Enough brand con­fu­sion

Executive Magazine - - Editorial - Yasser Akkaoui Ed­i­tor-in-chief

I’m con­fused. Ev­ery time we write about the coun­try’s en­trepreneur­ship ecosys­tem, our re­searchers and fact check­ers con­duct ex­ten­sive in­ves­ti­ga­tions in an at­tempt to once and for all clas­sify cen­tral bank cir­cu­lar 331 in the right pol­icy frame­work. They al­ways come to the same con­clu­sion: it’s an eq­uity guar­an­tee. The whole pur­pose of this pol­icy in­stru­ment is to mit­i­gate the high risk of the “val­ley of death” or when there is a high prob­a­bil­ity that a startup firm will die off be­fore a steady stream of rev­enues is es­tab­lished.

With all due re­spect, the hand­ful of ven­ture cap­i­tal (VC) funds cur­rently de­ploy­ing guar­an­teed cap­i­tal are not serv­ing that pur­pose. They’re thirsty for rev­enues such as pri­vate eq­uity (PE) funds, not value cre­ation such as VCs. They’re all look­ing at ticket sizes of $1 mil­lion or more in com­pa­nies that are past the proof-of-con­cept stage and start­ing to see some real cash­flows. These aren’t seed tick­ets and def­i­nitely don’t need a guar­an­tee. Don’t get me wrong, growth-stage com­pa­nies in Le­banon were star­tups back when the ecosys­tem was smaller, func­tion­ing with lit­tle in­sti­tu­tional sup­port and starv­ing for cap­i­tal. They are more than wor­thy of in­vest­ment but in a man­ner that al­lows lim­ited part­ners (LP)’s or share­hold­ers to en­joy the risk and re­wards that come with fi­nanc­ing a lim­ited li­a­bil­ity com­pany (LLC).

No won­der funds are com­plain­ing of lack of deals. But what about the young com­pa­nies that have grad­u­ated from Boot­camp, Speed and the UK-Le­banon Tech Hub? This eq­uity guar­an­tee is for them. It’s meant to help them and many, many oth­ers that are still not even aware that 331 ex­ists to help them make it to the other side of the “val­ley of death” so they too can one day wel­come the big tick­ets and stay in Le­banon in­stead of look­ing else­where.

For seed fund­ing to start find­ing the right tar­gets we need many more ac­cel­er­a­tors, cowork­ing spa­ces and mar­ket­ing tac­tics to dis­cover and nour­ish all the re­main­ing scat­tered tal­ent. There are many ex­cel­lent op­por­tu­ni­ties that are equally tech and scal­able; in this is­sue, for ex­am­ple, we bring to you a se­lec­tion of en­trepreneurs in the agro sec­tor.

Banks and in­vestors that make the leap of faith to sup­port ac­cel­er­a­tors should have the first right of re­fusal to in­vest in grad­u­ates of these pro­grams and not the other way around. Only those in­vest­ments are wor­thy of an eq­uity guar­an­tee.

As 331 money gets al­lo­cated quickly, it is not too late to re­con­sider the struc­ture and re­wards of ex­ist­ing funds with spe­cial at­ten­tion to car­ried in­ter­est ar­range­ments. The time is now to give our only work­ing pol­icy its right­ful pur­pose. Let’s repri­ori­tise our goals so that every­one can ben­e­fit from a just share in the pie.

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