An entrepreneurship ecosystem captures the essence of entrepreneurial energy in a cycle of economic life. For these energies to become manifest and productive, ecosystems need a constant supply of fresh and ambitious business-oriented minds which are equipped with unconventional ideas. Those will often be minds emerging from the tertiary education system, although the entrepreneurial spirit can just as well shine in self-taught enterprise builders who have fortified themselves with experiences and practical insights.
In transforming talents into victors and disruptive ideas into success stories, the functioning of an entrepreneurship ecosystem will combine the benefits of a broad enabling environment with the effectiveness of nurturing units, namely the incubators and accelerators. Today these units are intrinsic to fast entrepreneurial processes of turning – in the culture of capitalism naturally and inevitably occurring – practical breakdowns of new business ideas into chains of development in which these ideas and human energies pivot from failing rapidly into improved iterations.
This is all economic theory until a country starts building its knowledge entrepreneurship ecosystem, a decades-spanning effort which in the case of the Lebanese one originated in the context of the early commercial internet at the end of the 20th century. This Lebanese tech and knowledge economy ecosystem emergence involved a period of gradual formation from the late 1990s into the early 2010s, not a perfectly balanced growth spurt with a deliberate infusion of funds and intense human capital investments in the 2010s, but lately a pivot to a new and more organic development phase that began with the painful loss of most funding and disappearance of some ecosystem players in 2019-20.
During the growth period of the 2010s – decisively induced by the famed Circular 331 of Banque du Liban, Lebanon’s central bank – the entrepreneurship ecosystem was tilted in favor of the “tech” component of technology-driven startups built around computer applications in education, health, advertising, communication, and finance (Healthtech, Adtech, Fintech, etc). With funding and equity deals for these startups hyped all too often beyond reasonable valuations, one would encounter several short-lived tech meteorites, or worse the occasional zombie venture, for each new star team and viable application.
Already during the ecosystem’s formation phase, which saw software houses, wedding, auction, and online financial services sites feature prominently among its New Economy ventures, early ecommerce startup founders naturally had food on the top of their minds. Whereas plenty of online ventures of the Lebanese dot-com bubble days have long been forgotten, Karim Saikali’s website, buylebanese.com, is today a rare holdout venture from this era. Delivery of Lebanese food products to aficionados in the diaspora was driving Saikali’s business when the site went live in November 2000, embarking on an ecommerce journey that included periods where the founder would run the entire operation single handedly from his laptop while sitting at this or that Beirut café.
Furthermore, notable agriculture and food related entrepreneurial brands were created during the 2010s, examples reported by this magazine include the niche consumer brands Taqa, Eshmoun, and The Good Thymes. Executive Magazine’s top 20 entrepreneurs list of November 2012, which was the most extensive one the magazine produced in a single year, featured one cooking/foodie site (Shahiya), one purveyor of organic food boxes (O’Box), and one olive-oil venture (Olivetrade/House of Zejd).
In the Lebanese tech entrepreneurship ecosystem of the 2010s, it was the default profile of a successful startup that penetration of markets other than Lebanon might shape a viable economic narrative out of a startup with a minimum viable product and local or better, regional, adherents. Although local job creation and knowledge economy focuses were deeply embedded into guidance force of Circular 331, the Lebanese entrepreneurship ecosystem by necessity of the small domestic market defied many high-blown expectations for job creation – which were incidentally not focused on rural growth but formulated in relation to the online tech services and urban ancillary realm.
Emerging sub-trends
Under the pandemic scenario of 2020 and even more so under the purchase power and market constraints of the world after the Lebanese pound’s collapse, the trend of outward orientation of Lebanese tech startups intensified. The ecosystem witnessed the emergence of sub-trends; like the trend of moving to entrepreneurship nurturing environments found in Dubai, Paris, London, or anywhere outside of this country. Another accelerating shift saw startups keep part or all of their back office and development “kitchens” on virtual islands of connectivity in Beirut while seeking clients outside.
A third sub-trend saw the thriving of platforms which focused on making Lebanon an outsourcing destination from which clients around the world could contract remote knowledge workers. Under a fourth sub-trend, ecosystem stakeholders were treated to a – in part domestically focused – surge in the number of advertising and ecommerce facilitators which delivered e-commerce platforms and market access strategies to local companies. This trend was based on the fact that local niche producers delved into operation of proprietary e-commerce platforms with focus on multiple target markets, among which the Lebanese market could be one – but did not have to be.
It is out of this entrepreneurship diversification and ecosystem change that the acceleration and incubation tech ecosystem has also seen a new successful entrepreneurial economic DNA mixing pool (see story on accelerators and programs on page 86) come up where the gametes and zygotes of Lebanese agricultural entrepreneurship and innovative zest combine into agro-entrepreneurial ventures that seek to interact with markets in search of sustainable profits which contribute to the recovery of the economy.
In many cases, enterprises that arose out of the tech entrepreneurship ecosystem over the past 20 years did not generate as many jobs as hoped, but they created change impulses for the direction of the Lebanese services economy. By the same logic of fostering positive change, the agro-entrepreneurship generation in our 2022 lineup (see profiles on page 80 for a look into their diverse range) include agriculturally oriented ventures that have startup appeal but also new impulses to offer in the areas of agricultural production and rural livelihoods.
Beacons of an entrepreneurship ecosystem that is inclusive of a strong agro-entrepreneurship component are observations that – partly under the impact of the pandemic and partly under the weight of the economic crisis – increasing numbers of university graduates and seasoned professionals have been rediscovering their village roots and been embarking on agro-entrepreneurial startups. Also of note is the outstanding vibrancy radiating from exhibitors at events focused on small green, innovative, and agrarian enterprises, from the legacy Horeca show in March of this year to the Vinifest and Green Innovation events of October.
Stakeholders interviewed by Executive during our investigation of the food value chain and food security situation of Lebanon emphasized that in an integrated system of agro-entrepreneurship, food exports will play a decisive role for Lebanese food security. They noted further that food exports require access to markets, which in the digital era will include proactive digital channels.
In recent years, proliferating online platforms of Lebanese producers, and the locally based specialized ecommerce platforms or online shopping malls, have important roles to play in this regard. Interestingly, the Lebanese entrepreneurship landscape of ecommerce and marketing also includes online ventures that are focused on Europe, such as Brussels-based Key16/Seven Shelves and the North American market from within the United States. These startups could contribute to the invigoration of Lebanese exports, food sovereignty, and food security. An example whom Executive conversed with is Za’atar Road, which in 2020 embarked on bringing artisanal Lebanese agro-food products to high-end foodies and health-oriented consumers in developed North American markets.
The curious case of the expatriate za’atarpreneur
Founder and chief executive of Za’atar Road Maya Hachem says she conceived of the startup shortly after the August 4 Beirut port explosion in 2020. She soon found an investor who backed her to help young entrepreneurs and artisanal food product makers in Lebanon, while also latching onto trends for healthy food and benefit from the large number of health food stores in the United States.
After her business plan was hatched and presented to one or several US-based investors (in response to an interview question by Executive, Hachem declines to divulge details on her startup capital or investor base), she undertook an exploratory visit to Lebanon for sourcing of suitable products. Her sojourn of scouting rural Lebanon and talking to producers in villages across the country lasted three to four months and yielded several hundred prospective artisan food producers as prospective partners – a success which set the founder of Za’atar Road onto a track of heading straight into a significant barrier.
“I had to hire a small team in Beirut to bring us all the samples that were then run by the food and drug administration (FDA) for checks and approval. This has been one of the most challenging parts of implementing the whole business model. Of the 452 artisans that I reached out to, I could only get approval for 62,” she tells Executive.
After gaining FDA approvals, three containers with 400 different products were sourced and Hachem embarked further on her push to market. “We are only focusing on small productions and small batches from suppliers who meet the criteria and procedures for FDA approval,” she notes.
Having internalized the insight that it is anything but easy to bring Lebanese products to the North American market, Za’atar Road’s Beirut-based supplies manager focused on securing the flow of small product batches to meet FDA requirements, while satisfying Hachem’s core business concept of not working with big names in Lebanon’s agro-industrial sector.
In the meantime, even after the product range was set to companies that had business registrations in Lebanon and met the food safety, labeling and all other FDA standards, Hachem says she frequently worries about economic and infrastructure barriers in Lebanon which might obstruct her artisan suppliers’ ability to deliver products in the needed quantities.
“Our product range includes spices, olive oil, soaps, jams and honeys; we have a little bit of everything,” Hachem says. In her first round of product sourcing, she focused on artisanal food products, but the scope of Za’atar Road’s supplier search is now being widened to non-food products.
The next business challenge on her path is the unpleasant duty to revise and rationalize the product range. In doing her trial to see what products work with the US consumer, “we experienced that some products do better than others. [Thus] we will by the end of this year have to decide which products and suppliers to strike from our range. If those suppliers can have a niche in another market, it will make more sense for them to sell their products there,” offering her rationale for what she describes as an upcoming hard decision.
Over the year of 2022, her operation has expanded from an online-only platform with 400 SKUs and usage of an external ecommerce fulfillment center to wholesale relations with several gourmet stores in US urban population centers. “It has to be the right store, though. The idea is not to have our products anywhere and everywhere,” Hachem adds. She does not target the Middle Eastern communities in the US with Za’atar Road as much as fine-food stores in the upper market reaches.
With regard to questions on financial aspects of Za’atar Road operations to date, she says that her Lebanese suppliers have so far been paid upfront in fresh dollars and her sourcing costs have been stable under this formula. As to figures that she is willing to disclose, Hachem says that Za’atar Road’s headcount has reached seven and names a revenue target of “around $5 million in the next two years.” Fundraising for more capital is on her agenda for a later stage of development.
As Hachem notes, in recent years some household words in the Lebanese food culture have been adopted into US culture or even become trendy in foodie circles. Many other terms, however, have yet much room to define a Lebanese niche in developed food cultures by which they would adequately represent the contributions and values of the culinary wealth of Lebanese lands. An integrated agro-entrepreneurship ecosystem that brings expatriate and local constituents together in demonstrating the diversity and depth of Lebanon’s culinary tradition, is hopeful on the two counts of helping in the reduction of food insecurity by the indirect path of improving exports, and contributing to real economy sustainability and food sovereignty.
