By Mona Alami
A new-wave of entrepreneurship is helping Lebanon become a hot-bed for start-ups. Mona Alami looks at how young business minds are making a contribution to the modern marketplace
Lebanon has always prided itself on its knack for entrepreneurship, a trend that seems to be picking up among young Lebanese behind a series of hip and creative start-ups.
Serene Abbas and Narina Najm have set up their headquarters on the sixth floor of an office building in Manara, a neighborhood in Beirut overlooking the Mediterranean Sea. The two young women met at the ad agency JWT before taking the start-up plunge.
With their associate Jad Sarout they launched Raghunter in December 2012, an online search tool that provides shoppers with fashion items located in over 70 of Lebanon’s trendiest stores.
“We wanted to provide an online service to the Lebanese fashion industry and add value to the shopping experience of consumers,” says Abbas. “To do that, we had to figure out some of the problems faced by fashion retailers and work on their online presence. We also catered to the needs of consumers who have a hectic life and see shopping as time consuming. We basically want to become their best shopping buddies.”
Raghunter is gaining a presence, receiving about 500 visits per day, with 70 percent of viewers women and 30 percent men, mostly between the ages of thirteen and 34. The two entrepreneurs can expect their search tool to gain an even greater following having also launched an app which allows users to shop more efficiently by taking a quick look at prices, sizes and collections available at stores near their location.
The Raghunter team collects items from stores and takes pictures before cataloguing them by price, size and colors available, as well as providing users with the location of the store.
The two young founders explain they learned the ins and out of the Lebanese fashion market by conducting in-depth research and extensive interviews with both buyers and shop owners. “Most fashion retailers know they have to be online today, but can’t afford it,” says Abbas.
“We offered to bring them this service for a smaller fee than a website would cost,” says Najm. “We are basically acting as their online marketing consultant by putting their collections online, referencing them and marketing them.” This is how Raghunter generates income.
The Raghunter team has managed to attract a large array of clients from mid- to high-end brands by local designers or multi-brand stores. “Some of the fashion retailers we feature include Plum, G.S, Front Row, and Oddfish, as well as e-commerce stores such as Lebelik.com and YoungWilderness.com. However, international brands are hardest to get on board because such a project requires international approval,” explains Najm.
In the next two to three years, the founders aim at growing Raghunter by setting up shop in other Middle Eastern countries such as the UAE. The founders are now hoping to raise $200,000 to expand their operations.
Another product launched and marketed by a Lebanese woman is Instabeat, a device mounted on any pair of goggles that can instantly track a swimmer’s workout, displaying heart rate, calories burned and number of laps.
Hind Hobeika turned first to crowd funding to market her new invention. She was able to raise twice her initial budget of $35,000 in the first days of her campaign. Contributors came from the US, Europe, Asia and the Middle East.
The idea came to Hobeika, a swimmer herself, after she had difficulty tracking her heart rate while training, as conventional heart-rate monitors are essentially designed for runners and bikers and are cumbersome for swimmers. Instabeat features color-coded data that tells the swimmer if he or she is in the fat-burning zone, the fitness zone or in the maximum-performance zone. Instabeat was named one of the 17 Most Intriguing Gadgets in the 2013 Computer Electronics Show (CES) in Las Vegas. Hobeika started manufacturing the device in China in 2013.
Another Lebanese, this time a man, is behind a very practical idea making use of Lebanon’s largest and most powerful sector: the Banking industry. With two partners, Elie Abou Jaoude built Bnooki, a search tool that stands for “my banks” in Arabic and offers a summary of Lebanese banks’ products and the services they offer.
Abou Jaoude, who previously worked in the banking sector, says that the idea came to him because he was constantly being solicited by friends asking for advice on where get a housing loan or open a deposit account. “I saw that there was a market for a product that provided quick and simple answers to these questions,” explains Abou Jaoude. “When I moved to Berytech [a local incubator], I discovered that the web could offer a solution to consumers looking for banking products. There were also similar successful models in France and the UK.”
By using Bnooki, consumers can shop for banking products from savings accounts to business or home loans. To make life easy on its clients, Bnooki even came up with its own loan simulator, which the Kafalat financial company has acquired.
“Bnooki is easy to use and timely, and it aims at making the search for local financial products a more transparent one,” he adds.
After creating the Bnooki demo, Abou Jaoude and his partners went to local banks and pitched the idea. “Banks were not essentially opposed to the project, but they showed little interest and were a bit skeptical. The biggest challenge the engine represented for banks was to be compared horizontally and vertically,” Abou Jaoude says.
The Bnooki team relied on a research firm to conduct extensive mystery shopping – online searches conducted alongside face-to-face meetings with bank managers. Finally, the team reviewed the product with all the banks before launching the site. “We needed to make sure that the search engine would provide complete and accurate information,” says Abou Jaoude.
Today, after an investment of $500,000, Bnooki is showing positive revenues by processing over 300 applications per month. “We are generating income by providing banks with business intelligence and fees for leads with each application processed,” he points out.
The company’s client profile is Lebanese people between the ages of 25 and 35, as well as members of the diaspora. To attract and encourage other entrepreneurs, Bnooki is also collaborating with the Lebanese Commerce Chamber on the launch of a loan of $20,000 with three years of free interest. A Bnooki app for smartphones will be launched soon.
Abou Jaoude says his company is considering expansion into other countries. “We have designed the search engine in a format that is scalable, which will facilitate its launch in other countries,” he adds.
The emergence of popular start-ups such as Instabeat, Raghunters and Bnooki reflect the fast-pace change in the country’s cultural environment and the Lebanese Central Bank’s new policy that is more favorable to new ventures in technology and online business.
The Central Bank of Lebanon recently released a circular that de-risks investments in start-ups made by Lebanese banks. When a local bank agrees to invest in a start-up, it receives a seven-year interest-free credit from the Central Bank, which can be invested in treasury bonds with an interest rate of seven percent. The Central Bank will also guarantee up to 75 percent of the value of this investment.
Other institutions are incentivising entrepreneurs, namely, Kafalat, Endeavor and Berytech, providing more support to launch online businesses.
“Lebanon compares positively to other Arab countries in terms of venture capitalist projects,” says Sami Beydoun from Berytech.
The company, whose investments are made mostly in the ICT and software sectors, has a high success rate, with many projects in the pipeline.
Today, Lebanon’s booming start-up industry can benefit from growing usage of internet – a quarter of the population, one million people, have internet connections. However, Lebanon’s internet is among the slowest in the world. “Lebanon can generate good products cheaper than elsewhere, but is hindered by the slow Internet, which is an obstacle to the sector’s development,” notes Beydoun.
But the slow internet hasn’t stopped entrepreneurs from making an online presence, and Lebanese from using their products.