Developmental disruptions are piling up on the liabilities side of the world’s sustainability balance sheet in 2025. For the tiny, battered country of Lebanon, each of this year’s new shocks – be it a financial or geo-economic tremor, a disruption that is climate-related or technological, a political imperialist insanity or an illicit military aggression – weighs in heavily on the liability side of the national reform and development balance sheet. Each shock increases the risk of deterring needed investments and speaks of new danger in public and private institutional paralyses. This magazine’s perception at the start of 2025, of experiencing a deceptive calm in the eye of a regional and even broader, multi-level “perfect storm,” has in every imaginable and many non-imaginable regards been borne out in the first half of the year.

The only question is which global storm system, apart from the obvious hurricane of regional militarist aggression and war of identities, has the severest impact on this fragile economy and its towering social investment needs. Two outstanding candidates are changes in humanitarian and developmental funding – on global scale highlighted in June by a massively downward revised and re-prioritized OCHA appeal for humanitarian aid due to imperiled fundraising success in the year to date – and Lebanon’s continuing drift to the bottom in the fostering of entrepreneurship when compared (on the 2025 Global Startup Ecosystem Index) to the region’s growing startup ecosystems of Arab countries from the UAE and Saudi Arabia to Jordan and Qatar. 

A notable intersection of both factors, Lebanese innovation and entrepreneurship institution Berytech, is an outlier in the two crucial regards of keeping the proverbial Lebanese entrepreneurial spirit strong and expansionary on the one hand and digesting the shock of seeing a once dominant source of funding – the United States Agency for International Development – vanish in Trumpian mists from February. Executive sat down with Nicolas Farhat, the deputy general manager of Berytech, to inquire about the state of the institution whose academic lair atop a hill in the Beirut conurbation inspires allusions to a hillfort, those settlement habitats that not only in form of Epipaleolithic tells but also in present, digital times stand out as bastions of civilization and development.  

Interview with Nicolas Farhat

Walk me, if you would, through the inflection points in the story of Berytech from the initial idea of an academia-induced technopole through the association with bank funding, involvement of the private sector, the subsequent integration with BDL’s circular 331 ecosystem, and then the switch to donor funding.

It is true that Berytech at its start wanted to replicate the model of the French Sophia Antipolis technopole and incubator in Lebanon. When Berytech was established in 2002, the original entity included the commercial banks of Lebanon participating with a seed investment in form of an indirect social enterprise called in French société en commandite, where profits get reinvested to a certain extent to support the ecosystem. We also back then received funds from the Agence Française de Développement (AFD) to build this building. When the Berytech 1 Fund was created in 2007, it was funded by big US tech companies, not the banks. In 2015 the fund was under the circular 331 and in 2018 and onward, IM [Capital] was anchored by USAID. Simultaneously, all programs were funded by sponsors and partner donors which majorly are EU-funded programs and programs funded by European countries.

The funding pipeline of Berytech, which has been in existence since the 2000s, has in recent years drawn upon diverse sources, notably development grants. What share of your funding and financial pipeline today comes from European partners?

The core [operation] of Berytech is of course to support the ecosystem of entrepreneurship and innovation. But how do we go about this? We can say that we do it along three verticals. The first vertical, which was started in 2002, is having an incubator. One incubator is here at this building [in the USJ Mar Roukos campus] and another one is in [Beirut’s] Mathaf neighborhood facing the French embassy. There also is a plan to open a new facility in [the north-central Lebanese town of] Amchit in 2026.

Our second vertical is the programmatic part. In the past few years, we have deployed over 40 programs, with a total programmatic funding of about $93 million. We have been working with all international donors, such as the EU, Netherlands, USAID, and UN agencies. We also work with international NGOs, agencies like AFD, and Development Finance Institutions (DFIs) such as the World Bank and others. Our third vertical is the investment arm. We created the Berytech Fund 1 in 2007, Berytech Fund II in 2015/16, and then the IM [Capital] and IM Ventures funds. Also, you will hopefully see new funds being launched in the coming year or two.

Let’s talk about this third vertical, your investment arm and the funds you are working on in your collaboration with what I believe was originally a Berytech brainchild today branded as IM Fndng. Will such funds be applying a Private Equity (PE) or Venture Capital (VC) philosophy, with their expectations on return on investment?

What we are envisioning for forthcoming funds is innovative financing mechanisms, not the traditional PE or VC vehicles. They will also not be vehicles such as the Berytech [I and II] Funds of the past. I note here that the IM [Fnding] was among the first to use an innovative funding mechanism. It did this by matching public funding, i.e. USAID funding, as guarantee in securing private capital. To its SoLR & Renewable Energy Fund, IM also recently attracted CMA-CGM, the giant shipping company, to come in and propose a financial product that is affordable for the Lebanese private sector.

The key word to look at in the forthcoming funds is going to be affordable finance. If you look at the SME sector and the ecosystem of startups over the last four, five years, the system was mainly relying on grants, ether in cash of in kind. All the funding that came to the private sector, however, did not really make a dent in the real funding needs of SMEs and startups. This funding was also focused on [specific criteria] and many SMEs were not included.

Most funding that will be coming to Lebanon in 2025, will be addressed to micro-credit institutions, lending to Nano enterprises with a cap of 30 to 50 thousand dollars per ticket, and probably high interest rates. What we are looking at is catering to the private sector in MENA with focus on SMEs. We therefore have two vehicles that we are actively working on, in partnership with DFIs. We experienced a setback [in setting up those funds] when the project was delayed due to last year’s war. But we are hopeful today that it might materialize at an accelerated rate now. One fund will focus on social, environmental and economic impact by SMEs. It is not sector-agnostic but it is not only focused on circularity and green economy. An SME that promotes import substitution and can enhance local production and meet local demand and later on export, which will be improving the trade balance and the balance of payment of Lebanon, could tap into this vehicle.

When USAID announced their 90-day moratorium on funding while programs were being reviewed from the start of the second Trump presidency in the US, nobody was eager to talk about what was indubitably a shock, whether it might have been a disruptive negative shock or even a healthy shock in favor of greater self-sufficiency. Now, as the USAID cuts have been implemented, how large was the shock and what was your learning out of this at Berytech?

This question is a great one that comes at a very sensitive time. What put Berytech in a better position when compared with other USAID partners or implementing bodies, is that we always had diversified sources of revenues for funding its programs. We also always had a mix between donor funded and revenue generating activities. When you consider USAID’s role in this entire mix, it did not represent the majority of our funding. It was, however, a significant source of funding and a shock for us [when this funding vanished] but we were able to adapt quickly.

One of the main programs that had been funded indirectly by USAID – by which I mean that USAID used to act as the intermediaries between European donors and implementing partners such as Berytech – was the Water and Energy for Food (WE4F) program for the MENA region, which we were leading. We were lucky in that when we received the “stop work” order, when there was a disruption and later on termination of this program, one of the donors – the Swedes, i.e. the Swedish International Developmental Cooperation Agency – were able to transfer to us a small funding directly, which would allow us to wrap up our activity in a responsible manner and address to the extent possible the needs of our stakeholders, which were SMEs in Lebanon and MENA, plus services providers and subcontractors. This allowed us to safeguard 4.5 years of activities under the WE4F program. So today we are in the final stages of discussion to launch a 2.0 version of this program directly with the donor partners.

In terms of funding, how would the 2.0 version of this program compare to the first edition? Would it be equal in size, larger, or smaller?

The 2.0 version has an additional component that tackles the risk of experiencing a shortage in funding as we all need to be aware that at a certain point donor funding may not last. Thus the 2.0 version in total program size will be 50 percent in terms of grants to start with on top of a buy-in component. When Syria opens up – and we are mapping the Syrian ecosystem today in an exercise that will be finished by end of this month – we will have room to conduct those additional activities as part of our mandate, with funding on top of the existing mandate. But the main catch of the WE4F 2.0 program is that it is setting the ground for a regional fund that will have the mandated facilities that I mentioned in the beginning of this interview. This money is supposed to indirectly de-risk this fund in anticipation of having an anchor investor join.

This will be a complete and sustainable exit from a donor funded program. If we get WE4F 2.0, we will be able to operate over the next three years by continuing to do what we have done while simultaneously preparing the launch of the regional impact fund that, if profitable, hopefully will sustain our regional activities over a long period of time.

So the regional fund would be larger than the original WE4F funding allocation?

Absolutely, significantly larger.

Looking at the regional dimension of development, much potential might be directed towards our esteemed neighbor country that is nether nominally nor de facto at war with us, which is Syria. Recent large partnership and investment announcements for Syria involved large port developments with CMA CGM and even larger power station Build-Operate-Transfer agreements with a Qatari-led consortium. What will Berytech’s strategy be to assert your early mover advantage and competitive edge as an innovation hub that has a history and track record of almost 25 years?  How will you compete if external actors or Gulf-based entrepreneurship actors get active in Syria?    

Development in Syria and the size of it is a delicate issue. We also have to be realistic about the size and capacity of Berytech. We certainly position ourselves as a potential major player in the development of the ecosystem of entrepreneurship and innovation in Syria. We are today mapping the ecosystem in Syria, for which we have received funding from some of the donors…based on some geographies that were pre-selected as safer regions where an ecosystem can be developed. I do not think that anyone can predict how fast things will happen in this development. There are many uncertainties in Syria. It is a “wild card”. But Berytech certainly will have a role to play in the ecosystem there. We do not know how things will play out with everything around us being reshuffled but we are hopeful and see a new phase for Lebanon, Syria, and the whole region.

What are the next steps from this hopeful but uncertain current situation? You have referred to the need for functional and advanced infrastructure in order to keep startups in Lebanon. My impression from the first companies who set up at this Mar Roukoz facility in the 2000s was that they were attracted to this location because the new locale of Berytech was one of the few places in Beirut where you could convene an online meeting with an international correspondent. But what is your edge today?

We still have this resilience and track record. For the past four years, despite of all the adverse events in Lebanon and the crisis, this facility specifically did not have a shortage in electricity for a single minute. Even during the last war, when there was a risk of seeing the telecom cables hit so that we would be disconnected from the whole world, we had satellite internet connection installed in less than 48 hours as backup. This retained many of the current tenants that we have, because of this location. What we offered in 2002 as a luxury and as advanced service, what we offered over the last 5 years, is resilience and business, especially given that many of our tenants cater to markets outside Lebanon.

It seems that the mindset of a full-service provider against all odds has served you well. Do you have a contingency plan for any eventuality, from a regional military conflict to a global trade war?

You can say in a nutshell that we are very agile in managing and mitigating risks to the extent possible. One of the interesting aspects when talking about resilience of Berytech and Lebanon is this example for me: when the war started last year, we saw that many of the donors that we were working with started shifting their support from private sector and SMEs in the agri-food sector towards humanitarian aid and towards filling food boxes. For over four years these donors had invested into food security in this particular sector [of agri-food]. So when a shock and adverse event happened, we said that the local sector could somehow cater in terms of food production.

As the war started, our team was stuck here, as many of our colleagues lost access to their homes, were displaced. Some of them were working remotely, others passing by the office, and you can see we had a direct view of everything [that happened in the war on the suburbs]. At the same time, it was the busiest period of the year including in the WE4F program’s four-and-a-half year run.

On top of this pressure, we were finding that everyone had started with filling food boxes, so we made an appeal to donors requesting to support the companies that are working in Lebanon. Some donors said they could not accommodate the request because they needed to act under a top-down decision and did not have time. Some donors, however, such the WE4F Program donors, allocated a funding to us for selection of 15 food processors working in the safer part of Lebanon that could ramp-up production in a very fast way, while also meeting requirements such as using less water and relying on sustainable energy solutions, if they can get a small grant.

This is what we did. We were able to close this call in record time, less than six weeks, selecting the top 15 companies from hundreds of applications, and provided them with cash grants of up to 25,000 dollars to adjust their working capital needs and ramp up food production. This is the intra-entrepreneurial staff of Berytech, the talent, the dedication that enabled us to address an issue in a timely manner an issue that happened in the country. Nobody had to do it but everyone volunteered. We worked overnight and on weekends to wrap it up.

So just to assess the dimension of this support, we are talking about 15 companies receiving up to 25,000 each, so much less than a million dollars.

Less than one million but this was calculated on basis of working capital needs for two to three months, which was affected by supply chain disruption and cash shortfall. During the war, cash is king. The money coming as working capital allowed them to increase their production very fast. This was large in terms of impact and it was also done to raise awareness about the importance of supporting producers in times of crisis, and not just buy staple food and put it in boxes and distribute it. It is the idea of sustainable investment.

For the coming years until 2030 in this very volatile region, do you have set KPIs on annual growth of your funds, or of your programs, or the tech startup nourishment activities?

Every program and every fund has its own set of KPIs, and their own monitoring and evaluation framework. On an aggregated basis, the Berytech annual report captures indicators such as the number of entrepreneurs served, the number of SMEs, and the number of technical assistance provided, the investment raised, numbers of jobs created directly and indirectly, along with segregation by gender and age group. To give you a small example that we are doing well, we have supported more than 6,000 entrepreneurs over the past five years, more than 1,000 startups, and more than 1,300 m-SMEs in Lebanon alone. We have conducted more than 93 million dollars worth of programs and raised investments of more than 38 million. Although the whole landscape of donor funding is changing, we are not at a crossroad today. [This is because] we are looking at things strategically from the question of how we can activate our revenue generating activities while keeping a certain number of programs running for another three or four years, until [the economy] picks up again.

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