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Lebanese connecting Silicon Valley with its nascent IT sector

  • Connecting the world

BEIRUT: New Lebanese graduates looking to enter the IT sector probably already have their sights set on Silicon Valley, the worldwide hub of startups and technology investment.

But some Lebanese who have already established themselves there, in some cases as recently as the past couple of years, are looking at ways to support the sector in their home country by offering their skills and experience, and also see investment opportunities in some new companies starting up in Lebanon. And as technology companies develop in Lebanon under difficult circumstances, so do individual and group initiatives to link the country with Silicon Valley.

“In the tech sector there are Lebanese executives that are fairly organized, and they want to give back to Lebanese entrepreneurs,” says Hasan Baydoun, founder of Cashbury, a mobile phone application that won first place at last year’s annual regional technology conference Arabnet.

Baydoun returned to Beirut earlier this month to attend Startup Weekend, an initiative started in Seattle in which participants compete to establish new companies in 54 hours.

Today he is based in San Francisco, where he continues to expand his company, which he says would have been difficult to develop and fund in the same way had he stayed in the Middle East due to a lack of angel investors willing to provide seed money to startups.

Even with Lebanon’s much less developed technology ecosystem and infrastructure problems – including a slow and expensive Internet connection, daily power outages and lack of government support for the country’s IT sector – Baydoun believes it is important to keep a foot in the door in his home country, where he will soon be opening an office.

He and other Lebanese expats who have established themselves abroad are aware of their country’s most valuable commodity – its educated and entrepreneurial workforce.

Last year, Georges Harik, a Lebanese expatriate resident in Silicon Valley and one of the six founding engineers of Google, invested $250,000 in the Lebanese startup Dermandar, based on a $5 million valuation of the company. Founded by Beirut-based entrepreneur Elie G. Khoury, the Web and mobile phone application creates panoramic views from pictures.

Harik says he made the investment because of the company’s global potential. Indeed, since Dermandar was launched just last year, it has gotten more than 4 million downloads, mainly from outside of the Middle East, a sign that Lebanese companies can compete in a global market.

So far, such initiatives have been done on an individual basis. But some organizations are working to exploit what is arguably Lebanon’s most valuable export – its human capital.

LIFE (Lebanese International Finance Executives) and Lebnet aim to harness the skills and influence of Lebanese financial executives abroad to strengthen and promote Lebanese businesses, while Tech Wadi seeks to do so for the Arab world.

In January, the Beirut-based ICT group Ijma3 brought IT leaders from across the region on a three-city road trip to Las Vegas, Silicon Valley and Washington D.C. And in March, for the first time, Google came to Beirut to host a series of workshops.

“Startups in high-growth sectors are a big engine of economic and job growth, so it is important for Lebanon to learn how to nurture the startups and the ecosystem they need in order to reap the benefits in terms of high-paying jobs with high economic multipliers,” says Ghassan Bejjani, a member of LIFE who spent 23 years as a venture capitalist and an IT executive with Morgan Stanley, and now works as an independent investor.

He believes that fostering the relationship between the two communities could help defend intellectual property in Lebanon, give startups more incentives, and bring about a community of entrepreneurs that could compete and learn from each other.

Fadi Daou from Lebnet adds that Lebanon could learn from Silicon Valley in corporate governance, corporate laws that simplify investments and employment practices.

“The IT industry is global and for technology companies to succeed, they need to have an open access to the global market and the supply chain. Lebanon especially has a huge handicap with respect to customs, and open markets,” says Daou. “All the laws and systems are currently geared to technology consumption rather than technology development.”

Instead, he thinks Lebanon has the potential to be a leading IT developer in the region – and not just a consumer, and the country can learn from its more experienced California counterpart to exploit its skills.

“Silicon Valley is the archetypical model for such an ecosystem, and Lebanon has to be linked to it to be able to learn how that works. That linkage will also help provide funding and strategic business opportunities for Lebanese startups,” Bejjani says. “The Lebanese diaspora is an under-utilized resource and we need to find a way to leverage it first to initiate and institutionalize that kind of linkage and then to spread it to other economic areas.”

 
A version of this article appeared in the print edition of The Daily Star on July 25, 2012, on page 5.
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