ALT CITY – BOOTCAMP
Turning a civilian into a soldier includes a lot of yelling, demoralizing and running. The transformation is neither easy nor designed for the weak willed. While the process is different – and excludes munitions training – making a profitable business out of a bright idea is similarly grueling. Bootcamp, a recent addition to the entrepreneurship ecosystem, is taking would-be startups and getting them ready for war.
With a $1.8 million investment backed 100 percent by BDL (see story page 30), Boot Camp SAL began accepting recruits and running a program by the same name earlier this year out of AltCity, the co-working space in Hamra established in 2011, David Mounir Nabti tells Executive in an email interview. Nabti is both the “mayor” of AltCity and General Manager of Boot Camp. While Nabti does not mention the bank with a fully guaranteed investment, Marwan Kheireddine, chairman and general manager of Al-Mawarid Bank revealed that his institution provided the funds. Boot Camp’s online commercial registry documentation lists the bank as the largest shareholder, followed by Nabti. Former Telecommunications Minister Nicolas Sehnaoui holds one share in the company. Nabti says AltCity is an “implementer (and minority stakeholder) of Boot Camp SAL, through which we run the Bootcamp program.” He describes the program as a “pre-accelerator accelerator,” noting it is “designed to give the participants a strong introduction to and training in critical startup skills.” Included are: understanding the basics of a term sheet, valuation techniques and pitch training.
At its core, Bootcamp is about taking people with an idea and a dream, whipping them into shape and creating new startups capable of absorbing the hundreds of millions of dollars the central bank is helping pump into the ecosystem. Nabti explains that, while Bootcamp offers no direct cash investments in the proto-companies it trains – as per central bank rules for essentially financing the operation – “we do work with financial partners to invest in startups, and we are working to expand our investment/acceleration partnerships to facilitate a quicker funding cycle for startups that go through our programs and to more effectively build the pipeline for downstream members of the startup ecosystem in Lebanon.” Bootcamp is guiding eight graduates through the process of securing 331-related investments, he says. A few years down the road, Nabti hopes, Bootcamp may attract entrepreneurs “outside the country to come to Lebanon.”
While Bootcamp does not inject capital into the enterprises it trains, it takes a “sweat equity” stake of 2 percent, which “we may adjust lower,” Nabti says. The central bank, he explains, will let Bootcamp take up to 5 percent for their hard work. The equity cap in general and Bootcamp’s lower-than-allowed participation in particular are meant to ensure there is still room for future investment in these startups, he says. Participation, however, is Bootcamp’s long-term revenue model, “perhaps on the timeline of 7 to 10 years,” he explains. Aside from the 2 percent stake, Bootcamp does not charge participants for the training. He doesn’t offer a guess as to how long the $1.8 million will keep Bootcamp running, but says the team will “explore possible options to diversify funding sources over the medium to long range (next several years).”
Bootcamp has gone through a few iterations – it was initially shorter than the current, intense four-week session followed by three months of light support aimed at securing investments – and Nabti says “we are working on adapting/optimizing our program to dramatically boost both the quality and quantity of early-stage startups in the Lebanese ecosystem.” As of today, the three functioning venture capital funds – through which the bulk of 331-related investments are flowing – focus on later-stage funding with ticket sizes typically starting at $1 million. Only one fund expressed even a potential interest in providing seed capital (see story page 26). This means that in the current environment, Bootcamp graduates will rely on angel investors or whatever banks keen to do direct 331 investments that the program can put them in touch with. Times, however, are changing. BDL says funds specifically focused on early-stage investments will be launched soon, putting another piece of the ecosystem puzzle into place.