Entrepreneurs require the proper startup ecosystem to nurture and thrive. The recent growth of the Lebanese startup ecosystem is incredibly exciting and has been extremely evident in 2015, as is distinct in the collaborations amongst entrepreneurs, support organizations, and investors.
A startup ecosystem is formed by several components interacting as a system to create and sustain startup companies. A successful startup ecosystem is highly developed in all areas of the components. For ecosystems to become a self-sustaining source of innovation, lead to economic growth, and create jobs, it needs to have the following 6 pillars:
- Human Capital
These are the individuals starting, joining, and guiding startup companies. It’s vital to have access to a good quantity of high-quality workers with exceptional skills and competencies. These qualities include but are not restricted to the level of education, the number of graduates, the fields of specialization, and the level of professional expertise. If entrepreneurs are considering global expansion, then English communication is an important skill they would need to have, since it is the global language for international business.
- Knowledge Resources
Having knowledge resources dedicated to a startup ecosystem is a fundamental success factor. It is essential to increase the knowledge generated and distributed within the ecosystem. Universities, innovation labs, and mentoring and network programs all push startup ecosystems to thrive.
- Capital
A fundamental pillar of a successful startup ecosystem is its accessibility to funding opportunities. Funding sources may vary from venture capital firms, loans, angel investors, grants, and accelerator programs to the 3 F’s (friends, family and fools). Choosing the wrong funding source may be detrimental to a startup’s growth therefore founders must be very diligent when raising capital for their company. When evaluating this pillar we don’t only examine the amount of available funding as lump sum but we also examine how it is spread over the different startup growth stages. A successful ecosystem is one where a promising startup at any stage of growth can raise intelligent money.
- Governance
Governmental regulations and policies can make or break a startup ecosystem. Having laws and regulations that support businesses being created, as well as the investors that fund them, move ecosystems in massive strides. - Infrastructure
Startups require access to affordable office space/ co-working spaces, high-speed internet, mobile, and utilities amongst other requirements. The lack of infrastructure may be detrimental to forming a successful startup ecosystem. Incubators and accelerators tend to provide some, if not all of these needs to prospective startups. Moreover, the city’s actual infrastructure, such as transportation and good standards of living, is a crucial factors to striving startups.
- Markets and networks
Finally, markets and networks refer to the local market size and its dynamism, in addition to having access to other considerable-sized markets. The market needs to be large enough to sustain the startup’s business and if it’s not growing enough, it could turn away investors and entrepreneurs.
Taking into consideration all the 6 pillars, Lebanon may not have a highly developed startup ecosystem; however, there really is no startup ecosystem in the world that is perfect. We have observed several positive signs indicating that the Lebanese startup ecosystem is headed in the right direction.
