were up 7.2 percent from 3.4 million tons in the same period in 2012, according to BDL. However, the question remains how much the increase in volume says about the state of the industry. Cement deliveries during the first eight months of any of the past five years have been in a range of plus/minus 6 percent of 3.5 million tons.

While the stats point to a property market recession in Lebanon, the sentiments that developers shared with Executive during the research for the 2013 sector review were not your expressions of the bust phase in a typical boom-and-bust cycle.

Approximately one third of the developers and intermediaries that Executive talked to assessed 2013 as the worst year for their respective companies in years or even since they started doing business in Lebanon. Ramco, one of the most experienced intermediaries, up-market developer Premium Properties and Prime Consult — the property firm best known for its association with Lebanon’s soon-to-be tallest building, Sama Beirut — all expressed such sentiments.

However, while developers overwhelmingly said that the year was tough, they also insisted that it was a challenge that was manageable and not entirely unexpected. Whilst admitting the year in Beirut “was tough for everybody,” Ayad Nasser, chief executive of niche developer Loft Investments, argues that perceptions of a very bad year were shaped by the fact that the sector became accustomed to high growth and returns in the years 2008-2010. “But I can assure you the market is not dead. People are doing some transactions, we are still alive, and we are cool,” Nasser says.

Inquiries by people who called in search of a property were “rare” this year, concedes Mireille Korab, the head of sales and marketing at FFA Real Estate. She qualifies her remark with a note of optimism, however, by adding “but you still have people calling and they are more serious. People are not shopping around, they are serious and they know what they want. If you present them with the opportunity, they will buy.” Ramco director Karim Makaram similarly concedes that while business is down, there are still sales to be made, “even at the upper end of the market, which was the most negatively affected by the downturn.”

Still in the mixer

Many developers who took note of regional changes and their ability to negatively impact Lebanon were prepared for the slump ahead of 2013, choosing not to embark on new projects whilst adjusting market strategies. Loft Investments’ Nasser says he opted against new projects in anticipation of a slower market and Houssam Batal, chief executive of Premium Properties, says that his company put itself into “a position to be successful by off-loading most of our inventory.”

One unforeseen incident that greatly hindered the real estate sector was the collapse of the Mikati government in March 2013 followed by consequent failures to establish a new cabinet.
In the view of Massaad Fares, chief executive of Prime Consult and head of the Real Estate Association of Lebanon (REAL), a lack of confidence was the decisive factor impinging the market. Samer Bissat, senior project manager of the Majd Al Futtaim (MAF) Waterfront City project in Dbayeh, argues that the detrimental impact of the domestic political impasse was more significant than that of crises in countries around Lebanon. “The political scenario affects the mood in the market, the mood of the investors, and it affects the foreigners more than the locals and the expatriates,” explains FFA’s Korab.

While the political class is not everyone’s darling, another part of the administration appears to have a solid fan base in developer circles: the central bank. “The incentives that the Central Bank Governor [Riad Salameh] provided did have a real positive effect and helped the property market not to stagnate despite the deteriorating political and security situation,” says Hassan Tajideen, chief executive officer of developer Tajco.

Central bank intervention could go a long way toward explaining why the dynamics of the Lebanese property market in 2013 were not exhibiting the marks of a bust phase. In focusing much of the 2013 economic stimulus package of $1.46 billion — of which 56 percent was allocated to home finance support — on real estate, the central bank has pursued a policy to make real estate finance easier for families in the lower and middle income brackets. This stimulus policy was the opposite of the monetary tightening by which central banks conventionally respond to boom phases.

Having low-cost access to funding under the 2013 stimulus package, banks could lend money to home buyers at comparatively low rates of interest. The stimulus measure appears to have softened the pressure on the real estate sector which accounts for 13.8 percent of Lebanon’s aggregate economic value, according to figures from the Central Administration for Statistics.

With the support of the stimulus package in 2013, one third of demand — the home buying of first-time owners and young families — was functioning rather normally while two other demand categories — up-graders and Lebanese expatriate and foreign buyers who want to invest — were subdued.

Fares sees the value split in the market as heavily skewed toward the two latter categories. “If the market is $7 billion a year, they probably represent $6 billion,” he says.

“The young generation buys the smallest apartments and the least expensive ones,” he adds.
Buyer’s market

For property buyers who had the cash, the confidence, the speculative bravado, or the absolute need to hunt for a new home in 2013, the market was to their advantage, at least relatively speaking. Newly constructed budget apartments that would have been available for significantly less than $100,000 per unit eight or nine years ago will most likely never again be that affordable. But compared with 2010 or 2011, new units in this market segment were available to Lebanese buyers in the past year at stable or sometimes slightly reduced prices, with financing terms and loan rates that could be called affordable by emerging markets standards.

Buyers who had the means to aim for a medium to high-end property had leverage to negotiate for lower prices. Developers Executive spoke to had different approaches — some insisted they had not and would not agree to bargain — but many readily admitted to having considered offers that were 10 percent or more below their asking prices, depending on the project and its demand experience. If they had the resolve to test the developers’ pain threshold for prices by negotiating aggressively, end buyers could get 15 or sometimes 20 percent discounted on the asking prices, according to comments from various experts.

According to property experts, these discounts may still be found in 2014 but most developers expect the strong buyers’ market to taper out in the course of next year. Makram Zard, chief executive of Zardman, says discounts were stronger in Beirut’s Ashrafieh district than in the Metn region. “I am guessing that these discounts won’t be there anymore in the middle or second half of 2014 as the market will pick up and the developers will be in a stronger position.”

Talking of better days to come, the tapering or durability of discounts will of course chiefly depend on market trends and here developers expressed optimism. REAL’s Fares predicts that in 2014, “the real estate market will start the up cycle. I think by January/February we will hit the real bottom and we will start going up from the beginning of spring. If the political situation is stable and clearer, this will give an added push.”

Sleeping giants

Batal of Premium Projects says that his company hopes for the political situation to clear up but emphasizes that they will be working on new projects in 2014 regardless of political currents. “I have a feeling that we are almost at the end of this tough period,” says Loft Investments’ Nasser. Chahe Yerevanian, chairman and chief executive of Sayfco, also strikes a positive note. “I foresee a general improvement in the market starting in the summer,” he says.

There certainly are enough projects on the drawing board by which developers are seeking to reignite a new profits cycle, and naturally they hope to rouse the market out of its current slumber, the earlier the better. The central bank has already said it will help with another, albeit smaller, stimulus package. On the other hand the meager estimates of the coming year’s real GDP growth — the World Bank is talking 1.5 percent — and the many vagaries of the regional situation serve as a reminder to keep realistic.

On the balance, undertones of caution contextualize any optimism and no one is expecting a jolly ride to profits in 2014. MAF Waterfront’s Bissat, who does not expect to see large changes in the market in 2014 compared with 2013, emphasizes that developers will need to demonstrate staying power and keep their ear to the ground in researching customer demand.

Building the future

Developers will also need to have new ideas, of this FFA’s Korab is sure. “The whole issue about coming up with a successful project is that the markets are changing very fast and we need to be up to speed. To succeed in this market, you need a new type of product; you need a smart product,” she says.

Beyond that, she is sure of one more thing: there is no alternative to having a positive outlook. “We don’t believe in stopping. Lebanese don’t stop and we don’t nag. At this point we are positive and we should always be positive. What should happen? We have been through war, through bombs, through everything and the market in Lebanon proved to be a really solid and mature market. If something unforeseen happens in 2014, it will be the same as this year perhaps; it can’t be worse.”

December 16, 2013 0 comments

Real Estate

‘A new government could save real estate’

by Thomas Schellen December 16, 2013

written by Thomas Schellen

As the property market entered into a troublesome year, the Real Estate Association of Lebanon (REAL) began 2013 by celebrating its recognition as a syndicate aiming to unite real estate intermediaries under a code of ethics. Executive asked REAL President Massaad Fares about the body’s first achievements under the new status as well as its plans.

E REAL has been active as a full syndicate for around a year. What have been the main achievements in this period?
We were previously active as an association and incorporated into a syndicate, as you said, about a year ago. Our major activity was the signing of an agreement with the [American University of Beirut] for the first real estate course in Lebanon: introduction to real estate brokerage.

E How long does the course run, what does it entail, and why is it important?
It is eight weeks, three times per week and three hours each time. The professors are all AUB professors. We give the introduction at the beginning of the session but the rest is all given by AUB professors. It covers negotiations, marketing, finance and banking — all related to real estate. We hope to continue with this education so that we are getting more advanced and this is our achievement in this year.

E Has the membership in REAL increased this year?
Yes, we have about 30 new members in the past eight months.
E That sounds like a significant increase, given that the membership in 2012 was below 30 companies. But how do you see the state of business for real estate intermediaries in 2013?
2013 has been the worst year in the trade. The political and economic situation coupled with our cycle has made it really the worst year.

E The worst in how many years?
I have been in Lebanon since 1996. I think this year has been the worst for me, mainly because of the lack of confidence. Not the lack of money, not the lack of product.

E How did the situation of the Lebanese government and the state of the cabinet influence the sector?
This is [the root of] the confidence issue. If we have a new government today, you will see that the whole market will change. All businesses will be positively affected. Confidence is the basis of economics. If one does not have confidence in the economy, one is not enticed to do anything.

E How about the impact of government inaction on the side of regulations and urban planning?
This is a long story. Unfortunately the laws in Lebanon are very old, most [have been there] since 1965, and they vitally need to be updated. They have not passed parliament yet but I can tell you that we all say we need them. Nothing has happened.

E Are there laws or law projects that specifically affect the intermediaries?
A few laws were introduced but they did not so much affect the business. The industry needs a total revamping in order for us to be able to say that the laws affected the industry positively. The development business is one of the strongest sectors in the Lebanese economy, and developers come maybe in second place after the banks. Unfortunately, the government is not looking at them this way. The government is only looking at them whenever they want to gather some more money and say we introduce a new tax on real estate. This is not the way one does development. Real estate is in the long vision. Real estate must be looked at as a long-term business and a wealth–generating industry, not as a product like in a supermarket.

E How about the professionalism among intermediaries? I understood that one reason why you introduced the course at AUB is that there is a need to improve the professional standards of the people in real estate.
All over the world, many people who have no [related qualifications] work as real estate brokers. Lebanon is the same. But here many buyers were taken advantage of by these [unprofessional brokers]. Perhaps because they don’t know how to read the floor plan correctly or don’t know how to read a contract. Thus the buyers feel cheated.

E When you attend an event or a social function and introduce yourself as a real estate intermediary, do you ever have people complaining to you about how bad the intermediaries are?
Yes. This is exactly why I started the association. I was tired of people telling me, ‘in this business, you are cheating people’ and using the word real estate broker like an insult. I wanted to change this. I wanted to tell the people in the Lebanese market that their broker is [a person of confidence] like your lawyer, your banker. He knows the inside of your problem and can help you solve your challenges, can help you get to where you want. I don’t want the real estate person to be your enemy. I want the real estate person to be your friend.

E That sounds like a tough challenge.
It is. It is a tough challenge but the situation is changing. Now when I am with people at dinners they say, ‘yes, you now have an association.’ This is very good and we have many plans that I don’t want to talk about yet. We have, for example, an awareness campaign [about] what a real estate broker is.

E For the general public and not just for those people who want to enter the profession?
For the general public because we want people to know that if they need a real estate broker, they should go to the broker that is licensed by the syndicate. Don’t go to the hairdresser, the butcher or the concierge. Go to someone that can be accountable.

E There is no existing mandatory liability insurance for brokers?
No. We are working on a proposed law to [to ensure the] intervening of a real estate broker becomes mandatory in all real estate transactions.

E That would make the brokers established as intermediaries by law. But is there a law to protect the customers of brokers against errors, like they happen in every profession?
No. But this comes along with the [other law]. They go together.

E What you are saying highlights why you attach so much importance to educating intermediaries and having them acquire certification. How many people participated in the first course in AUB?
Each course is [currently] limited to 25 people.

E Were some of them regular students or were most participants real estate professionals?
All are members of the syndicate and we will not open the course to the public until we finished [educating] all [members].

E And the members have to pay for the courses?
We are offering the program free of charge to syndicate members. We are financing it.

E May I ask how much the budget is?
Our cost is $800 per person but this is a price that the AUB gave us with about 50 percent discount.

E What do you expect for the syndicate in 2014?
REAL is going to make everybody know what a real estate broker is and how important this job is. And it will make the real estate brokers be proud of their profession. This is our plan in 2014. We have several activities and all are focused on this: awareness of the profession, awareness of the need of the real estate broker. Parallel to this we are working on the project of the law.

December 16, 2013 1 comment

Economics & Policy

Brave new worlds

by Tara Nehme December 16, 2013

written by Tara Nehme

‘Quit your job. Buy a ticket. Get a tan. Fall in love. Never return.’ — a five sentence meme that made its way into my Facebook newsfeed and struck the kind of chords that left me wondering what on earth I was doing with my life. In reality, it wouldn’t have been difficult to bring me to such a lost and confused state anywhere between 2009 and 2011. Twenty-hour workdays consulting for a corporate giant, despite being a pretty cool job, can do that to a person. So one day in June 2011, I made it past the meme’s first sentence. I walked away from the only cubicle I had ever known and, one over-rehearsed speech later, I officially burst out of my corporate bubble. This was no longer a thought that wormed its way into my brain every month: I was actually free.

The news didn’t go down too well with my old-school parents to whom “free” sounded more like “unemployed.” “Tickle my what?” my father shrieked as he surrendered the phone to my mother. “Your daughter wants to quit her job in Dubai and move to Beirut!” As I listened to my dad denounce his biological ties to me, a mix of happy and nervous feelings took over. This was the reaction to be expected from my parents. But I would move back, I would start my own business and I would attempt, for the millionth time, to prove my father wrong.

My roller coaster ride to creating a company within Beirut’s startup scene was nothing like I expected. First of all, I didn’t expect there to be a scene. I didn’t know anyone within it and there was no introduction manual. My adventure began from behind my MacBook inside Hamra’s jam-packed coffee shops. I had a name: ‘ticklemybrain’ and I had an idea: people, much like myself, didn’t know the first thing about getting their careers on track. And that was about it. As the months rolled by, words such as Berytech, Beirut Digital District and Endeavor pervaded my new habitat and slowly but surely I was welcomed in by the cult: the people that rule Lebanon’s entrepreneurial scene. Though I was introduced to all the cool (and not-so-cool) characters that comprised it via separate avenues, I soon realized they were all connected. Event after event, I began meeting a budding and ever growing core group of 200 to 300 people that consisted of entrepreneurs (the ‘successful’, the ‘attempting to be successful’ and the ‘wondering whether they want to risk attempting to be successful’), venture capitalists, angel investors, accelerator/incubator founders, co-working space owners, techies, designers and media folk. What made all of this even more fascinating was that all these people hovered around one central idea: somewhere within this bunch existed the next Steve Jobs. And all of this in Beirut; it was phenomenal.

Fast-forward two years and here I am, a proud member of Beirut’s startup scene; a part of the cult. I am tired of hearing the standard assessments of this country: Lebanon has no future, economy, water, electricity and Internet. The road may not be paved with gold but I see a different Lebanon. One with a startup scene that could easily be ranked among the finest and most progressive in the region and which is filled with ambitious people trying to break with convention. ‘Here’ is a pretty cool place.

The most recent proof of this can be seen in the Global Entrepreneurship Week, celebrated from November 19 to 24 of this year. The week started with Bader’s flagship opening party in which the winners of their Startup Cup were announced and ended with Executive’s closing party, where 20 entrepreneurs were awarded for their exceptional work. And it isn’t just now; all throughout the year there are events, workshops, conferences and more to celebrate and empower entrepreneurial growth and the amazing drive of the Lebanese people.

We hear stories of people stuck in dead end jobs who finally snap. For many, embracing the entrepreneurial life comes as a form of salvation for their economic blunders. For others, it comes as a spark. For me, the change came as a chance of freedom for my brain, which had felt limited by the confines of what it knew. Striving to be a successful entrepreneur has been a powerful experience filled with both joyous and heart-wrenching moments. Never knowing what my day will hold, combined with the constant fear of failure keeps me on my toes. So while I haven’t lived up to the meme in the exact direction it prescribes, taking it easy on an island in the sun, I’m definitely on the right path.

December 16, 2013 0 comments

Society

Hospitality in inhospitable times

by Nabila Rahhal December 16, 2013

written by Nabila Rahhal

As a new year approaches, Lebanon’s hospitality and tourism sector is limping along in a dismal socio-economic situation — severely sprained but not broken.

According to the latest statistics from the Ministry of Tourism, the number of tourists entering the country during the first 9 months of 2013 is down by 10 percent from the same period in 2012, itself a poor year for tourism. The biggest drop in numbers was from the Gulf Cooperation Council, though there was an overall drop across all nationalities. With an unstable security situation fueled by the war in neighboring Syria, Lebanon is no longer the blossoming vacation destination it once was.

While hotels are obviously the most negatively impacted sector, most other hospitality dependent ventures have suffered as well. Some areas typically frequented by tourists are almost deserted, although a few are witnessing a boom in their local market clientele. Owners of Lebanon’s hospitality venues have been tested in 2013, with only the most seasoned professionals passing unscathed.

Turnover from restaurant purchases at the country’s two main fruit and vegetable markets — a measure used by the Syndicate of Owners of Restaurants, Cafes, Nightclubs, and Patisseries (SORCNP) to assess performance — is down by half from 2012 and by 40 percent at the main liquor distributors.

Even among those restaurant and bar owners still making a profit that Executive spoke to, many experienced a drop in revenues and footfall. “There is a difference between making money every night when the country is stable and making money only on weekends and holidays, which is what is happening now,” says Rabih Mockbel, founder and chief executive officer of Mockbel Holding, which operates a string of venues on Uruguay Street in Beirut. Although Mockbel reports a profit, their margins have dropped 40 percent from 2010.

Here, there & nowhere

Fawzi Ghantous, the food and beverage (F&B) operations manager at Found’d, which owns Downtown, DT, So and The Gathering restaurants, reports a 7 percent decrease in overall profits and a 30 percent drop in turnover but points out that they are better off than many venues which have had to close down rather than incur further losses.

Paul Ariss, the head of the SORCNP, says while many established venues have felt the noose tighten and some clubs in Beirut are operating only on weekends, the situation is much worse outside of the greater Beirut area. “There is certainly a big problem in the mountain areas such as Bhamdoun, Aley and Faraya, and many did not even open this year. In Aley, only around 20 of the almost 80 venues there opened this year. The Bekaa was even worse and some of the big restaurants there lost money this year,” he says.

While it is a given that areas frequented by tourists will suffer as the number of visitors plunges, even those venues which do not generally depend on the largely Arab tourist audience were still affected by their absence: “Though we do not cater to tourists much because GCC nationals usually prefer Lebanese restaurants… those who benefit from tourism in the country spend at our venues and so we are indirectly affected by the lack of tourists,” says Ghantous.

The unstable domestic situation and the lingering global economic crisis discouraged another main hospitality sector energizer, the expat, from visiting as frequently this year, often restricting their trips home to only the major holidays, when previously they may have come for many short visits, even weekends.

“The Lebanese expat is truly the unknown soldier of our economy when you consider that we have more than 1.5 million Lebanese expats in Africa and the Arab countries alone, who spend even more than the Arab tourists when they do visit Lebanon. Our main problem is that they are not visiting as much,” says Ariss.

This drop in international demand forced those in the hospitality business to concentrate their efforts on the domestic market during 2013. “I believe in order to have a successful hospitality venture in Lebanon these days, you need to have the right concept and not be dependent on a potential overflow of customers in the form of tourists or expats,” says Mockbel.

The hospitality venue owners and alcohol distributors Executive spoke to all agreed that the best performing venues of the year were those located in Uruguay Street in downtown Beirut and Mar Mkhayel in the capital’s Ashrafieh, two areas which are generally not tourist reliant.

The local formula

“We designed Uruguay Street to appeal mainly to the resident Lebanese community and it was a success story this year,” says Marwan Ayoub, partner in Venture Hospitality which initially developed the project in the Old Municipality Building on Uruguay Street. The bars on the street generally cater to Lebanese professionals between the ages of 25 and 40 with a comfortable income.

In fact, Mockbel was so convinced of the street’s potential that, following the success of Bronz, his first venture, he rented eight additional venues in the location. Venue operators on the street and Ayoub agree that other elements which contributed to Uruguay Street’s popularity included a good security system, parking access and the backing of a developer which prevented the street from growing in a haphazard manner. “The only concern we downtown venue operators have is that what happened in the past in downtown in terms of sit-ins and demonstrations will happen again; this will truly be a nightmare to all of us who invested in the area,” says Mockbel.

According to Ariss, Mar Mkhayel is one of the few areas that has continued to expand this year as restaurant operators there have focused on concepts with good quality and low prices. Ayoub believes Mar Mkhayel succeeded because the area’s artsy vibe and refurbished heritage buildings offer a unique atmosphere.

Restaurants and cafes operating in malls have a mutually beneficial relationship with the mall operators and have also maintained a solid performance this year, says Ariss. According to Omar Zantout, general manager of consultancy firm Eaternity, Magnolia Bakery — which it brought to Lebanon in December 2012 — sees an average of 300 customers daily in Dbayeh and has just moved to an enclosed space in ABC Ashrafieh where Zantout expects even more customers.

Finally, the summer saw a surge of seasonal outdoor clubs and bars, such as MusicHall Waterfront and Garden State in addition to the weekly outdoor parties by Decks on the Beach, C U Nxt Sat and The Gärten, all highly popular among mainly Lebanese clientele looking to enjoy a cigarette in the open air. Fueled by the smoking ban and a short winter season, open air concepts such as terraces and rooftop bars are indeed a rising trend, according to Ayoub. Furthermore, Lebanese bargoers’ choices tend to be heavily dictated by trends, Found’d’s Ghantous says, explaining why some places soar in popularity while others find it difficult to reverse their dwindling numbers.

Catering to the local Lebanese customer means competing in a very narrow market with a low purchasing power. “The challenge here becomes to show who provides the best in service, drinks and food,” says Toni Rizk, managing partner at TRI Food and Beverage, adding that PR and social media are also important aspects in attracting customers these days.

Indeed, with so many venues competing for attention, restaurant operators have had to struggle to distinguish themselves, and elements such as quality, service and ambiance become even more important — factors Ghantous gives as reasons for two of their venues’ longevity (Downtown has been in operation for 25 years, So for 15).

No purchasing power

The decrease in local purchasing power has also meant that people went out less in 2013 and spent less when they did go out. Ariss speaks of restrained orders from customers who used to order the entire menu at Lebanese restaurants and of decreased profits even in the fast food and delivery operations as more Lebanese try to save money.

“Those who have money are still spending as before but those who are of a mid-income level are spending a bit less, creating a vicious circle where if one does not make money, one cannot spend as much and this in turn reflects on the venue owner. This is normal in tough economic times,” says Rizk.

As a result, some in the F&B business have bet on external success by taking their concepts abroad. But while this has proved successful for club concepts franchised to the UAE — such as Iris, Music Hall, and The One which all opened up abroad in 2013 — Ayoub sees that the market for Lebanese restaurant franchises is being tightened as Gulf nationals are “learning the franchising game and looking at other countries for fresh concepts, making Lebanese concepts less attractive than before.”

In these tough times, the hospitality sector is in need of support. Ariss says that Kafalat, which has given loans to many in the sector, has been very understanding in reprogramming or postponing payments and that the syndicate was in discussions with the government to lift penalties on the sector’s taxes. Ayoub speaks of the banking sector’s support in rescheduling loans and in the continuation of subsidies from the central bank.

Ayoub sees another harsh year of “survival of the fittest” for the hospitality sector in 2014 with some established operators falling out of the race due to their high overhead expenses. “The operations doing well due to local demand are but a drop in the sea of the hospitality sector, which is suffering,” he says.

Though those Executive spoke to are carrying on with their expansion plans and developments, nothing can compensate for the internal stability which can automatically breathe life back into the sector. “We need security and a stable economy and for the tourists to return. Something has to improve so the sector can be revitalized as it is currently not doing well overall. Many people are emigrating to the Gulf due to the lack of opportunities here and no new people are investing in the country as it is becoming very difficult to maneuver in,” says Rizk.

December 16, 2013 0 comments

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Along the fault lines

by Lama Fakih December 13, 2013

written by Lama Fakih

Lebanon is no stranger to the horrors of violence, proxy wars, sectarian strife, stagnant reforms, economic woes and refugee crises. In 2013 all of these afflictions have pushed the country into one of its worst security and social crises in years.

Violence from neighboring Syria spilled over into Lebanon — in the form of kidnappings, cross-border shelling and car bombings.

A car bomb on July 9 in the Beirut suburb of Beir al-Abed wounded dozens of people. On August 15, a previously unknown Syrian opposition group, the Aisha Brigades, claimed responsibility for a car bombing in the Rweiss suburb of Beirut that killed more than two dozen people and injured hundreds more. Eight days later, on August 23, car bombings targeted two mosques in Tripoli where sheikhs who support the Syrian opposition were giving sermons, leaving more than 40 dead and 400 wounded. No one has claimed responsibility for these bombings, but arrest warrants have been issued for members of the Arab Democratic Party which is allied with the Syrian government.

On November 19, a twin suicide bombing in front of the Iranian Embassy in Beirut killed at least 23 people and injured nearly 150. Sheikh Sirajeddine Zuraiqat, the religious leader of the Al-Qaeda affiliated Abdullah Azzam Brigades in Lebanon, announced on his Twitter account that the group was behind the attack, citing the presence of Hezbollah’s forces in Syria fighting for the government and the detention of Islamists in Lebanon as justifications.

Sectarian tensions in 2013, exacerbated by the conflict in Syria and a climate of impunity for gunmen, led to deadly clashes in Tripoli and Saida. In May, gunmen from the Jabal Mohsen and Bab al-Tabbaneh neighborhoods in Tripoli clashed, killing at least 28 and wounding more than 200. In October, a week of fighting between those neighborhoods left at least 13 more dead and 91 wounded.

The government finally implemented a security plan for Tripoli and deployed units of both the army and Internal Security Forces to the city in November. However, it failed to take steps needed to protect residents, such as confiscating weapons, arresting and prosecuting fighters, and maintaining an active security presence.

Syrian refugees registered in Lebanon topped 816,000 in November, and with limited international support the Lebanese government struggled to meet the refugees’ needs. According to the UNHCR, the UN refugee agency, the $1.2 billion appeal for refugees in Lebanon was only 51percent funded as of October 31. On November 1, UNHCR began eliminating basic assistance for 30 percent of the refugees from Syria in Lebanon due to the funding shortfall, further debilitating the vulnerable.

Lebanon, the last of Syria’s neighboring countries to maintain an open border policy, has borne an enormous burden as it continues to receive refugees. But closing the border to those fleeing death and persecution — as the government began to do in August when it started turning away Syrian Palestinians — is not the answer.

The Lebanese poor are bearing perhaps the greatest burden of the refugee crisis in Lebanon. In an October report, the World Bank found that as a result of the conflict in Syria up to 170,000 Lebanese could slide into poverty and that unemployment could increase by 10 percent by the end of 2014.

Amid the violence and crippled economy, Lebanon suffered from a familiar lack of leadership. Prime Minister Najib Mikati resigned in early 2013, and politicians still have not formed a new government. Draft laws to stop torture, improve the treatment of migrant domestic workers, protect women from domestic violence, and end discrimination against women under personal status laws — all issues of chronic concern in Lebanon — remain stalled in parliament.

In 2014, Lebanese need to see a government that will step up to fill security vacuums, arrest and prosecute those responsible for violence, and confiscate weapons of war. If the abuses are to stop, there can be no impunity.

The government should also do more to meet the needs of historically underserved communities such as Jabal Mohsen and Bab al-Tabbaneh and those in border areas including Wadi Khaled and Arsal. Residents in these communities lack employment opportunities and adequate infrastructure and services and suffer the consequences of the burgeoning refugee population.

Finally, donor countries should give more generously so Lebanon can continue to meet its commitments to the growing refugee population and to shore up infrastructure, health services and the beleaguered local economy. Only then can Lebanon be expected to continue to bear the weight of this crisis.

Lama Fakih is Middle East researcher at Human Rights Watch

December 13, 2013 0 comments

Business

Lebanon’s top 20 entrepreneurs 2013

by Livia Murray December 13, 2013

written by Livia Murray

There is a lot of talent active in Lebanon’s entrepreneurial landscape. The country’s entrepreneurs are clever, innovative and, most of all, resilient. When Executive picked its list of top 20 entrepreneurs, it looked at impact, innovation, business model, and scalability. This year’s entrepreneurs reflect excellence in these categories, both in terms of successful companies that have presented success stories for the country, and on the part of startups who are boldly launching their businesses in an uncertain climate.

Category: Industry Leaders

Anghami

Entrepreneurs: Eddy Maroun, Elie Habib

Ages: 38, 40

Industry: ICT/entertainment

Established: 2012

Number of employees: 20

Revenues in 2013: not disclosed

The model: Anghami is an application that lets users listen to and download Arab and international music on their cellphones. Their music library currently consists of 4 million tracks, and they are planning to increase the number to 6 million by next year. The model is based on a monthly subscription at the cost of $5, but they currently offer a free version of the application to grow their user base. Out of 3.4 million users, 100,000 are paying subscribers who opt for the Anghami plus version which has perks such as unlimited music free of ads. Anghami has recently signed an exclusive deal with Choueiri Group to run ads on the app.

Funding: Anghami raised their first round of capital last year, receiving $1 million from venture capital firm Middle East Venture Partners (MEVP). They are now finalizing a second round of funding from a Saudi company, looking to raise $1.5 million.

Growth: Valuation multiplied by five since last year. The company has expanded its employees from three in May 2012 to the current 20.

Achievements: With 3.4 million users, Anghami is the most-downloaded music application in the Middle East. Anghami is the only company selected to be on Executive’s list of top 20 entrepreneurs for two years, because of the dramatic growth it has experienced in the past year. They recently joined Endeavor, an international network which, via a rigorous process, selects high-impact entrepreneurs and gives them access to contacts in their network and business resources to stimulate the growth of their companies.

Challenges: The biggest problem Anghami faces is human capital. People tend to want to leave the country because they can’t find enough decent jobs in Lebanon.

Goals: Banking on cellphone integration. Users will be able to subscribe for the app and the app will be charged to them on their cell bills. They are looking toward the Middle East and the Arab world as a whole, including the diaspora. Their most targeted market is Saudi Arabia, which represents 22 percent of their user base, something they are trying to expand on.

Cedar Books

Entrepreneurs: Cyril Hadji-Thomas, Sany Naufal

Ages: 40, 41

Industry: Book distribution

Established: 2007

Number of employees: 35

Revenues in 2013: between $19 and 21 million

The model: Cedar Books is an online book distributor attempting to sell foreign books throughout the world via a network of booksellers. They work with bookstores, bloggers, and anyone who has a say in the book industry and either sell directly to them, or manage the sales on their behalf. They currently have a catalogue of 25 million books and a plugin which can be put up on bloggers or bookstores’ websites, so that a user can read about a book on a blog and then purchase it directly from the blogger’s website. Profit margins are shared with the partner through whom the book was sold. Cedar Books is a joint venture by Hadji-Thomas, Naufal, and Levant Group, Lebanon’s leading book supplier.

Funding: MEVP invested $1 million this year for the expansion of Cedar Books.

Growth: 50 to 100 percent every year since its creation.

Market: Their biggest market is the United States. Other big markets include Canada, the United Kingdom, France, the Middle East, and Australia.

Achievements: Cedar Books has sold 1.5 million books, and have opened up to German, Italian, and Spanish language books in addition to English, French, and Arabic. This year they created a network of booksellers, and opened a branches in California and Canada. They currently have a physical presence in five countries.

Competition: Their biggest competitor is Amazon. They compete by giving a higher commission to bookstores or bloggers than Amazon. They are trying to foster good relationships with publishers, focusing in particular on selling books in multiple languages.

Goals: To become one of the most prominent international book distributors by giving all the best tools to booksellers. To sell to every country in every language and to create a community of booksellers. They are currently working on the Bookwitty brand. Until now, everything else has been white-labelled. On Bookwitty, users will have direct access to Cedar Books’ catalogue. It will also act as an aggregation of all articles published about a particular book, and accumulated information that bloggers have posted. The reader can then decide who to buy the book from.

Challenges: Being able to advise a Brazilian reader on a book in German, English, or French.

Cedar Environmental

Cedar Environmental founder Ziad Abi Chaker

Entrepreneur: Ziad Abi Chaker

Age: 44

Industry: Environmental engineering

Established: 1999

Number of employees: 36

Revenues in 2013:

$1 million

The model: Cedar Environmental is an environmental engineering company that uses patented technology to treat municipal solid waste. Their patents are in dynamic composting technology, waste treatment, and in a technology that recycles plastic bags into panel boards. As they expanded and their operations diversified, they created two other companies: Green Ideas in 2010 which deals with fertilizer production and Greenius in 2013 which deals with plastic recycling. They take a fee to process waste and also sell recycled products such as their panel boards — dubbed “Ecoboards” — which can replace wood or steel boards in any operation. They work for municipalities on a contract basis and among one of their selling points is that they don’t require a landfill. They currently have ten recycling plants across Lebanon.

Achievements: In 2013, Ecoboard production expanded from 120 boards a month to 500. They created their second subsidiary, Greenius, which, along with Green Ideas, is already profitable.

Competitive edge: They produce a very high grade of compost which is certified for organic agriculture, and use an accelerated composting technique which turns organic waste into compost within three days. They strive for a 95 percent recycling rate.

Goals: To take their technology to as many municipalities as possible and build a major recycling plant in Lebanon, in the process drawing interest from the region to send their recycling to Lebanon.

Challenges: Encouraging countries in the region to invest in processing waste.

Cleartag

Cleartag founder Tarek Dajani

Entrepreneur: Tarek Dajani

Age: 39

Industry: Software

and Digital Media

Established: 2000

Number of employees:

45 in Beirut, 15 in Dubai

Revenues in 2013: Undisclosed

The model: Cleartag works on a wide variety of services for clients, working with both tangible media and everything that relates to online platforms. Their main work revolves around websites, mobile platforms, and social media platforms, but they have also held installations in physical spaces. They work for clients on various consultancy, strategy and product development services, using technology to enhance a client’s business proposition in order to give it a better market share. One of their clients is Touch, for whom they handle social media activations, applications, community management, and interface — everything on social platforms.

Funding: Mostly bootstrapped.

Achievements: Cleartag developed Bank Audi’s eGallery which was launched in June 2013. They were responsible for the project from A to Z; from the architecture of the interactive kiosks, to the technologies supporting it. Besides working with Audi and Touch, they have developed platforms for two telecom companies in the region.

Competitive edge: Cleartag works through a method of cross-pollination — as a tech company, they strive to bring great minds from multiple disciplines together. They have invested in experimenting, because they believe that to think about a product requires not just the technology behind it, but also the impact, strategy, positioning and branding. This strategy allows them to offer unique and innovative products and services to their clients.

Growth: As Cleartag has grown it has led to many spinoff companies so it can remain focused on services. When a concept is deemed worth pursuing it is incorporated as an independent project under the holding. Cleartag is now part of a holding, DNY Group, with around 6 or 7 ventures. The company has also placed emphasis on regional growth and has expanded around 30-45 percent since last year.

Goal: To keep adapting. In a field that is continuously changing, Cleartag needs to constantly adapt to continue to be relevant.

Dawtec

Dawtec founder Wissam Daou

Entrepreneur: Wissam Daou

Age: 37

Industry: Renewable energy

Established: 2002

Number of employees: 10

Revenues in 2013: $550,000

The model: Dawtec has developed a series of products in renewable energy. Their catalogue includes technology which converts solar energy into thermal energy, with multiple applications including water heating for residential or commercial venues such as hotels, hospitals, and health clubs. These systems can be used for pool heating and for industrial applications. Other products include an architectural solar water heater — for use on roofs or the front of balconies — which includes the same mechanical properties to turn solar energy into thermal. The energy can be used in household or commercial applications. A third product currently not for sale, consists of a testing apparatus, which can be used to test different materials used in solar or water heaters to record data that will allow them to improve their materials. Dawtec makes revenues both from the sales of these products, as well as through maintenance fees.

Achievements: In 2013, Dawtec won the Grow My Business competition for a total cash prize of $33,000. In 2012 they were named among the top five market leaders by the Ministry of Energy.

Funding: $150,000 Kafalat loan.

Goals: They are targeting new markets in the region: Iraq, Kuwait, Jordan, and Qatar.

Diwanee

Diwanee co-founder Delphine Eddé Diwanee co-founder Hervé Cuviliez Diwanee co-founder Ivan Petrovic

Entrepreneurs: Delphine Eddé, Hervé Cuviliez, Ivan Petrovic, Patrick Boulos (not pictured)

Ages: 38, 42, 41, 40

Industry: Online media and e-commerce

Established: 2008

Number of employees: 75 in Lebanon, 15 in Dubai, 30-36 in eastern Europe

Revenues in 2013: Undisclosed

The model: Diwanee is a digital media company operating a series of websites that target women in the Middle East. Their online Arabic content websites are building one of the largest female audiences in the Middle East, with over 5 million users. Their major websites include Yasmina.com, dedicated to fashion, 3a2ilati, a parenting website, and Atyab Tabkha, which specializes in cooking recipes. They also launched an e-commerce wing in January under Mooda.com. Diwanee pursues a strategy of digital marketing working with brands to increase engagement and maximize reach through customized content.

Achievements: In 2013 Diwanee launched their online shopping branch as well as a social network to connect the users across Diwanee various sites. At the end of 2012 Diwanee joined Endeavor’s network, a highly selective international network that helps companies grow by connecting them to mentors and successful entrepreneurs worldwide.

Target market: Diwanee’s services targets in particular Arab women. Their largest user base, at 70 percent, is in Saudi Arabia, with the rest mostly coming from the UAE, Qatar, and Kuwait.

Goal: Diwanee is trying to create a global online ecosystem wherein users interact between their websites. For instance they want to support designers on Mooda, and have people talk about them on Yasmina.com.

Nymgo

Nymgo founder Oman Onsi

Entrepreneur: Omar Onsi

Age: 35

Industry: Telecoms

Established: 2008

Number of employees: 40 in Lebanon, 50 total

Revenues in 2013: between $10 and 12 million

The model: Nymgo is an application that offers voice over IP (VOIP) services for callers all over the world — delivering international calls over the internet. Their services are 65 percent cheaper than Skype. Nymgo focuses on expats, specifically on blue collar expats, who are looking for an affordable way to reach their families back home. Although their network operates from Lebanon, they do not actually provide this service in the country as Ogero’s monopoly over telecoms makes VOIP services illegal. For the moment the application is a pay-as-you-go service, but they are planning on launching monthly packages.

Funding: Raised an undisclosed amount in 2011 from Intel and Abraaj Capital of between $3 million and $6 million.

Achievements: In the past year, Nymgo has grown 70 percent. They have customers in 190 countries, and millions of downloads. On a monthly basis they have 150 thousand active users. They joined Endeavor’s network in 2013.

Target market: Nymgo operates worldwide. Their largest consumer base is in the Middle East, Africa and Asia.

Goals: Nymgo is operating in a $95 billion industry. They are focusing on growth, and have high hopes that it could turn into a billion-dollar company.

Paravision

Paravision founder Michel Sfeir

Entrepreneur: Michel Sfeir

Age: 40

Industry: Information and technology

Established: 2002

Number of employees: 170 globally with 70 in Lebanon

Revenues in 2013: Off-record

The model: Paravision develops multimedia products and services that encompass programming, content creation, and hardware. They work for clients on a project-by-project basis. The product itself depends on the client, and they work for almost all sectors — banking, real estate and tourism. Their clientele includes banks and governments, with 99 percent of their projects outside Lebanon.

Achievements: In the past year, Paravision has created over 3,000 different applications. They have developed interactive multimedia for Beirut’s Mineral Museum: large, interactive touch-screens which let the user learn about the science behind the rocks, their name, age, and chemical composition through immaculate digital visual representations that add value to the visit of both the layman and the specialist. They have also created installations for Panasonic and Toyota exhibits.

Funding: Mostly self-financed, with $400,000 in Kafalat loans which they received almost a decade ago.

Target market: They deliver solutions both domestically and internationally: in the Gulf, the United States, Japan, and Europe.

Goals: To maintain a cutting edge in the field of technology, Paravision are putting money into research and development. They are also developing their products for the Asian market and are currently developing a new product in partnership with an industrial company in Taiwan. Another major product that they are planning to launch in 2014 is Touristube, a platform to guide tourists in every aspect of their travels. They believe the project will draw 50 new employees. Currently operating in Qatar, Dubai, and Abu Dhabi, they have recently opened companies in Saudi Arabia, Europe, and Switzerland and are witnessing a 25 percent growth year-on-year.

Background: Michel Sfeir was a co-founder in three other companies, one of which was a multimedia firm in France.

The Little Engineer

The Little Engineer founder Rana Shmaitelly

Entrepreneur: Rana Shmaitelly

Age: 42

Industry: Education

Established: 2010

Number of employees: 7 full-time internationally including 4 in Lebanon. 25 part-time

Revenues in 2013: $550,000

The model: The Little Engineer is an educational program which teaches youth aged 6 to 18 in the subjects of science, technology, and engineering. It aims to make students more confident to study and pursue careers in engineering. Starting as a small club in robotics and renewable energy, the Little Engineer is a franchising model and has opened 6 centers in Lebanon, Qatar, and Libya. The Little Engineer is primarily an after-school program but has also established clubs within schools. Their clients consist of the students who pay fees to enroll in their programs.

Funding: $50,000 from MIT Arab Competition in 2010. $20,000 from Cartier Women’s Initiative Awards.

Achievements: In 2013 the Little Engineer piloted a program that could be integrated into a school’s curriculum. The year also brought them a strategic partnership with leading aircraft manufacturer Airbus Middle East to deliver workshops in the region. A further significant partnership in the past year was established with American-based scientific and engineering software production company National Instruments to use their programming language software to teach children.

Goals: They are currently working to set up a franchise in Kuwait.

Strategy for the future: To grow the company and make a good exit, then start another company with a new concept.

Woopra

Woopra founder Elie Khoury

Entrepreneur: Elie Khoury

Age: 28

Industry: Internet/technology

Established: 2008

Number of employees: 10

Revenues in 2013: Undisclosed six-figure number

The model: Woopra is a platform that offers businesses real-time analytics. It allows its clients to understand how their customers engage with their website and applications, and then use this insight to plan strategically, charging their clients a momthly fee to use their products.

Achievements: In 2013, Woopra moved further upmarket into the enterprise space. Their clients include large, international companies with some of the internet’s highest trafficked websites. They have closed a partnership with cloud computing company salesforce.com, best known for its customer relationship management software.

Competitive edge: Woopra distinguishes itself by allowing its clients to see people, not just numbers, in real-time, and take tactical actions based on their behavior, such as email or promotional on-site ads.

Expansion: Woopra was founded in Byblos, Lebanon, but has been an international company from the start. As the company expanded, the founders felt that to optimize growth they needed to move to the heart of the technology industry, which precipitated their 2011 move to San Francisco. They run minimal operations in Lebanon.

Goals: Woopra is currently working on forming partnerships with other major technology companies, and is looking to increase their strategic partnerships and continue to increase their marketworth.

Category: Startup Entrepreneurs

Bnooki

Bnooki co-founder Elie BouJaoude

Entrepreneurs: Elie BouJaoude (pictured), Nicolas L’Helgoualch, Yann Rotyl

Ages: 30s, 40s, 40s

Industry: Online banking comparison website

Established: 2013

Number of employees: 5

Revenues in 2013: Undisclosed, but cash-flow positive

The model: Bnooki is an online comparison website for banking services. Users can compare bank services to get the best deal to match their personal criteria. They can apply for the service directly through Bnooki’s website. They generate revenues from the business reports they sell to banks, and from advertising.

Achievements: Bnooki launched in 2013 and very quickly reached a significant user base and are sending more than 500 requests to banks per month. They also generated revenues very early after their launch. They received an approval to operate from the central bank, and among their greatest achievements got 21 banks on board with their services. They also signed an agreement with the Beirut Chamber of Commerce under which the chamber launched a new loan which can be applied for exclusively via Bnooki.

Goals: Bnooki is currently working on a partnership with Google to establish ties to their website. They are also conducting market studies in other regions of the MENA to see which market they can expand to. The company is looking at horizontal and vertical expansion. In terms of horizontal expansion they are looking towards countries in the MENA region. In terms of vertical expansion they are looking towards expanding to other sectors, such as investment.

Background: Elie worked for a number of years at Kafalat, then became an investor at Berytech fund. He has sat on the boards of many startups.

CardioDiagnostics

CardioDiagnostics co-founder Ziad Sankari CardioDiagnostics co-founder Layla el-Zein

Entrepreneurs: Ziad Sankari, Layla el-Zein

Ages: 28, 29

Industry: Healthcare/IT

Established: US in 2011, Lebanon in 2013

Number of employees: 1 full-time, 8 part time

Revenues in 2013: Undisclosed, less than $1 million. Close to breaking even. Projected $1 million in 2014.

The model: CardioDiagnostics offers portable devices that monitor patients’ hearts outside of hospitals for up to a month. The data registered on these devices is transferred to monitoring centers, where it is checked by professional experts. This technology helps patients get out of the hospital faster, and gives medical professionals better tools to provide quick diagnoses to patients. Patients rent this machine from hospitals, and CardioDiagnostics receives money for the service, generally from insurance companies. Their revenue stream includes the rental fees and the licensing of their technology to third parties.

Funding: Cardiodiagnostics has been financed by the Qatar foundation and Berytech for undisclosed amounts.

Achievements: In Lebanon, they have partnered with the largest medical centers in the country. The company operates from Lebanon, but their technology is also attracting US customers, and has been deemed up to international and US standards. When the company was established in 2011, they were still working on researach and development. They have only recently started acquiring customers across the US in significant quantities. They currently have more than one thousand cardiologist customers across the US.

Goals: CardioDiagnostics is considering expansion to other countries looking in particular at Belgium and Germany.

Challenges: Difficult to find talent. One of the reasons they decided to come back to Lebanon was to create job opportunities, but they found it difficult to transform fresh graduates coming out of universities into sophisticated well-experienced talent.

Dom Controls

Dom Controls founder Ahmad Bizri

Entrepreneur: Ahmad Bizri

Age: 30

Industry: Home Automation

Established: 2012

Number of employees: 2

Revenues in 2013: Revenues pending the launch of the product.

The model: Dom Controls creates home automation technology that allows users to control air conditioning, hot water, curtains and blinds, light dimmers, etc using their cellphone, smartphone, or computer as a remote. Bizri is still working on the prototype, but has found a market in Lebanon, where he has been approached by many potential customers, some of whom were interested in customized versions of the technology.

Achievements: Dom Controls will equip the 11th and 12th floors of Skygate, a prestigious property in Achrafieh still in development. The company has also have been approached by an enterprise that sells yachts.

Target market: The Middle East, particularly the Gulf where there is a demand for high-tech luxury items. Bizri is looking at Saudi Arabia, Erbil in Iraq, the UAE and Kuwait in particular.

Financing: Partly self-funded, with some funding from Berytech and one other private financial backer.

Thinking about: Creating a series of products for the industrial sectors, for instance being able to turn on machines at a distance without having to be present in the factory.

eTobb

eTobb co-founders Paul Saber, Sara Helou and Jad Joubran

Entrepreneurs: Paul Saber, Sara Helou, Jad Joubran

Ages: 25, 25, 20

Industry: Online Health

Established: 2013

Number of employees: 5

Revenues in 2013: Undisclosed

The model: eTobb is an online Q & A platform which connects doctors to patients. It allows users to pose questions anonymously and for free to doctors, in either public or private conversations. It also allows them to read the answers to other members’ questions, and search for doctors to review their profiles. One of the inspirations behind eTobb was the founders’ realization that a lot of people asking medical questions online were not recieving reliable information. The venture’s revenues currently come via sponsorships from insurance and pharmaceutical companies that can sponsor particular topics or place logos and products on eTobb’s site.

Funding: 2012 investment of $76,500 from startup accelerator Seeqnce.

Achievements: eTobb managed to attract over 700 doctors, who cover 38 medical specialties, in addition to over 20,000 registered users, with 5,000 questions answered by doctors. They were semifinalists in the MIT Arab Business Plan Competition, and nominated for the 2013 World Summit Awards in the e-Health & Environment category.

Target market: eTobb’s users are primarily Lebanese, with some from the Arab world and a few outside the region.

Goals: To improve access to healthcare in the region by digitalizing health. The company is currently working to charge a monthly fee for doctors to make online bookings through their websites. They are also looking to expand to other countries.

Kashida

Kashida co-founders Elie Abou Jamra and Mirna Hamady

Entrepreneurs: Elie Abou Jamra, Mirna Hamady

Ages: 27, 25

Industry: Creative industries/product design

Established: 2011

Number of employees: No full-time, projects outsourced monthly to design hubs. In peak season they have 10 people working for them.

Revenues in 2013: Undisclosed

The model: Kashida sells home accessories and furniture based on 3D Arabic typography. They also create personalized design pieces for clients. Their work covers small to large home accessories, corporate gifts, and souvenirs for events. Their concept celebrates the Arabic script with a functional element. They have partnerships with five to six production workshops in the region, in which they work with craftsmen and artisans. Kashida generates revenues by selling their products and services. Their products are ready-made items, whereas their services stem from the customization of their items. They can create designs with letters and words to reflect the name of companies, souvenirs for weddings, or baby showers amongst other things.

Funding: Self-financed.

Achievements: In 2013 Kashida created an e-commerce portal so that their clients could make purchases online. They have increased the number of products in their line, expanded to different markets, and grown internationally. At the end of 2013, they secured a partner in the UAE and plan on opening an office in Dubai. Their revenues grew 200 percent in one year. They currently have partnerships with big regional designers in the MENA region such as Dewan Architects in the UAE, Nuqat Creative Conference and Promoseven in Kuwait and Brash Brands in Dubai.

Target market: Kashida has expanded beyond Lebanon and their clientele is mostly based in the Gulf. They cater to both individuals and businesses.

Goals: They are focusing on business-to-business, increasing their partnerships with interior designers, creating more lines of corporate gifts, focusing on larger pieces, and targeting the GCC market.

Moujaz

Moujaz co-founder Shadi Moadad Moujaz co-founder Ali Hammoud

Entrepreneurs: Shadi Moadad, Ali Hammoud

Ages: 35, 20

Industry: IT/broadband/information extraction

Established: 2013

Number of employees: 1

Revenues in 2013: Undisclosed

The model: Moujaz is a summary service that extracts key information from articles to provide a shorter version. Moujaz’s technology allows businesses to send their articles to the company and receive a short version in seconds. The businesses can then provide article summaries for their users. Moujaz removes up to 75 percent of content in a totally automated service. The program can increase hits to a website by 25 percent. Their model hinges on a monthly subscription for media websites, with several cost brackets depending on the amount of articles summarized.

Achievements: Secured a partnership with one media agency, and working on another. These have access to 40 large newspapers.

Target market: Cellphone users. Consumers of articles by phone often don’t have the time or attention to read a full article.

Challenges: Convincing businesses that they need to keep up with technology in order to stay alive.

Goals: They are working on a plugin for customers to use their services directly to summarize articles, to grow their user base and make their product easier to sell. They also aim to capture more users across the region. From the data they collect from these users, they plan on developing another product to sell to newspapers which would provide info about their users, and generate recommendations based on their behaviour.

Pin Pay

Pin Pay founder Omar Bader

Entrepreneur: Omar Bader

Age: 48

Industry: Mobile payments

Established: 2008

Number of employees: 28

Revenues in 2013: Undisclosed. Expect to make $2 million in 2014.

The model: Pin Pay is an application that allows users to make payments from their cellphones. This mobile banking service allows users to check their account balance, receive statements, transfer funds, and contact a help desk. Users can also make mobile payments to pay bills, recharge their phones, etc. Their revenues come from subscription fees and transaction fees. In some cases the users pay, but most often it is the receivers who pay. So far, they have established partnerships with Bank Audi and Bank Med, and are working closely with three other banks.

Funding: Over a period of 5 years they have raised around $5 million from banks, angel investors, and MEVP. Pin Pay was launched as a joint initiative between Omar Bader, MEVP, and Bank Audi.

Achievements: In 2013, Pin Pay has expanded their transactions and the number of payment types available to the user: including TV subscriptions, health subscriptions, and government payments. They have added a second bank to their portfolio and have increased the number of users. They currently have 70,000 active users. They are the only company authorized by the central bank to do inter-bank transactions.

Goals: First, the company wants to break even. Then they plan on increasing the number of banks, users, and services that they offer, to create more value for Pin Pay customers. They are looking to add at least 100 new services, ranging from membership fees to recurring bills.

Challenges: There are a lot of legal issues surrounding regional expansion.

Background: Omar Bader has previously co-founded 3 companies.

Presella

Presella co-founders Walid Singer and Louay Al Kadri

Entrepreneurs: Walid Singer, Louay Al Kadri

Ages: 28, 26

Industry: E-commerce

Established: 2012

Number of employees: 3

Revenues in 2013: between $15,000 and $21,000

The model: Presella is a crowdfunding and e-ticketing platform. Users can either create a regular confirmed event, or an unconfirmed event — following a crowdfunding model, where the event will only take place if its goal is reached in ticket sales. Presella makes 2.5 percent plus 99 cents on every ticket sold, and 4 percent plus 99 cents on their crowdfunding campaigns.

Funding: $76,500 from startup accelerator Seeqnce.

Achievements: Presella sold $300,000 dollars worth of tickets, and over 100,000 tickets both online and offline. They have 3,000 registered buyers, and have hosted over 200 events in Lebanon. They have also hosted events in Dubai, Qatar, Cyprus, and Turkey.

Goals: Presella are working on a cellphone application and looking to expand as quickly as possible.

Ubility Net

Ubility Net co-founders Ziad Mabsout and Khaled Dassouki

Entrepreneurs: Ziad Mabsout, Khaled Dassouki

Ages: 25, 33

Industry: Communications/cellular operators

Established: 2013

Number of employees: 2

Revenues in 2013: No revenues in 2013, plan to break even in 2014.

The model: Ubility Net is a technology company that creates tools for cellular operators to create flexible data plans for their users. Still awaiting a patent, their product would allow cellphone users to obtain customized data plans, to get the most out of their mobile experience. Their product is a combination of hardware and software; a server on which they install software that monitors the internet traffic of customers. Cellular operators can then create plans based on Ubility Net’s tools, which are also used in delivering the plan to the customer. Their revenue stream consists of the sale of the tool to cellular operators, and then support services.

Achievements: Ubility Net came in first place in the Maurice Fadel Prize in 2013. This year they were among the top 10 at the MIT Arab Startup Competition. They also found their first customer — a cellular operator in the Gulf.

Competitive edge: Ubility Net sees itself as unique because of its easy-to-use traffic-tracking technology with an interface geared directly towards cellular operators who can create data plans directly through Ubility Net’s software.

Goals: Ubility Net is finalizing its period of research and development and is planning to launch its final product in 2014.

Strategy for the future: They are planning to launch a series of products, all related to mobile operators.

Zoomaal

Entrepreneur: Abdalla Absi

Age: 21

Industry: Crowdfunding

Established: 2012

Number of employees: 3 in Lebanon, 1 in Syria

Revenues in 2013: $4,000

The model: Zoomaal is a crowdfunding platform for the Arab world. The crowdfunding platform lets projects with a defined scope raise money, which they receive only if they reach their goal. If the project is successful, Zoomaal makes a 5 percent commission on the project. If it is not, the money goes back to the contributors. Zoomaal has 12 different categories for their projects, including music, art, research and inventions, and education.

Funding: The platform is supported by 4 VC firms in the region: Wamda, MEVP, Sawari Ventures (Egypt) and National Net Ventures (Saudi Arabia). The company is seeking a second round of investment.

Achievements: Zoomaal has had five successful projects for which they raised a total of $100,000. Among their success stories is Lebanese band Mashrou’ Leila, who raised $67,073 in a month to fund their third album Raasuk. They have launched 22 projects on their website.

December 13, 2013 2 comments

Business

Where are they now?

by Livia Murray December 13, 2013

written by Livia Murray

Of the 20 companies picked for 2012’s top entrepreneurs, five stood out for their innovation, business acumen and drive. In no particular order were AdTech, a startup that imports used computers to sell on the Lebanese market, Anghami, which provides online music, Cinemoz, a video-on-demand service, Eastline Marketing, an online marketing company, and finally Butterfleye — now Instabeat — a startup manufacturing heartbeat-monitoring goggles for swimmers. Of these, Anghami made it into the top 20 for a second time running, and is profiled here. Here, Executive checks in with the other four to see how far they have come and where they are now.

AdTech

Entrepreneurs: Joseph Massih, Elio Massih

Ages: 29, 24

Industry: Technology

Established: 2011

Number of employees: 4

Revenues in 2013: $800,000, up from $300,000 in 2012

The model: AdTech imports used computers from the United States to sell in Lebanon. Targeting a specific niche in the lower class Lebanese market, they have partnerships with electronic wholesalers in Tripoli, the Bekaa, and the South. From these partners they also purchase electronic scraps, computers that are dismantled in AdTech’s warehouse and sent to be recycled. Plastic parts can be recycled in Lebanon, but the rest are sent to Europe, where they have partnerships with a network of big recycling companies.

Since last year: AdTech’s revenues have more than doubled from $300,000 in 2012 to $800,000 in 2013. During the past year they realized that Lebanon was lacking the proper means to recycle old electronics. “After a year of importing electronics, we saw a proper solution for us to get rid of our old stuff,” explains co-founder Joseph Massih. This year they began procuring electronic scraps from their partners that buy used electronics, and have just acquired land in Batroun on which they plan to build a recycling facility.

Looking to the future: The founders of AdTech are currently talking to investors to get funding to enable their procurement and recycling of unusable electronics. They are also looking at other markets. They are currently looking toward Iraq, and are thinking of starting a similar program there by mid-2014. They hope to reach the $1 million revenue mark by 2014.

Cinemoz

Entrepreneurs: Karim Safieddine, Maroun Najm, Jad Saroud

Ages: 29, 29, 30

Industry: Media

Established: 2011

Number of Employees: 13, up from 11 in 2012

Revenues in 2013: $500,000, up from $200,000 in 2012

The model: Cinemoz offers an on-demand online video platform. They currently have over 1,000 movies available in Arabic. Their two main goals are preserving the heritage of Arabic cinema, and kickstarting the next wave of Arabic content throughout the world. Their core revenues come from advertising. They will be launching a paid subscription via credit card, SMS, and in app devices by mid-2013.

Since last year: For Cinemoz, 2013 was the year of scaling. Since last year they doubled their audience and established content partnerships with three major studios across the region and also launched their own production track. They have started creating their own content tailored to a younger audience

Looking to the future: Cinemoz is seeking to develop its user base. Their main markets today are Saudi Arabia and Egypt, followed by the rest of the Gulf. They are working on growing these markets and evolving outside of the online sphere to attract an offline audience. They are planning high-end online campaigns to attract users by delivering original content. They are aiming to generate between $760,000 and $1.1 million in 2014.

Eastline Marketing

Entrepreneurs: Marc Dfouni & Nemr Nicolas Badine

Ages: 37, 37

Industry: Online Marketing

Established: 2006

Number of Employees: 32, up from 15 in 2012

Revenues in 2013: $1.6 million, up from $1.2 million in 2012

The model: Eastline Marketing is an online marketing company. They deliver services in the domains of social media marketing, search engine optimization, paid search marketing, and online advertising. They serve markets locally, regionally, and internationally.

Since last year: The team has grown from 15 to 32 employees and has doubled revenues. In terms of geographical reach, they have expanded to Saudi Arabia. They have also launched new products online, one of which, SweepzApp.com, is a self-service platform for companies to launch sweepstakes online for their users to enter a draw through Facebook or Instagram.

Looking to the future: In 2014, in addition to further expansion in Saudi Arabia Eastline Marketing plan to further develop additional components for their Sweepzapp.com app. Their projected revenues for 2014 are 2.5 million.

Instabeat (formerly Butterfleye)

Entrepreneur: Hind Hobeika

Age: 25

Industry: Sports technology

Established in: 2011

Number of Employees: 5

Revenues in 2013: no current revenues, but 1,000 pre-orders

The model: Instabeat is a sports technology startup that has designed swimming goggles that can monitor a swimmer’s performance while they swim. The goggles allow swimmers to visualize their heart rate in real time through the lens, with a blue light if fat is burning, green light for being in a fitness zone, and a red light if they have reached maximum performance. The goggles measure calories, number of laps, number of flips and turns and breathing patterns. To top it off, swimmers can upload their information after their workout for a detailed analysis over time.

Since last year: Instabeat has launched a crowdfunding campaign on Indiegogo, surpassing their target of $35,000 by raising a total of $56,374. Though they have not yet sold their technology, in the past year they have received 1,000 pre-orders for their goggles — priced at $150 a piece. Their market is mainly international — with 90 percent of pre-orders coming from outside the country.

Looking to the future: Instabeat plans on selling a couple of thousand units in the next year. They are currently focusing on a swimming product that they want to distribute all over the world. Beyond this, they want to develop new sports products, not just limited to swimming.

December 13, 2013 0 comments