Central Bank sets rules
for incubators and accelerato
Knowledge economy to account
for five percent of GDP by 2030
Incubators and accelerators are allowed to invest only up to five percent in the capital of each startup company that benefits from their support, according to a circular by the Central Bank (BDL) issued recently.
“BDL is keen to determine the goal of each investor in startups,” said Marwan Mikhael, Head of Research at Blominvest Bank. “Instead of having high shares in a target company and provide it with a priority, BDL considers that incubators and accelerators should be neutral and serve many companies in the market,” he said.
Managers of incubators and accelerators are also not allowed to have direct or indirect shares or investments on their own behalf in these startups, the circular said.
The circular said that profits and amounts due to BDL should be paid after deducting the administrative fees and costs in two cases: First, when the bank cedes its shares in startups, when it invests through a venture capital firm, and not when this venture capital firm cedes its shares in these startups, second, at each concession made by incubators and accelerators of their shares in startups.
More than $250 million have been invested in the knowledge economy, according to BDL Governor Riad Salameh. “These investments are creating job opportunities and increasing the country’s competitiveness,” he said.
The knowledge economy currently accounts for one percent of the Gross Domestic Product (GDP), according to Blominvest Bank figures. In four to five years the market will start to see successful startups with satisfactory sizes, according to Mikhael. In ten to 15 years, he said that the share of the knowledge economy sector of the GDP may range between four to five percent. “The country has the right knowhow and any significant technology creation would reduce production costs and help support other industries,” said Mikhael. “However, to achieve this target, we need stable economic growth and development of infrastructure, including Internet speed and fiber optics, among others,” he said.
The intermediate circular modifies a basic circular issued in 1996. BDL issued Circular 331 two years ago, which allowed commercial banks to invest up to 80 percent in a startup’s capital, in order to encourage investment in the knowledge economy.
Reported by Leila Rahbani
Date Posted: Nov 26, 2015