The Lebanese Information Technology (ICT) sector and related industries, is a fast growing sector with a market size of $436.2 million in 2016, and projected to reach $543.5 million by 2019.
The startups ecosystem is a dynamic one with a high number of new initiatives, concepts, and ideas seeing the light on almost daily basis. The sector has at least six incubators and accelerators, and benefits from a multitude of VCs and subsidised money covered by the government.
To resume it all, Lebanon has what it takes to be a regional hub for the smart industries. This is what the sixth edition of Mix N’ Mentor Beirut accentuated. The event took place on September 8 at the Beirut Digital District (BDD), and gathered nearly 200 of the industry’s leaders, mentors, and creative entrepreneurs.
Focus on your audience
The event’s opening session came with a new format this year, giving the crowd the opportunity to answer 30 questions asked anonymously or by registered startups. These questions addressed startups concerns on the best tools to adopt to reach to a wider crowd, and how to do it the proper way. “Partnerships are a good tool to grow,” asserted Elie Habib, cofounder and CTO of Anghami. “You have to standout from the crowd to attract new customers in this digital age: focus on your niche audience,” he added.
Identifying the audience would also help businesses pick the right social media platform. “If what you offer is a visual experience for instance, you go to Instagram,” said Abed Agha, founder and managing director of Vinelab, a digital entertainment company.
Focus on your added value
As founding a new business is getting easier, competition is becoming fiercer. The added value a product or a service brings, will be the one that will define the survival rate of the business. “Always have in mind that the one who pays for your or product service always thinks of ways to stop doing that. This is why your added value is always key to keep clients coming back,” explained Antoine Khadige, cofounder of Looya, an end-to-end customer loyalty program provider.
Thus, the startup should develop a minimum viable product (MVP) that tackles a true need in its niche audience, but don’t overdo it, according to Khadige. “If you have a hardware prototype, build some units, sell them, get feedback. This way you'll get information worth 100,000 with just $1000,” Ghaith Yafi, B&Y Venture Partners' founding partner.
Fadi Bizri, partner at B&Y Venture Partners also asserted this: “In any marketplace, you need to minimize the cost of leakage. Make sure people have the need to come back to your app again and again.”
More than 30 percent of Lebanon’s workforce is employed in knowledge intensive activities. Around 2,000 university graduates specialized in ICT-related activities join the sector every year. “Lebanon is a talent hub when it comes to creating content,” started Walid Faza, partner at Wamda Capital and COO of Wamda.
According to Arabnet’s Omar Christidis, the MENA region will witness the closure of many startups due to economic difficulties or due to the financing shortage. “If you are after new talents, you would rather follow closing SMEs,” he said.
Many startups even opt for partnering with technical teams and incorporate them within their business. “When you’re short on cash, you want the developer to be your cofounder,” said Karim Sarkis, CEO of Sync Media, a multi-platform content creator for TVs, web, and mobile.
Access to finance is a key concern to all entrepreneurs, but choosing the right funding partner is as important. “At an early stage level, your equity is your most precious asset. You cannot give out easily shares of it in return for funding. It’s cool that various investors would like to take risks with you and fund your concept, but it should be a negotiation tactic to decide how much equity to give,” Faza explained, adding that “not every company in the region is institutionally VC-ready.” This questions the valuation of the company, and how to do it. According to Faza, valuation “is an arm wrestling technique. It won’t help you to over-evaluate your company to take big money. Be careful about anti dilution rights and liquidation rates.”
Another main issue that faces entrepreneurs is profits and revenues, especially that many mix both concepts. “If you have some extra cash in your pocket that you wanna give back to your investors, this is not profitability. The true revenues are translated in people loving your product and telling you they're ready to pay for your stuff,” explained Faza.
Feature images via Wamda.