Can tech start-ups save Lebanon’s foundering economy?
Beirut - From the outside it looks like just another trendy Beirut coffee shop but inside the UK Lebanon Tech Hub, there are neither coffee shop punters nor university students. It’s more of tomorrow’s business leaders in a country that can barely provide essential services such as water, electricity and trash collection, a county ravaged by large-scale corruption with an economy only in name.
It’s hard to imagine that in the midst of this office, Lebanon’s problems could be resolved by a group of 30 or so start-up companies bent on developing an app or a gadget that will make their company a “unicorn”, reaping millions of dollars and putting Lebanon on the map as a hub for cool ideas and investment and a good starting point for educated youth who want to show the country is still ahead in the region.
Under the initiative, the brainchild of departing UK Ambassador Tom Fletcher, Lebanon’s brightest are sent to the United Kingdom to be mentored and trained on how to attract investment for their projects.
UK investors will be the first to profit from the project, which has sent its first group to London for the programme with hopes of them returning to Lebanon with both investors and customers.
Lebanon is bursting with clever young people who can design and build apps and have the business savvy to use the country as a business hub for the entire Arab peninsula — despite power cuts, garbage and car bombs.
The idea was inspired by a Lebanese investor who made a successful business from importing generators and their parts from the United Kingdom. His success was noted by Fletcher who saw that, regardless of the problems in Lebanon, the investor had a network in Africa and the Middle East of Lebanese business operators who were ready and waiting.
“We noticed that Lebanese investors imported UK goods, like whisky, salmon and cars and then re-exported them… and the biggest importers of UK goods in the region were the Lebanese,” explained Nadim Zaazaa, who is part of the programme but also heads up the Lebanon hub.
Zaazaa cited as an example of a locally produced online Lebanese recipe that recently sold to Japanese investors for $13 million.
One project in the programme is a prototype cigarette lighter that helps a person stop smoking; another is a financial services search engine aimed at consumers.
“We’re helping Lebanese companies internationalise through London,” Zaazaa said. “We need to take the best companies from Lebanon. We offer them mentoring and access to the market through introducing them to clients. There’s also a lot of marketing around them.
“At the end of six months, they should start developing business.”
UK companies, Zaazaa explained, are not good at accessing Arab markets. Yet the programme itself might reach those Arab countries ahead of the products that Lebanese start-ups have to offer them. Barely six months after it kicked off, other countries in Africa and in Europe expressed interest in the United Kingdom extending the programme to their areas. The United Arab Emirates and Qatar are believed to be mulling the project to replicate it in the Gulf.
Paul Khawaja, Britain’s commercial attache in the British embassy in Beirut, is a keen follower of the programme.
“I’m really encouraged by things so far as now there are another 25 Lebanese firms who are waiting to join the next phase, with $64 million from the (Lebanese) Central Bank already allocated,” Khawaja said. “And it’s a win-win situation for the UK firms who are using the Lebanese firms as ‘added value’ to what they have now.”
The Central Bank has pumped $64 million into equity-based investments in the start-ups. “What the UK Lebanon Tech Hub did in one year was not expected to be achieved until three years,” Khawaja noted. “Soon, it will expand to Cyprus as a base.”
The programme is not even exclusive to Lebanese citizens. Some foreign companies that set up in Lebanon are taking advantage of the mentoring.
Transterra Media, an online content firm that supplies broadcast news outlets with raw footage, although not a benefactor of the Central Bank equity, is taking advantage of the programme in London.
“Our principal focus in London is on business development for both our publisher (CNN, BBC) and our brand clients,” explained Transterra Chief Executive Officer Jonathan Giesen. “So, we’ll be setting up an office in London to drive business development and we hope that we can really expand our customer base through a newly launched London operation.”