Lebanon Opportunities – August 2019

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of the Gulf Cooperation Council (GCC),
which has opened up a huge lead over
the rest of the Arab world. The combined
investment in both the Levant and North
Africa represents just one fourth of overall
MENA investment. “This indicates that
the flow of dollars is not equally spread, as
opposed to the number of deals,” according
to the report.

THE RISING NUMBER
OF INVESTORS
Lebanon’s share in the total number of
investors in the MENA digital sector has
slowly increased, to 11 percent in 2018 from
seven percent in 2013. The country is also
home to all types of investors with respect to
ticket size. “The distribution of investors by
ticket size across markets mirrors the level
of maturity of the investor community per
country,” according to the report. The most
prevalent types of investors across the MENA
region are accelerators, corporate investors,
and venture capital firms. Accelerators
have been the fastest growing segment of
the investor community over the past five
years, recording a 32 percent surge in their
number. “Increased corporate appetite and
interest are evident with the rise in the
number of corporate investors over the
past two years. Corporate investors have a
stake in supporting tech-focused solutions
to advance their digitization process,”
ArabNet said.

MORE SUCCESS STORIES
Lebanon emerged as the country with the
lowest proportion (5.3 percent) of failed
startups over the period 2013-2018. Out
of 132 startups, 125 remained active
over the period. Around one quarter of
the startups founded in the MENA region
in 2013 have become inactive. “The low
startup failure rate is attributed to the
continued proliferation of private and public
sector initiatives supporting and funding
startups, the reluctance of investors to
discontinue support of portfolio companies,
and the cultural stigma associated with
failure,” ArabNet said. The more a startup
secures funding rounds, the lower its risk
of failure becomes. Around 20 percent
of the businesses that received a second
round of funding failed. The failure rate
of startups which received three rounds of
funding or more decreases to zero. “This
demonstrates that once a startup has hit
its stride and reached the growth stage, the
chances of failure drop significantly,” the

LEBANON OPPORTUNITIES, AUGUST 2019 21

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L0819-83 State of Digital Investments

in MENA 2013-2018-ArabNet

report said. The startup’s need for further

investment also decreases. Early stage

funds remain the most prevalent category of

financing resources across MENA countries,

representing 48 percent of the investor

community. Conversely growth funds are

in steep decline, their number plunged 50

percent compared with 2017.

MORE FEMALE INVOLVEMENT

The Levant boasts a higher proportion of

female founders compared with the average

in the MENA region. “When examining the

ratio of female founders by market, the

data indicates that the Levant continues

to exhibit the highest proportion of female

founders in MENA, with Jordan and Lebanon

at 20 percent,” ArabNet said in the report.

The gender distribution of startup founders

across the MENA region remained relatively

unchanged over the 2013-2018 period, with

the ratio of female founders ranging between

12 percent and 19 percent. This is despite the

fact that governments in the region continue

to push for further female participation in

the labor force and that increasing numbers

of funds are focused on investing in female-

founded startups. “Cultural factors seem

to affect female participation in startups,

such as pressure from family to find a stable

job with low stress levels,” according to

the report.

Reported by Shikrallah Nakhoul

Source: ArabNet

NUMBER OF DEALS

PER ONE MILLION PEOPLE

UAE

5

Lebanon

7

Jordan

Saudi Arabia 1.3

0.8

Egypt

0.4

NUMBER OF DEALS

PER $100 BILLION GDP

UAE

12

Lebanon

77

Jordan

33

Saudi Arabia

4

Egypt

17

VALUE OF DEALS

PER $100 BILLION GDP

UAE

$120

Lebanon

$54

Jordan

Saudi $80

Arabia

$9

Egypt

$28