About/Investment Strategy

Early stage entrepreneurs both, as part of the work covered by the CDGs and others seeking financing at the early stage will be, encouraged to meet with institutional investors  if they have not already done so, to ensure that the evidence they have assembled or their business plan will address the investors’ information needs and truly shows that the entrepreneur is investment ready.

To qualify for the equity investment financing, the entrepreneur must have a commitment from an investor to invest in the firm. Having acquired a commitment the partner investor and the entrepreneur can then approach iSME to seek a co-investment participation that will share the initial investor’s risk and add to the capital available to the new business.

The iSME fund will only make equity investments in companies alongside an approved investor who is also providing new equity. The iSME facility can provide second and third round of co-equity financing with an approved Investor Partner to the same venture if judged to be viable and potentially profitable after review and approval of the IC on the requested additional financing deal.

Additional financing for the company can be made alongside the injection of new equity and this may take the form of loans and guarantees from the approved investor or other sources. The full financial package will form a part of the shareholders agreement between the company and the equity providers.

Seed Capital

Seed investments are made at the time of incorporating a new company and will be in the range of $25,000 to $200,000.

Venture Capital

Venture Capital (VC) is needed at the stage when a new enterprise has been established and the preparation work for product or service launch has already been completed. VC will be in the range of $200,000 to $500,000.

Growth Capital

Growth capital is needed to assist a company that has established its position in the market and has high growth potential which can be realized through the injection of new capital. Growth capital will be in the range of $500,000 to $1,500,000.

Application Procedure

Applications will be called for and considered on a continuous basis from approved investment partners and/or entrepreneurs. Should an entrepreneur contact the project directly they would be encouraged to meet with one or more of the approved investors to get a commitment in principle for co-investment.

Should the entrepreneur be successful in getting the commitment in principle from an approved project investor, they can then formally approach the iSME fund with the co-investor to be considered for an equity investment by the scheme.

Each application will be examined first for eligibility and completeness. Non-eligible applicants should be informed within two weeks that they do not qualify. Eligible applicants with incomplete applications will also be informed of the missing information and asked to fill in the gaps.

If appropriate they should be encouraged to apply for the grant component to assist them in completing their application.

Eligible and complete applicants will be invited to meet a Kafalat analyst and be informed of the due diligence steps required for each application.

They will be informed of the likely timing of the work and when a decision can be expected.

Eligibility for Entreprises

Entrepreneurs and firms that have an offer from an approved investor to invest in their business, are eligible to apply to the scheme.

Additional criteria applied are that the business:

  • Is or is intending to carry out business that is not on the excluded list (Non-Eligible Financing)
  • Has a Legal form; officially registered in Lebanon
  • May be a subsidiary of a larger firm
  • Operates or intends to commence operations in Lebanon in order to generate or expand enterprise production and employment in Lebanon
  • Does not have participation or ownership by any public entity

Non-Elegible Financing

The iSME Fund cannot finance any proposals that fall under Category A or B of the World Bank Safeguard policies OP/BP 4.01.

More specifically, business proposals will be excluded from the scheme if they fall under the following categories:

  • Arms, weapons and munition production or dealing
  • Prohibited drugs
  • Real estate purchases and any physical intervention including construction and rehabilitation
  • Activities that limit or deprive of individual or community’s access to land, assets or available resources
  • Activities that cause displacement of individual or community, involuntary taking of land resulting in relocation or loss of shelter, loss of assets or access to assets, loss of income sources or means of livelihood, whether or not the affected person must move to another location, or involving the involuntary restriction of access to legally designated parks and protected areas
  • Activities in a protected area or a natural habitat
  • Activities that have or may have impacts on the health and quality of forests, affect the rights and welfare of people and their level of dependence upon or interaction with forests, or that aim to bring about changes in the management, protection, or utilization of natural forests or plantations, whether they are publicly, privately, or communally owned.
  • Activities that may adversely affect or benefit an indigenous people, or that impinge on the lands owned, used or claimed under adjudication, by indigenous peoples
  • Activities that involves, or results in diversion or use of surface waters
  • Rehabilitation of latrines, septic or sewage systems
  • Activities that affect dams, weirs, reservoirs or water points
  • Activities that affect physical cultural resources,  which are defined as movable or immovable objects, sites, structures, groups of structures, and natural features and landscapes that have archaeological, paleontological, historical, architectural, religious, aesthetic, or other cultural significance, that may be located in urban or rural settings, and may be above or below ground, or under water, and the cultural interest of which may be at the local, provincial or national level, or within the international community.
  • Production or trade in any product or activity deemed illegal under host country laws or regulations or international conventions and agreements, or subject to international bans, such as pharmaceuticals, pesticides/herbicides, ozone depleting substances, PCB, wildlife or products regulated under CITES
  • Production or trade in alcoholic beverages (excluding beer and wine)
  • Production or trade in tobacco
  • Gambling, casinos and equivalent enterprises
  • Production or trade in radioactive materials
  • Production or trade in wood or other forestry products other than from sustainably managed forests.
  • Production or trade in unbonded asbestos fibers and
  • Drift net fishing in the marine environment using nets in excess of 2.5 km. in length.
  • Activities that involve hydroelectric, irrigation, flood control, navigation, drainage, water and sewerage, industrial, and similar activities, including detailed design and engineering studies of such activities, that involve the use or potential pollution of international waterways, defined as: Any river, canal, lake, or similar body of water that forms a boundary between, or any river or body of surface water that flows through, two or more states, any tributary or other body of surface water that is a component of any waterway described above   and any bay, gulf, strait, or channel bounded by two or more states or, if within one state, recognized as a necessary channel of communication between the open sea and other states--and any river flowing into such waters.
  • Activities in disputed areas.
  • Activities involving pest management.
  • Production or activities involving harmful or exploitative forms of forced labor (all work or service, not voluntarily performed, that is extracted from an individual under threat of force or penalty)/harmful child labor (the employment of children that is economically exploitive, or is likely to be hazardous to, or to interfere with, the child's education, or to be harmful to the child's health, or physical, mental, spiritual, moral, or social development).
  • Production, trade, storage, or transport of significant volumes of hazardous chemicals, or commercial scale usage of hazardous chemicals. Hazardous chemicals include gasoline, kerosene, and other petroleum products.

 

iSME Investor Partners

The equity investment scheme relies on the efforts of partner investors both to identify and promote new business projects and to provide active mentoring and professional inputs that characterize truly effective equity investment participation making their investments successful.

Hence there will be a register of co-investors that are carefully screened by the iSME management team before they are approved to work with the iSMEequity scheme.

Berytech Fund II

IM Capital

Saned Equity Partners

B&Y Venture Partners

MEVP

Leap Ventures

Phoenician Fund

Azur Fund

Seeders

Review and Award Process

The iSME management team will conduct a review of each proposal to ensure it:

  • Meets the eligibility criteria
  • Does not trigger any of the Safeguards categories beyond what has been assigned by the World Bank for this project
  • Provides a sound business case with evidence supporting the analysis of risks and opportunities involved in making the business a success
  • The entrepreneur’s credentials and background are thoroughly reviewed and checked

Each proposal will then be submitted to the Investment Committee (IC) with a Summary Report prepared by the iSME team.