Fronting the revolution: Hala Fadel says the line between social and commercial entrepreneurship is blurring
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In Bachoura, a rundown quarter of central Beirut, a quiet revolution is gathering strength. From the balcony of a new office block, the Mediterranean sparkles behind a row of cranes. On a freshly painted roof patio next door, entrepreneurs work at picnic tables laden with laptops and lattes. Amid walls still bearing artillery scars from the civil war a quarter of a century ago, the Beirut Digital District is rising — one of a growing number of spaces in the Lebanese capital dedicated to 21st-century start-ups.

Hala Fadel, a dynamic serial investor who grew up in Paris, is among women in the vanguard of this entrepreneurial revolution. She is chairwoman for the pan-Arab region of MIT Enterprise Forum, a non-profit organisation that promotes entrepreneurship, and began its start-up competition in 2005. Returning to Lebanon in 2003, “everything outraged me”, she says. “But I love the people. It’s not just about making money; it’s entrepreneurship with a mission to change the whole system. This is why I wear so many hats.”

Once a top-ranking analyst at Merrill Lynch in London, Fadel started a telecom software company after studying business at Massachusetts Institute of Technology. Last year she quit her day job in fund management to co-found Leap Ventures, a $71m venture capital fund for high-growth Middle East technology businesses, which launched in March at the sixth ArabNet Beirut. At this huge networking event, Raed Charafeddine, vice-governor of Lebanon’s central bank, hailed an “Arab digital renaissance”, while the telecoms minister, Boutros Harb, pledged improvements to Lebanon’s notoriously slow internet.

The line between social and commercial entrepreneurship is blurring, Fadel says, as everyone wants to create jobs. But with inadequate governments (Lebanon has been deadlocked without a president for almost a year), start-ups are stepping into the breach, to address issues from recycling to traffic jams. Fadel enthuses about Tripoli’s car-free day in 2011, when she organised a rally of 50,000 people and 900 volunteers to raise environmental issues in the northern city. “Twenty-two kilometres of roads were closed for a day. It was the best project of my life.”

Another of Fadel’s passions is to exploit the talents of women. Of 5,000 applications to the MIT Enterprise Forum start-up competition this year, 69 per cent had at least one woman in the team, she says. Over the life of the competition, 47 per cent of teams have been led by women. Her own open-plan office has a mostly female staff.

Fadel, who scarcely knew her parents’ homeland, returned to make a difference, like many other new entrepreneurs. A business park across the Beirut river is home to the Beirut hub of Diwanee, a pioneering online media company aimed at women. Co-founded by Delphine Eddé, it has grown since 2008 to six websites, covering topics from motherhood and health to beauty and fashion, with a lifestyle channel partnered by Google. Of its 7m unique users a month, 70 per cent are in the Gulf — insulating the company from worsening security since the Syrian war began in 2011.

Eddé’s family fled the civil war to Paris when she was two, and after studies at the Sorbonne and in New York, she was headhunted as digital director of Condé Nast France, the magazine publisher. It was the Israeli bombardment of Lebanon in 2006 that spurred her and Hervé Cuviliez, her French husband (also a backer of Leap Ventures), to move to Beirut and “do something for the country”. They started Diwanee when only 5 per cent of online content was in Arabic. “We realised women’s websites were not in Arabic, and Arabic sites were not for women,” Eddé says. Of 140 employees in Beirut, Dubai and Belgrade, “more than 80 per cent” are women.

Small private enterprise is nothing new in the Middle East. The Arab uprisings of 2011 were triggered by a thwarted Tunisian fruit-stall entrepreneur. But even before the Arab spring trumpeted the potential of Facebook and Twitter, the region was undergoing a tech-based revolution — as charted in Christopher Schroeder’s book Startup Rising (2013). Accessing markets and skills abroad, start-ups also open a path for talent to sidestep red tape and wasta (an Arabic term for favouritism). Roughly a third of Middle East start-ups were founded by women. In two landmark exits in the Arab world, the recipe website Shahiya.com was acquired for $13.5m by Japan’s Cookpad in January. Last year, a majority share in Diwanee was bought by Paris-based Webedia. Both Lebanese start-ups had women at the helm. “Technology and the internet are equalisers for women in strict locales,” says Amal Ghandour, the incisive Beirut blogger of thinkingfits.com. For her, the surge in start-ups signals “desperation in a region of overbearing governments and meek private sectors — the only way out and up for disadvantaged youth or Arab females looking to break age-old barriers”.

So what are those barriers? In certain respects, Lebanon seems to be an Arab-world leader in women’s freedom — from the lack of censorship that makes Beirut an Arabic publishing hub to fashions flaunted in Beiruti cafés. While Saudi women, restricted in driving and workplaces have embraced the internet as a salvation, some highly educated businesswomen in Beirut are politely impatient at being set apart from male peers.

A march opposing domestic violence against women, marking International Women’s Day in Beirut in March 2014

Yet urban freedoms cloak inequalities. Rallies in Beirut in March for International Women’s Day attacked discriminatory laws preventing women from passing their nationality to their children. Only after such protests was domestic violence criminalised last year. Lebanese women are “superficially free”, says Fadel, citing Lebanon’s ranking for women’s rights of 123rd out of 136 in the 2013 World Economic Forum’s Global Gender Gap Report. “The apparent reality is hiding a horrible truth. A woman is not the legal guardian of her children. Women’s participation in parliament is only 3 per cent — we’re second to last after Saudi Arabia. And 77 per cent of women of working age stay at home. It would really be a revolution if women became part of the economy.”

In 2012, BLC in Lebanon, in partnership with the World Bank, became the region’s first bank to target funds at women entrepreneurs, arguing that while women owned 30 per cent of small and medium-sized enterprises in the country, they were granted just 3 per cent of loans. Funding and guidance for start-ups and growing businesses is increasing, partly though Lebanese central bank initiatives. But the start-up revolution may have to embrace a broader section of women if the goal is to boost the economy.

Finance is not the only hurdle. “In this part of the world, men have more access to professional networks,” says Rima El-Husseini, who studied banking at the American University of Beirut (AUB) and co-founded the Blessing Foundation in 2012 to “create a space where women can talk business”. Its third round of business mentoring ended in March. “There’s a perception that women don’t help each other, but it’s totally the opposite,” El-Husseini says. She aims to extend that space to “less-educated women designing bouquets or gift-wrapping biscuits, who definitely face social barriers: they may not be allowed to work outside the home or have financial independence”. In June, the foundation launches an “open market in Arabic for any woman in business to sell online — we’re trying to give rural women a platform too”.

El-Husseini’s luxury chocolates and gifts company, started with her sister in 1996, has franchises across the Arab world and is a reminder of pre-tech women’s enterprise. Bokja, a thriving furniture company with a showroom in Beirut’s regenerated Saifi Village, is another. Hoda Baroudi and Maria Hibri put in $5,000 apiece in 2000, growing the company to 34 employees and a $1m turnover. “We started from scratch, working with artisans” — most of whom are men, says Baroudi. “It took time to gain respect. They’d talk down to us, but we were persistent.” Citing Lebanon’s long-term brain-drain, they say men took jobs in Dubai and elsewhere while women did business at home. Yet technology has opened up many more opportunities, and the flexibility suits women.

In historically Greek Orthodox Achrafieh in east Beirut, bicycles rest outside the Kiosk, a former Ottoman bathhouse in the Sursock palace gardens. The restored villa houses Coworking +961, a start-up services provider set up by Fadel three years ago amid soaring rents and named after the country dialling code. One of nine resident companies is Butterflye — an exemplar of innovation. Hind Hobeika was an engineering student at AUB and a competitive swimmer when she invented Instabeat — a device for swimming goggles that monitors and displays heartbeat and other data on the lenses, and record the athlete’s progress. She honed the prototype in 2010 on Stars of Science, a Qatar television reality contest (“they lock you in the lab for four months”), winning third prize — the only woman in the top five.

The contest was empowering, says Hobeika. Berytech, the seed fund, encouraged her to quit her job designing air conditioning, and she now has nine staff in Beirut, Berlin and Ukraine, while manufacturing in the US.

Butterflye has raised $2m, including $80,000 in crowdfunding from 54 countries, yet frustrations remain. When Hobeika wanted to hire a Cornell-educated engineer from Tripoli, “the weekend of the interview, a bomb went off, and she didn’t want to commute any more”. Volatile security also “affects our reputation”, she says. “People say, ‘is it safe?’ It’s more about image.”

While Fadel aims to break that image, “to show Lebanon is not just a warzone, and there’s something going on beyond nightclubs”, there are hints of another shift in the start-up culture. Tensions among staff at some companies in Lebanon have been raised during Syria’s descent into war, which has inflamed sectarian friction. But Fadel paints a different picture: “In our office there’s almost every sect and every combination of backgrounds. Outside, the tension is there. But start-ups don’t do that.”

If anything, experience of war may fuel the can-do ethos. Baroudi speaks of a “Lebanese culture of now — there’s no postponing anything”. El-Husseini, who saw out the civil war years in Beirut, adds: “Nothing puts us down. We’re always ready to start all over again — and we always find a way.”

Copyright The Financial Times Limited 2017. All rights reserved.
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