Beirut aims to become the number-one hub in the Middle East for young entrepreneurs.
Beirut aims to become the number-one hub in the Middle East for young entrepreneurs.To make that dream a reality, the Lebanese Central Bank, Banque du Liban, recently raised by $200 million its 2013 promise to guarantee $400 million worth of investment in the knowledge economy.
This pledge, also known as Circular 331, actually means that BDL will guarantee 75% of Lebanese commercial banks’ direct investments in local start-ups or venture capital funds. Gains resulting from the sale of shares or from dividends are then split 50/50 between BDL and the bank making the investment.
“To be eligible for Circular 331 funding, companies need to be based in Lebanon and contribute to innovation and new technologies,” says Marianne Hoayek, director of the executive office at BDL.
Three years down the line, the original $400 million has been allocated and about $70 million has trickled down to local companies. According to the central bank, more than 100 start-ups have benefited from Circular 331, whether through direct input, venture capital or accelerators.
In early November, Lebanon will host the BDL Accelerate conference to showcase the ecosystem’s achievements.
“Thanks to the central bank’s commitment, we now have the scale to invest in larger companies,” says Walid Mansour, managing partner at Middle East Venture Partners, a Lebanese venture capital fund that has received $71 million dollars under Circular 331 and has invested in more than 10 tech start-ups.
However, Lebanon still has to cope with structural challenges, such as slow and expensive Internet, daily electricity cuts and heavy bureaucracy. The country’s ambitions are also limited by political instability. While Beirut strives to become a safe haven for investors, it cannot help getting caught between war-torn Syria and Israel—with whom it has officially been at war with since 1948.