At the Second Global Entrepreneurship Summit in Istanbul, access to finance was pointed to as the single biggest barrier to entrepreneurship in the Arab World. Yet today, entrepreneurs in Lebanon can look to a new funding opportunity with the launch of a $US 50 million Lebanon Growth Capital Fund, jointly announced by Riyada Enterprise Development, the venture capital arm of the Abraaj Group, the European Investment Bank (EIB), and Cisco.
Cisco has invested $7 million under its “Partnership for Lebanon” program, which has worked since 2006 to improve ICT infrastructure and create opportunities for small businesses in Lebanon. This fund also complements Cisco’s business education initiative that helps entrepreneurs in the region develop their soft skills.
EIB has also invested $US 6.75 million, with Riyada Enterprise Development investing the balance to close the fund’s first round at $30 million. The remaining $20 million will be met by future investment partners.
The goal of the fund, which is part of RED’s $US 500 million small and medium-sized investment platform, is to invest in high growth companies that target regional and international markets.
“We will invest in 15 Lebanese SMEs over the life of the fund,” says Elie Habib, Riyada’s Country Manager for Lebanon. “One, which we will announce soon, has already closed in Sept 2011, and two more are in advanced stages. We are looking for swiftly scaling companies that will be the market leaders of tomorrow.”
The fund will be sector agnostic, he notes, yet RED’s experience on the ground since April 2010 has allowed it to identify key sectors of interest in Lebanon such as IT, media, media content, communication, telecom, healthcare, education, and logistics.
RED itself will invest between $1.5m and $8m in targeted companies, taking a minority stake with strong minority rights. Critically, RED also focuses on supplying the expertise and guidance that companies need to implement a growth strategy over the medium to long term.
Ultimately, the goal, says Habib, is “to create highly skilled jobs in Lebanon as well as fuel the creation of economic engines for the country. We are committed to a long-term investment strategy in Lebanon.”