Frontier Market Scouts Beirut

I had an extremely positive weekend with Silatech.  I pitched VilCap discussing the curriculum and VilCap’s results.  This was a very different experience than mine in Beirut, and might tell us something about our model.  Additionally, VilCap would not be coinvesting in these programs- post program investment would come exclusively from Qatari angels.  This is fabulous because it show very strong local buy in.

Silatech’s reach extends all over the region, and partnering with them in Doha, will go very far for VilCap’s proof of concept in MENA.  Also, I was really impressed by the local talent in Doha.  I filmed parts of the pitches from the VilCap simulation, and I think you all will be impressed by the young Qataris as well. This group happens to want to build a community that is active in entrepreneurship and Angel investing, and it will get done because they are willing to commit the resources for the talent, time, and training to launch it.

Here are a few photos from the weekend…

The key to success in any endeavor is the ability to adapt and overcome the situation at hand.  Sometimes opportunities fall apart; however, we learn lessons from these failed opportunities. That way, we can assess future opportunities with more scrutiny.  Here are 2 recent lessons I have learned from Beirut.

Lesson #1

Do not look to partner with the biggest incubator in town, unless they are passionate and excited about the program. This should be obvious, however when actively exploring partnerships red flags are not always easy to recognize.

Out with the old, in with the new. Recently, a number of positive opportunities have opened up. We have been offered office space, as well as fundraising support for the program.  Additionally, Wamda is very interested in supporting us.

Lesson #2

Lesson Learned:  I actually know a lot about VilCap.  After pitching it for 4 months, it was not a problem to get up in front of professional investors and development folks and pitch the program.  That being said, it is important to know VilCap statistics and the curriculum like the back of your hand.  Also, have materials to help you get the points across, and don’t be afraid to draw lots of pictures…

That’s right, now stop crying and take the following quiz:

We will do this like a standardized test-

“An FM Scout drives….”

A) The closer vehicle B) The farther vehicle C) Both vehicles D) Neither vehicle
…  If you answered A you are correct!  That’s right I get around on those 60 pounds full of testosterone and speed.  Turns out one of the most important lessons Beirut had to teach me was on the streets.  I have only been hit twice, I haven’t hit anyone, and it hasn’t been stolen الحمد الله

The last week has been full of action.  I took a trip to a conference for young leaders in Zurich, Switzerland, One Young World and visited regional partners in Jordan.  Additionally, I have been meeting with a number of local Social Entrepreneurs (most of them don’t have websites, sorry), and we are about to put out a ‘call for applications’ for VilCap Beirut.

I am going to break from my past format, because there is really no way to give you a concise update whilst including EVERY meeting.

Here are a few highlights:

My fiance and I had one of our most delicious meals yet at Tawlet!  Tawlet means “table” in Arabic, and is an off shoot of Souk El Tayeb Lebanon’s first farmers market.  Souk El Tayeb translates to “the delicious market.”

Tawlet is one of the most interesting restaurants I have ever been to.  They serve lunch every day that is cooked by a different women from various parts of Lebanon.  In all they have over 15 women that come and cook on a rotating basis.  This is a fantastic model in so many ways.  Many of these women typically would not have any other source of personal income.  In addition to their daily wage (which is far above the going market wage rate, if they had been able to find employment elsewhere), there is a measure of prestige that goes along with traveling to the ‘big city’ to cook at a fine restaurant twice a month.  Souk El-Tayeb has a number of for profit initiatives, of which Tawlet is one.  They have a couple concepts up their sleave that could be highly scalable, and I am looking forward to future talks with them…

In Amman I was able to meet with the Aramex’s Entrepreneurial Support Unit, Ruuwad, and the King Abdullah II Fund for Development.

Aramex founder Fadi Ghandour has a strong belief in entrepreneurship.  He also happens to be the major backer of Ruuwad, and group that focus on community development in the lowest of income areas in Jordan.  Like many individuals around here where the start up and venture investing industry is so young, many individuals in the Aramex office wear the investment analyst, mentor, and even entrepreneur hat simultaneously.  For in stance, the MENA Venture Fund is run out of the Aramex office as well.

The KAFD is going to be a fantastic recruiting and marketing partner.  They have been recruiting and mentoring fellows for three years now, and have had two complete classes.  A lot of there fellow have received a lot of tips on how to start there business and are working in the ‘seed stage sweet spot,’ where what they really need to do is scale.  This is fantastic because as participants in VilCap they will get a chance to focus on how to take on investment and do just that, scale.  One of KAFD’s most successful entrepreneurs/enterprises has been Souk Tel.  And if you just caught that the word “souk” appeared half a page up, you may have a future in linguistics.  Souk Tel is an online marketplace for connecting potential employees to jobs, particularly in Palestine.  You can read more about them on their website- I hope to be able to meet the founders at some point.

Thank you for reading, and I will do my best to stick with bi-monthly updates from now on.

A lot of friends, colleagues, and family have decided that August, particularly the last two weeks, is the time to get out of Beirut!  Some are going to their villages outside of the city, however the majority of expats and Lebanese that left, left the country.  Despite this fact, I am giving August the title, “Month for Survivors,” because those of us left behind to survive the heat have been hard at work!

I am going to share some more about our progress with local partners, and Lebanon’s potential.  However stay tuned, some time in the next two weeks I will be profiling several entrepreneurs.

*Confidential*

Friday, August 19th

This morning I had a wonderful meeting with one of VilCap’s strongest partners in the region.  We are getting very close to moving forward with signing an MOU together and  building a marketing plan and call for social enterprises.

Beyond Reform and Development

Thursday, August 18th

In Beirut’s trendy, and incredibly fun Gemayze district, I had the wonderful fortune of a happy hour meeting with two of Beyond R & D’s 15 partners, Gilbert Doumit and Carmen Geha.

Gilbert focuses on social enterprises that have a strong impact on political structure (or lack thereof) in the MENA.  He had just return from Benghazi, an experience which he described as ‘surreal.’  He has taught courses on social entrepreneurship at AUB, and gave me perhaps one of the best general definitions of the social enterprise/social entrepreneurship I have ever heard.  He should be speaking at TEDx, Beirut this year…

Carmen and Gilbert gave me a number of fantastic leads to social entrepreneurs in Lebanon.  They confirmed something that FMS Director Dean Yuwei Shi has alluded to for a very long time, which is that many entrepreneurs don’t know it, but they are actually social entrepreneurs.  This is another consequence of the lack of awareness of social impact investment, social entrepreneurship, etc.  I look forward to showcasing a number of these enterprises in the coming weeks.

Alt-City

Monday, August 15th

Dave Munir and I discussed the potential of launching a Fall workshop series around social entrepreneurship.  VilCap and Alt-City would cobrand the effort, the main goal being to raise interest around Social Entrepreneurship.  Within this, perhaps one of the best services we can do the industry is to ‘define’ what social impact is, and more importantly to approach the falsities that naturally present themselves where social impact is (brand) new (because it is ‘new’ almost everywhere).  One of these negative assumptions, is that some how social entrepreneurs are ‘burdened’ with another dimension.  “It is enough work just to reach profitability, entrepreneurs in this environment can possibly be burdened with yet something else they need to get off the ground…”  I heard from someone locally.  David and my goal is to create a great awareness around what social entrepreneurship is and isn’t.  I will provide the perspective in the context of ‘highly scalable social impact,’ and venture investing.

Potential BoP Vil-Cap program, Palestinian Camps, Lebanon 2012

Friday, August 12th

Today I discussed the viability of a VilCap program in Lebanon’s Palestinian refugee camps (It is a misnomer to say “Palestinian” Camps, since the low cost of living has attracted refugees from Iraq, and else where in the region). His background has been with a number of multinational NGOs and governmental development agencies at work in the camps.  As a Lebanese citizen that also carries a Spanish passport, he was faced with a hard decision in 2006.  As Israel was indiscriminately bombing much of the South of the country (the camps included), and Beirut’s majority Shia suburbs, he was faced with the choice of staying or being evacuated with other European and American citizens.  He decided to stay, and has since served in a wide range of development capacities in the camps.

We foresee the biggest potential being for investors and donors to make loans at the $5,000 to $10,000, in businesses that seek to grow, creating more jobs, and enhancing the local economy.  This would be a majorly scaled down version of the VilCap program, since these are not necessarily venture scalable businesses.  However, the culture of lending in the camps is that loans are gifts-  changing this could be a huge hit for the local economies, and VilCap’s programs might just have the right dynamics to do that.  Any future scouts interested in working in that environment?  Email me directly, and we can start the conversation of how a program like this could unfold.

Start Alliance

Wednesday, August 10th

I had the pleasure of speaking with Jamil Wynne, remotely today, and we discussed his work in Jordan.  Jamil is half way through a Fulbright in Jordan, researching start ups and entrepreneurship in Jordan.  He has built a network of entrepreneurs, Angels, and incubators in Jordan called the Start Alliance.  Jamil has a fantastic list of contacts, including founders and investors from among the MENA’s biggest start up enterprises.  I look forward to figuring out ways to connect the entrepreneurial ecosystem in Lebanon and Jordan through social impact.

During the Islamic Holy Month of Ramadan, Ramadan Kareem is one of the standard greetings.  In means literally, “Ramadan is generous.”  This year, as you can see, Ramadan falls during a very hot August, with very long days.  I have fasted on and off, however being my first Ramadan, I have felt very weak.

Here is an update on what I have been up to:

Bader Young Entrepreneurs Program

Friday, August 5th

Today I met with Antoine Abou-Samra, Managing Director of Bader Young Entrepreneurs Program.  Like others in the Lebanese entrepreneurship/startup ecosystem, he is passionate about entrepreneurship as a movement and a cause.  It is hard to disagree, as many enterpreneurs that gain access to expertise and funding, can have an exponential impact with those inputs.

Bader has an extremely impressive network of entrepreneurs, and mentors, and moreover, they started the first Angel network in Lebanon, Lebanese Business Angels.  They also are partners with the MIT Arab Business Plan Competition, one of the most prestigious in the region.  Finally, Bader is doing work on the global scale (ie WEF’s, Global Competitiveness Network) to enrich the Lebanese market.

Alt-City (meeting #2)

Thursday, August 4th

I ended up being almost a half an hour late to my second meeting with David Munir, of Alt-City.  As usual at Alt-City, there was an army of staff and volunteers ready to tackle the days work in the space.  In Beirut there are two types of ‘taxi-like’ transportation.  One is a normal taxi, and the other is called a service- pronounced ‘sir veece.’  Services are the cheaper of the two, but they pick up and drop off people as you go.  Thursday morning I got a tour of Beirut, on the way to my meeting with David.  Suffice to say, that if time is money, maybe services aren’t the cheapest way to go.  Anyhow, David was gracious despite his team of 7 in his next meeting that had to wait for us to finish.

David and I discussed the long term potential of Vil-Cap and the benefits that Alt-City could bring.  David also informed me as to some of the shortcomings of Lebanese entrepreneurship culture.  Just like in the United States, entrepreneurship can sometimes be seen as a way to make ‘fast money,’ or a way ‘to the top,’ the lack of infrastructure here supports that thinking.  Unfortunately, entrepreneurship is grueling, hard work, with low success rate, and a lot of room for self-doubt (speaking from experience here).  As Lebanon becomes more and more a place of entrepreneurship, I believe that (like other places), it will be the social entrepreneurs who win the day.  They know how to turn a profit, but see farther than the singular bottom line.

David and discussed how there is a lot more opportunity in Lebanon beyond media and entertainment.  Again, I believe that Village Capital may be successful here because we have success out side of the ‘traditional’ venture investors; the ones only looking for the hockey stick curve, that is.  We look for ways to help entrepreneurs make education, energy, transportation, etc. better.

David, the rest of the VilCap team, and myself will be building out a marketing plan for this Fall complete with workshops, mixers, and other events.  Individuals from different parts of the community can ‘get to know’ social entrepreneurship, and it will serve as a primer for a VilCap cohort this Spring.

Berytech Fund (<<–Press Conference and investments announcement, click hear), Seeqnce

Wednesday, August 3rd

In the morning I attended a conference where the Berytech Fund announced three new investments.  The investments were in Yalla Play, ButterflEye, and WEXT.  While none of the enterprises fit completely within our social enterprise criteria, it is a good taste for some of the tech start up potential in Lebanon.  Additionally, Nicolas Sehnaoui, Lebanon’s Minister of Telecommunications, was in attendance and spoke about the upcoming, country wide bandwidth upgrade.  I am looking forward to this as much as anyone!

In spite of a 100 degree fever, Samer Karam showed up to meet with me and tell me about his incubator/accelerator space, Seeqnce.  Seeqnce, like others in the start up space, is focused on mainly mobile and web-based ventures.  Samer was extremely encouraging as we discussed the landscape here in Lebanon.  “If anyone tells you what to do, or that what your are doing is wrong, don’t worry about it,”  he told me.  “The start up scene is so young here that  there is plenty of room for experimentation.”  Samer is working with a lot of other groups in Beirut, and hopefully we can add VilCap to the list!

Olayan School of Business, American University of Beirut

Thursday, July 29th

Over looking the Mediterranean on waterfront property, AUB is one of the finest Universities in the Middle East.  Yesterday I had the pleasure of meeting with one of their B School’s senior individuals and a huge proponent of social entrepreneurship, Tony Feghali.

We discussed the potential for partnership between AUB and VilCap, and I am extremely optimistic about future collaboration.  Tony has been working hard to make entrepreneurship, and more specifically social entrepreneurship, a staple of the University.

Tony shares my viewpoint, which is that Lebanon has massive potential, often over shadowed by politics- whether they be in the past or more current.  There are huge opportunities in agribusiness, clean water distribution, and other projects relating to infrastructure

Tony and AUB will be hosting an enterpreneurship workshop in November, and we hope to devote an entire day to VilCap related topics.

Endeavor, Lebanon

Thursday, July 29th

Endeavor is a fantastic non-profit organization, that provides all the expertise, network, and support of a Venture Capitalist, just not the capital.  This is important, because in many parts of the world, a little capital goes a long ways, but the scalability is extremely labor intensive.  This is very similiar to VilCap’s philosophy.  Endeavor accepts just 4% of applicants, and has an extremely high success rate with those entrepreneurs.

Cameron Miller, fellow FM Scout and intern at Endeavor this summer, as well as Tania of Berytech connected me with Tarek Sadi, Managing Director of Endeavor Lebanon.  Tarek and I had a very interesting conversation about two their enterprise which will be looking for working capital to scale in the coming months.  One is social media advertising firm, targetting the Arab world.  Web based advertising products in the Arab world are a $19 million market, and are suspected to grow to $400 million in the next 2-3 years.  Endeavors company is uniquely positioned to tap into this market, as they focus almost exclusively on the Arabic speaking world.  The other enterprise is an enterprise that exports fine Lebanese artisan products, doing about $3-$5 million a year in Revenue.  The enterprise employes about 40-50 people directly and 150 people indirectly.  Lebanon was once the center of glass production in the world, meanwhile there is currently only one glass blower in the country.  This enterprise is interesting in that many of these artisan enterprises that are part of their supply chain, might not exist had it they not come into play as a buyer.

Additionally, Tarek and I talked about the democratization of the internet, and what has happened this Spring in the Arab world.  We discussed how one could make an argument that twitter and Facebook where the two strongest proponents of social good in the region, this past year, therefore contributing to an ever refined understanding of what social impact means.  Context is everything, and the political climate is perhaps one of the more important contributors in this part of the world.

Tarek, his team, and organization, are extremely passionate about entrepreneurship in the region.  It will be inspiring to see what Endeavor Lebanon continues to accomplish, after only 6 months since its inception in the country.

My apologies that I have not updated my blog in a few days.  I arrived in Beirut 7 days ago and there has been a lot of action, which I will share with you in detail.

Berytech Technology and Health, Incubator

Monday, July 25th

I met with Tania Mazrani this morning, Director of Berytech Technology and Health.  She has been nothing but helpful as I began exploring the entrepreneurship climate here in Lebanon, even before my arrival. Berytech is a non-profit incubator/accelerator, that offers a number of other start up and SME services.  They are housed in a beautiful 11 story building in one of Beirut’s business districts, and is an extremely well run operation.

Berytech's downtown building

Tania and I went through the Village Capital program template and had a long discussion around the viability of the model in Beirut.  She is extremely optimistic about what we are looking to accomplish as we discussed some of the finer points of entrepreneurial culture in Lebanon.  One huge point of importance in regards to Vil Cap, is that the 16-20 strong cohort of entrepreneurs see themselves as ‘team mates,’ and less as competitors, all vying for the same pot of capital.  One of the ways we may over come this is by focusing on the concept that ‘ideas are cheap.’  There are a lot of great ideas out there, however whether in Beirut, Lebanon, or Palo Alto, California, the ability to execute a highly profitable business out of a strong concept is the key.  If we are able to drive this point home, as well as successfully break the ice in our first couple of gatherings, there should be a greater free flow of ideas among the entrepreneurs.

One of Berytech's meeting spaces

Berytech is extremely well established in Lebanon, with a number of international and regional partners as well.  First Light Ventures and Vil Cap hope to bring even more international expertise and exposure to the incubator, as we explore ways for them to break into the social impact space.

Berytech Fund

Friday, July 22nd

Last week I had the pleasure of meeting with an analyst and  portfolio manager from the Berytech Fund.  Berytech Fund makes venture capital and equity-related investments in start-up information, communication & technology (ICT) portfolio companies in Lebanon.  They have about USD $6 million under management, and while they are small, they are a perfect example of ‘smart capital.’  While they are a completely seperate entity from the Berytech Incubators, they are connected in some significant ways, and have made investments in some of Berytech’s most successful startups.

Berytech Fund and Technology Incubator ("on the hill")

They asked a number of questions related to First Light Venture’s investing philosophy and investment criteria.  One of the main problems addressed, especially in the high-tech/clean tech space, was the lack of access to the quantity of skilled engineers and scientists needed to launch some of the projects that are highly viable in the country and region.  For instance algae farming for biofuels in the Mediterranean.  Based on a number of factors, farming algae is ideal in this climate, but unfortunately, Lebanon has been unable to import talent for this kind of project yet.

In general, the Angel/VC startup culture is nascent in Beirut, and the fund, which has been around for only 3 years, is doing tremendous work in spite of this fact.  Hopefully, international exposure through FLV and VilCap can help nurture some of their exits.

2Bdesign

Thursday, July 21st

After talking with Raja a month ago, I was very impressed by 2Bdesign, and talked about them in my last post.  I was even more impressed when I visited them at their workshop.  Raja and his partner and founder Benidicte are travelling to New York and Paris to showcase their high end pieces which will typically sell from between USD $400-$600 a unit.  2B purchases salvaged rod iron from 19th and early 20th century homes that are being demolished to make room for high-rises.  The rod iron then makes its way to an NGO that runs an iron smith and employ’s individuals from the BoP.  2B is now subsidizing the salaries of those individuals employed by the NGO to produce livable wages as well as paying their own employees who are differently abled and/or from the BoP.  There is something innately beautiful about people from poverty and disabilities, scrap into something that is both full of art and extremely valuable.

80% of 2B’s sales are outside of Lebanon, while over half of the sales within Lebanon are to foreigners.  It is not hard to understand, however, why this art would have more value outside of Lebanon.  It is not uncommon for us humans to find more value in other’s cultures or for other’s find more value in our own, than we do.

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As 2B scales they are actively looking for distribution partners in the US and Europe.  They are targeting the US more, where 19th and early 20th century is considered ‘old.’

Alt City

Wednesday, July 20th

Last week, my first meeting was with David Munir of Alt City, and formerly Root Space.  David is a veteran to social entrepreneurship space, and extremely well read on the region and the issues facing social entrepreneurship.  Additionally, David has been responsible for helping to organize MENA related events at SOCAP, the premier forum for social impact investing and social impact enterprises.

Alt-City's new space in Hamra

I had the pleasure of seeing Alt-City’s brand new space in the trendy and artsy Hamra district of Beirut.  When I visited him he, as well as a number of staff and volunteers, were hard at work get the space ready for this week full of media collaboration and education events.  I was extremely impressed by David’s talent as an individual, and equally impressed by the fact that he was able to inspire and mobilize an army to help him make his new collaboration and incubation space a reality.  I believe that David and Alt-City can be a strong partner for Vil Cap in Beirut as they establish themselves as a force for social impact.

David's army, in anticipation of AltMedia Experience Week

Next month I will be heading to Beirut to source deals for investment partners.  I have goals on two levels; professional and personal.

My professional goal is to source deals for my investment partners, First Light Ventures and New World Innovation.

My personal goal is to prove that Lebanon is a place of economic strength, resilience, and ultimately has a lot more to offer than is portrayed in the lame stream media.

We are currently exploring a partnership with Berytech, an incubator and accelerator in Beirut. Things look promising as Berytech has been around for over 10 years, and has incubated and invested in some very successful enterprises.

A huge question I have, is what exactly the enterprises will look like. I am sourcing deals based on my investors’ interests, which center around positive social impact. In Lebanon, it is unclear what the enterprises will look like and what social impact may be in the context of political instability, unemployment, and intermittent violence. The wise thing to do is to hold off pre-conceived notions of what I might define as social impact, and see what is happening when I get there. I certainly will be looking to take enterprises on the cusp of ‘investability’ towards scalability, and maybe I can do the same for entrepreneurs that have not more than loosely defined their social impact oriented goals.