Lebanon tech hub helps Beirut startups eye global stage
Around 1,300 skilled jobs have been created thanks to a pioneering scheme to nurture tech entrepreneurs; in less three years, 80 companies have launched operations and 30 have gone international. Matt Smith reports.
From life-saving surgery software to trailblazing teaching techniques, The UK Lebanon Tech Hub is helping nurture a thriving community of future-focused startups that might just create Beirut’s first ever “unicorn” company.
A unicorn is a start-up that grows to be valued at more than $1 billion and while such a company remains some way off for Lebanon, the hub’s achievements since it launched operations in April 2015 are extraordinary – nearly 80 companies have completed its accelerator programme. Combined, these firms are valued at comfortably over $300 million, with aggregate annual revenues of around $30 million.
As the name suggests, the non-profit hub is backed by the British and Lebanese governments – both have observer members on its board – and it arose out of a 2013 Lebanon central bank initiative, Circular 331, that made around $600 million available to fund knowledge-based start-ups.
Why Britain? Lebanon’s central bank governor astutely believed the world’s fifth-largest economy could help the Mediterranean country’s fledgling tech sector attract the correct kind of expertise and exposure to help its best startups go international. “Jumpstarting a knowledge economy is a common challenge that small countries like Lebanon face,” said Nadim Zaazaa, chief executive of the UK Lebanon Tech Hub. “Our programmes are meant to maximize the economic partnership between the two countries by exploiting the vast start-up knowledge in the UK, creating jobs, raising investment, and growing the tech sector of Lebanon.”
There are several aspects to the hub’s work, but it broadly focuses on applied research, start-ups and scale-ups.
The hub’s 12-week start-up accelerator, The Nucleus, assists early-stage companies in perfecting a prototype and a pitch deck within three months.
“The Nucleus helps start-ups build the three pillars that make up the core of any successful business: an agile team, a scalable product architecture, and a customer-centric business,” said Zaazaa. “In three months, they can be out with a product validated by key customers and raising the funding needed to grow as they take on the right market.”
Start-ups accepted into The Nucleus give up 5 percent of their equity in return for a $50,000 investment in cash and in-kind. Founders get to work with the hub’s in-house technology team and executives who possess the experience they lack.
They also benefit from the uncompromising feedback of global tech leaders, experts and clients from within the hub’s network, which they join and permanently benefit from after completing the programme. “The quality of people we met in The Nucleus and how they were really interested in helping us made all the difference,” said Nicolas Jamal, chief executive of Beirut-based Dox, a battery management startup.
Dox’s pioneering technology gathers data such as voltage, current and battery temperature to predict key battery metrics such as operation time, charge time, and remaining useful life.
“Our solution will reduce battery waste by letting companies make the most out of their batteries,” said Jamal. “Some companies are throwing away their batteries after only two years of usage even though the batteries can last five years. This leads to more battery recycling and manufacturing, which have a negative impact on the environment.”
The company will first target the e-bike sector before entering the automotive industry; consumer adoption of hybrid and electric cars is driving growth in the global battery market, which is forecast to be worth $17.26 billion annually by 2021.
“The board meetings we went through were amazing. It takes you from just being an entrepreneur to being an actual businessman,” said Jamal, whose company is in talks for further financial backing that will enable it to expand to a staff of 7-9 employees. “The technical assistance was excellent, going through the product and adjusting different architectures. In terms of PR, they're really helping us, connecting us to clients, connecting us to people in Europe, which is really important.”
Other companies graduating from the hub include Proximie, a medical start-up using augmented reality so that expert surgeons can remotely supervise operations, and Kamkalima a trailblazing Arabic language app that is transforming how Middle East schoolchildren learn their mother tongue.
The hub also runs a scale-up programme for high-growth firms. Usually, these companies have been operating for a couple of years and are looking to expand globally.
“They usually require support to secure growth capital or access major markets like Europe, the U.S. or China,” said Zaazaa. “Most of this region’s start-ups are run by first time entrepreneurs who need leadership support and a lot of handholding.
“We tap into our global advisory board for mentoring and our dealmakers for hands-on support with global expansion, operations and sales. We also provide growth coaching and tools to equip a fast-growing company that needs to better understand what it’s like to operate in multiple markets and at a global level.”
For applied research, the hub sources, manages, funds and commercialises projects, which could be collaborations between universities and industry, or start-ups working with universities on a certain technology they want to commercialize. It also helps universities set up a one-stop shop for innovation and tech entrepreneurship.
“Our model is slightly different in that we put the technology transfer office and the incubator in one place to create an end-to-end entrepreneurial pipeline,” said Zaazaa. “We blend research, entrepreneurship and business together. Having an office in London allows us to have a wider reach than most regional entities doing similar work.”
To join the hub, whether as a researcher, a start-up or a scale up, would-be entrepreneurs must demonstrate potential to build a global innovation in STEM-related fields – science, technology, engineering, mathematics.
Its programmes are open to all. However, to qualify for “331” funding, entrepreneurs need not be Lebanese but must base their company in Lebanon. So far, hub companies have created around 1,300 jobs and more than 30 sell products or services internationally. Three start-ups operate permanent offices in Dubai and seven in London.
The bulk of the hub’s time goes into supporting start-ups; as a nascent industry, Lebanon currently has few tech companies ready to scale-up to go international. Those that are, however, can get an incredible lift from the hub’s support.
“Our reach enables us to take our companies, for example, directly to the headquarters of Manchester United to test some pioneering sports technology, or King.com for an opinion on a mobile game” said Zaazaa. “Our presence in London means we’re able to bring in that international differentiation.”
The same is true for applied research where the hub has connected our projects with Imperial College London, University of Central London and University of Manchester.”
Its programmes are expanding to become a regional resource as an entrepreneurial bridge into global tech hubs, starting with London.
“We have plans to take The Nucleus into the region’s exciting talent ecosystems such as Amman or Cairo or Tunis,” added Zaazaa. “We plan to cultivate emerging market innovations, bridge them into global tech hubs and help them retain that value back home for social and economic impact.”