When Samer Karam talks about his new job it sounds as fantastic as if Sinatra had just sat down next to Peggy Lee to intone the Gershwin classic, ‘Nice Work If You Can Get It’. Karam, who ran the accelerator program of ecosystem company Seeqnce, in March of this year began promoting the Lebanese startup economy through a new company he formed with funding support from Banque du Liban (BDL), Lebanon’s central bank. He says the venture, called Startup Megaphone, “was created to market the country as a destination for startups and investors from around the world.”
In the first seven months of its operations, the company conducted what Karam calls “two activations” outside of Lebanon and has been producing research and promotional materials in preparation for the BDL-organized Accelerate 2015 event next month. The events that Startup Megaphone organized abroad were a 300-person conference in New York City and a three-day retreat in Singapore, coinciding with the city-state’s Formula One race in September.
“It was extraordinary,” Karam says about the latter event. “We were able to bring the best of Lebanon [together] with the best of the [venture capital] world and some key startups and a lot of magic happened. We can’t announce much of it but one of the attendees, Vinli, a startup based out of Dallas but with a Lebanese founder, came with us to Singapore and ended up signing a [business] partnership less than 24 hours after the retreat and is in the process of closing another two.”
Although the Singapore outing was clearly a success for Vinli, it remains to be seen what direct benefits a lucrative business deal for this thriving US-based startup with a Lebanese chief executive would contribute to “enriching the Lebanese national wealth” via the “economic and social growth, and job creation in the Lebanese market,” which BDL’s Circular 331 stipulates as an objective in the institution’s support for the startup economy. There are clear hopes that such success can be repeated for companies where the benefits to the Lebanese ecosystem will be more obvious and tangible.
Startup Megaphone warrants attention because it is more than just a 15-employee strong marketing outfit for the Lebanese startup ecosystem. The company, whose shareholders as per the commercial registry include Karam family-owned Seeqnce, was funded by BLC Invest Bank but the investment is backed to 100 percent by BDL, Karam says.
This advantageous funding position is because Startup Megaphone is a pillar in the ecosystem’s infrastructure alongside [email protected], UK Lebanon Tech Hub and AltCity’s Startup BootCamp. “All three are designed as for-profit institutions with ad-initiation investment from a bank in collaboration with BDL with generally two to three years runway to break even. The idea is that these companies were not designed to make profit [for investors] but designed for sustainability by putting profits back into the cycle,” he explains.
According to Karam, the formula of 100 percent guaranteed funding means that any bank involved in a pillar carries zero risk in the venture. “When [the project] is 100 percent guaranteed, the decision comes from BDL. We submitted the term sheet to BDL and [it] decided that it would be BLC,” he says and claims there was no specific reason why BLC Invest became the largest investor in Startup Megaphone, which he characterized as following the same investment philosophy as the other three infrastructure pillar ventures. “You can say it is a social enterprise. We have specific guidelines, a business plan and a term sheet. And hopefully we will hit our targets. We will reach our breakeven point in three years.”
How exactly Startup Megaphone would reach breakeven point in three years’ time and generate profits allowing for sustainable reinvestments is not entirely conventional. The website does not promote products or services that a foreign investor or internationally active fund could contract; for startups it offers a hotline for “entrepreneurial emergencies” but without hinting at monetization of such a service. Judging from the activities to date – the aforementioned conference in New York and the retreat in Singapore – an event-organizer business model with participant fees and sponsorships would appear the likeliest road to revenues. However, Karam did not elaborate on the issue and told Executive that, “we have set the plan and we will reach it.”
It is clear is that Karam is a passionate promoter. From the eagererness of his discussion on the startup economy, Lebanon appears as an el Dorado of entrepreneurial openness. “If you want to start a company in Lebanon, you are eligible. You don’t need an iqama [residence permit] to create a societe anonyme libanaise [joint stock company],” Karam enthuses broadly and advises: “If you want to launch a company in Lebanon, as an international startup either as entrepreneur or as investor, there are dozens of lawyers who are more than capable of facilitating that for you and they are very accessible. Offshore, onshore, sal or sarl, there are no limitations as long as you speak to the right lawyer.”
However Karam faces the difficult task of overcoming several hurdles, which even strong promotion cannot sidestep. In 2015 Lebanon was ranked 119 out of 189 for starting a business in the World Bank’s annual Doing Business report even when leaving aside the clear location and domestic market focus requirements of Circular 331, many entrepreneurs who have repatriated to the country with the intention to locate their companies here have enountered problems, like poor infrastructure, which are not as prevalent elsewhere in the world.
As a marketer of the whole ecosystem though, Karam is keen to adopt an all-inclusive approach, even at the risk of going slightly overboard. For example, he tells Executive that Circular 331 is a “$500 million sovereign fund targeted at VCs” and says that any Lebanese passport holder anywhere and any non-Lebanese who is residing in the country are part of the Circular 331 initiative.
The task of “managing Lebanon’s international image”, which is the uppermost tag line in Startup Megaphone’s online self description is arguably fraught with many interesting challenges. But Karam hits a homerun with his advice on how our startup ecosystem can rise to global prominence: “We need to have very high standards because this is the only way people will take us seriously.”