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  • 24-07-22

    Lebanese venture capital companies deal with doubtful future as economy falls

    (MENAFN) With their money held in banks, the sudden depreciation of the Lebanese lira, the de-facto delay of Circular 331 and the increasing inflation, financiers as well as the Lebanese central bank Banque Du Liban have touched a deadlock.

    Walid Hanna, founder and chief executive of Middle East Venture Partners, stated to Arab News that “The first five years of Circular 331 initiative were great to the ecosystem, venture capitals included.”

    The circular issued by BDL at end of 2013 inserted almost USD400 million into the entrepreneurial area to construct a Lebanese knowledge economy.

    Hanna stated that “The initiative seamlessly empowered the ecosystem until the financial crisis occurred in 2019. Problems happened when venture capitals powered by the circular received capital calls from their banks and the BDL, either in Lebanese liras or US dollars.”

    A capital call is a lawful right by which a fund director requests the fund financiers or shareholders to recompense their pro-rata share of their fund commitments.

    Mr. Hanna also mentioned that “The devaluation of the lira, which has lost more than 90 percent of its value, made the situation complicated and problematic.”

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