- There is a need for innovation and R&D in the agro-industry sector in Lebanon and the region.
- Agrytech, a program by Berytech focusing on innovations in agriculture, was created to address this need. It has four major pillars including an accelerator program and an agri-food innovation cluster.
- Agrytech was promoted to university students and graduates through various activities and interest in the accelerator program, now in its third year, has risen slowly and steadily.
- Agrytech received its second round of three-year funding from the Foreign Ministry of The Netherlands this August 2019.
At the time of writing, Lebanon is over a week into nationwide protests which were, to a large extent, fueled by the miserable economic situation the country is facing. Now more than ever, we are reminded of the importance of high performing productive sectors, namely industry and agriculture, in a country’s economy. In a 2018 article published in Executive’s end of year issue, Cristiano Pasini, representative and director of the United Nations Industrial Development Organization (UNIDO) for Lebanon, Jordan, and Syria, wrote that a strong industrial sector, which benefits from technological advancements and innovation, is a driving force behind national economic growth.
Among the industry subsectors in Lebanon, it is agro-industry that shows the most potential for being a driver of economic growth. “There are around 960 companies working with food products in Lebanon. [Agro-industry] is the second [largest] subsector in terms of exports, and the first in terms of added value, since the raw material used is grown or found in Lebanon,” Mounir Bissat, the secretary of the Syndicate of Lebanese Food Industries told Executive in a December 2017 interview. According to the Food and Agriculture Organization of the United Nations, agro-industry contributes 5 percent to GDP (as does agriculture) and “constitutes a major and growing employer in the economy.”
However, one of the reasons the agriculture and agro-industry sectors are not living up to their full potential is the lack of investment in research and development (R&D) and innovation. In the same interview with Executive, Bissat explained that almost 90 percent of the companies in agro-industry are family-run small- and medium-sized enterprises (SMEs) with limited budgets, making it difficult for them to invest in modernizing traditional recipes or innovate design or food production techniques.
Lack of R&D investment is preventing the agriculture and agro-industry sectors from reaching full potential.
According to Ramy Boujawdeh, deputy general manager at Berytech—an ecosystem that fosters innovation technology and entrepreneurship, initiated in 2002 by Université Saint-Joseph—the agriculture sector in Lebanon and the region faces many challenges that could be addressed through innovation, yet are not. “We see Lebanon as one of many countries around the MENA area that have major issues in innovation in their food sector,” he says. “The main issue is that we are really dependent on the import of food, which, in turn, goes back to our lack of connected agricultural value chains, water security issues … there are lots of opportunities and systems across value chains that could be improved through innovation.”
It is within these dynamics that Berytech launched Agrytech in January 2017. Boujawdeh says Agrytech, an agri-food innovation hub, was “designed and branded to attract people that are interested in reviving and improving the agricultural sector in Lebanon.”
The program has four pillars, the first of which is an acceleration program designed to support entrepreneurship in agri-food. Second is an agri-food innovation cluster focused on SMEs and large businesses. Third is an online resource platform designed for those with an engineering or tech background who want to get insights on the challenges facing agriculture in Lebanese and regional markets to identify opportunities where they could make a difference. The last pillar is a digital fabrication lab, which is accessible to Agrytech through the funding of Berytech and is open for all at varying costs (depending on whether it is individuals, startups, or established companies). In the Fab Lab, people can prototype their hardware solution or scale their minimal viable product to take to investors and show them how it works.
Agrytech receives 90 percent of its funding from the Ministry of Foriegn Affairs of the Netherlands, and Boujawdeh says they raise the remaining 10 percent through a variety of channels including sponsorship opportunities for various activities at Agrytech. He says that getting noteworthy sponsors such as banks and agricultural companies sends a positive message that their program has weight and that a number of people believe in it.
This past August marked the end of the first three-year period of funding for Agrytech, at an amount of $3.3 million. The program has now entered into a second three-year round of funding, with the Dutch again covering 90 percent. The fund for the coming three years is $6 million to be split in half between Agrytech and a new program by Berytech called Cleantech (see story page 66 for more details). However, Agrytech does not plan on sustaining itself indefinitely based on external funding and support. Boujawdeh says they are looking to move into an equity-based accelerator model in the coming years, now that they have built up their expertise and know-how and have several solid success stories. They are also looking at how such a model can be exported to the region and drive innovation in the agriculture sector outside Lebanon as well.
Setting the wrong foot right
In its third batch of startups, Agrytech is now well-established, but things did not run smoothly at first. As Boujawdeh recalls, the initial thought was that by simply launching the program and opening the call for applications to the acceleration program, they would be flooded with applicants—this was not the case. “We thought we had a problem of youth without jobs so they would be happy to find job opportunities [through the program] and they would immediately relate to the sector and our work would be done,” he says. “But we quickly realized that there needs to be an educational component whereby they can learn about the sector before they get excited about it.”
Boujawdeh says that this is because the agriculture and agri-food sectors are generally not perceived as providing attractive job opportunities. Many people in Lebanon and the region still perceive agriculture as the rural farmer on his donkey tending to goats and sheep or toiling away on the land with little reward. As such, Agrytech had its work cut out for it in attracting tech-minded people to its program and exposing them to the challenges in the agri-food sector.
To achieve this, Boujawdeh says Agrytech focused on university students and targeted them through several channels. During the winter and spring seasons, prior to the launch of the accelerator program in the fall, they organized a series of two-day startup weekends, ideathons, and hackathons. During those events, Boujaweh says, teams or individuals propose a problem and spend a few days with experts, mentors, and coaches discussing it and learning the thought process involved in developing viable solutions. On the last day of the event, they pitch their solutions in front of a jury and three winners are announced; winners receive cash rewards of varying amounts depending on the event.
Efforts to familiarize the market with Agrytech is slowly but surely paying off, with increasing applicant numbers.
Another way Agrytech spread the word for its program was through reaching out to university professors and asking them for their support. “The word is getting out and so we have university professors in engineering pushing their students to look at agriculture as an opportunity or connecting with a colleague in the faculty of agriculture and getting their students to meet him or interview him,” Boujawdeh says. “We are seeing more final year projects that are in the engineering field focusing on applications in agriculture.”
Those who have been working in the agriculture sector for several years and were familiar with its challenges were also interested in Agrytech’s accelerator program, he says. To them, they had a potential solution for a certain challenge but were afraid to take the risk of leaving their jobs and so they tested their idea with Agrytech.
Their efforts to familiarize the market with their program is slowly but surely paying off, according to Boujawdeh. Agrytech had 65 to 70 applicants for their first accelerator batch in 2017, 80 applicants for the second batch in 2018, and 110 applicants for the third batch that was launched in October 16 of this year. Boujawdeh says that not only has the quantity of applicants increased, but so has their quality and maturity level: “People in the first batch were looking at the downstream side of agri-food production—the post-harvest aspects that include everything between food processing and the end product that reaches consumers. With the second and third batch, we have more people looking at the entire value chain and focusing on the upstream side of production—the pre-harvest aspects from the sourcing of fertilizers, seeds, and equipment through farming until you produce and harvest. This is super exciting because most of the problems lie in this upper chain.”
From the 110 applicants for the third year of Agrytech’s accelerator program, 24 were selected and were due to begin their 11-month journey with the program on October 16. Teams can be made from individuals with a variety of backgrounds but there has to be members with experience in science or technology.
The program is divided into three phases, the first of which is a two-month validation phase where Agrytech works with the startups to make sure the problem tackled is big enough to have a market share and be investable. Only 12 participants make it to phase two of the program, and here they go from a well-developed idea to a minimum viable product that is piloted or tested among users. The third and final phase sees eight shortlisted startups learn to become “investment ready” by practicing pitching to investors and by identifying potential clients.
Startups get a cash injection at each stage: $2,000 in the first phase, $15,000 in the second, and up to $20,000 that they need to match in the final stage—they do so either through personal funds or by different competitions such as Arabnet, for which Agrytech helps them pitch. Boujawdeh explains that they give participants cash instead of procuring the needed materials themselves because they want them to learn how to invest their money in the best interest of their business. How this money is spent, however, is monitored and regulated. Agrytech also run audits on what they do to make sure everything is above board.
Post accelerator program, Agrytech maintains a soft follow up on their graduates and invites them back to speak to the new batch and share their success stories. Boujawdeh says any startup that has been through the program and that raises funds in the year following the program is committed to pay up to 5 percent of any equity they raise up to a million dollars, so up to $50,000. “It is a way for them to pay it forward for others in the program,” he explains, adding that the money raised goes into funding the accelerator program.
Together we are better
Another major component of Agrytech’s program is an agri-food innovation cluster called Qoot—from the Arabic word for a farmer’s daily snack—that was launched in February 2019. The cluster is made up of 35 companies that either work directly in the agro-industry by producing foods or indirectly by developing packaging or printing machinery. The idea behind the cluster, according to Boujawdeh, is to have these companies—and others who will join down the line as Boujawdeh hopes to reach 100 companies by the end of 2020—support and source material from each other and work together to improve the agriculture value chain. Boujawdeh compares Qoot to a cluster of grapes, whereby each individual grape has its own identity, but since it is connected to the other grapes, it can grow better and faster.
Many aspects of what we consider normal in modern daily life in Lebanon and the region are thanks to innovative entrepreneurs.
Annual membership fees for Qoot range from $250 for companies with less than 10 employees to $800 for large companies (more than 50 employees). Boujawdeh says they are selective regarding admittance to Qoot, with two main criteria being that companies show an interest in innovation—through their business model, product, or service—and are willing to share and collaborate with others in cluster. Agrytech provides Qoot members with training and talks on innovation on a regular basis, and supports them in connecting to new markets.
Qoot provides a network of support for the startups in Agrytech’s accelerator program in that a number of its members mentor, coach, and test or buy some of the startup’s solutions. Meanwhile, many of the startups that graduate join Qoot to have a network of peers and professionals whom they could benefit from or support, Boujawdeh says. During the next three years, Agrytech will be scaling up Qoot and through it will be doing some advocacy and lobbying.
Many aspects of what we consider normal in modern daily life in Lebanon and the region are thanks to innovative entrepreneurs. It is high time that these innovations are directed toward agriculture and agro-industry, two sectors that literally feed us. Agrytech is the first bud of this plant bed, the hope is for the growth of more similar initiatives down the line.