Local fintech startups among
top four countries regionally
showing positive signs
Lebanon is one of four countries in the Middle East and North Africa (MENA) that when combined account for almost 75 percent of all fintech startups launched in 12 countries regionally, according to the recently published report: State of Fintech, by WRL and PayFort. The other three countries are the UAE, Jordan, and Egypt.
The report revealed that 105 fintech startups had launched in the region by the start of 2016. This is expected to reach 250 by 2020.
Jad Salame, Managing Partner of Phoenician Funds, a venture capital and early stage investing company for the fintech sector, said that it is difficult to pinpoint the exact percentage for Lebanon alone due to the difficulty in defining fintech. This is because the term can include innovations in financial literacy and education, retail banking, and investment, as well as backend processes of setting up servers and software applications for the frontend of traditional banking institutions.
“Fintech is an emerging sector, that matches the strong banking sector so has built in support,” he said.
Phoenician Funds has invested in seven local fintech startups so far this year. It has distributed two checks to two startups. It will sign five more for the remaining startups during the latter half of April.
Salame said that an investment of $2 million has been invested in BSyncro, a software insurance tech distributor, and $2 million in Risk+, an end-to-end risk solutions service provider. Risk+ will receive its investment in half million dollar tranches according to specific miles stones. Total investment will reach $1.5 million.
Fintech startups can serve customers who do no hold a bank account and are looking for basic access to financial services. The ‘State of FinTech’ report said that 86 percent of the adult population in the MENA region is unbanked. Here in the country there has been progress in addressing segments of the economy that are usually unbanked, such as small and medium enterprises (SMEs), women, and rural, low-income, and less-educated sections of society.
But according to a report entitled ‘Lebanon: Raising Financial Inclusion’ published in September 2016 by the Institute of International Finance (IIF), there is still room for improvement.
“Fintech during 2017 will see an active deal-flow, in which new ideas, innovations in services will produce diversification and peer-to-peer lending in this sector," Salame said.
Phoenician Funds manages a $30 million venture capital fund with an investment strategy focused on seed stage, including follow-on, and Series A investments covering three major sectors in the MENA region: Fintech, e-government, and digital health sectors.
By Derek A. Issacs
Date Posted: Apr 07, 2017