File - Students work on their computers at a university in Beirut, Tuesday, Sept. 10, 2013. (The Daily Star/Hasan Shaaban)
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The Central Bank is finalizing a framework for the implementation of circular 331, which provides incentives to commercial banks to make equity investments in startups or venture capital funds.While Lebanon's commercial banks have limited experience with equity investments, Hoayek says the Central Bank is encouraging them to work directly with startups in addition to venture capital firms.Under circular 331, the Central Bank guarantees up to 75 percent of the value of banks' investments in startups or VC funds. A commercial bank that agrees to invest in startups receives a seven-year interest-free credit from the Central Bank that can be invested in Treasury bonds. For this reason, VC funds are likely to receive the lion's share of initial investments by commercial banks that would rather avoid direct investments in startups at an early stage, Hoayek said.In a common refrain, some Lebanese startup founders are concerned that VC funds will impose excessively strict criteria before investing in nascent startups.Paul Saber, founder and CEO of eTobb, a medical based Web service, expressed concern that VC funds would have a monopoly on funds committed by commercial banks.
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