“Applying Global Models for Catalyzing Early Stage Innovation Financing in the Middle East”

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• Welcome Booklet (pdf)

Context and Introduction

Small to Medium Scale Enterprises (SMEs) are critical for creating jobs and promoting productive and diverse economies. According to a recent survey of nearly 50,000 firms in 104 countries, SMEs provide as much as two-thirds of all employment, with small firms contributing more to employment in low income countries than high income countries. However, not all SMEs are created equal. Evidence on the firm-level determinant of job creation shows that it is younger firms and more productive firms that have the greatest impact on employment and productivity.* Access to finance, however, remains a critical barrier for many SMEs, particularly young firms.

It is calculated that between 55 to 68 percent of formal SMEs in emerging markets are either unserved or underserved by financial institutions. Taken together, these findings suggest the importance of start-ups and fast growing young firms to economic development outcomes as well as the importance of removing access to finance barriers.

The “How-to” of Financing Technology Acquisition, Innovation and Entrepreneurship community of practitioners was created by the World Bank Group (WBG) in 2011 to help governments, international development organizations and experts fill knowledge-gaps, share best practices, network, and find solutions to support their efforts to address challenges in these areas. The ‘How-To FITE” activities consist of a series of cross-regional Innovation Forums, and Study Tours and involves WBG counterparts in the Middle East and North Africa (MENA) and across emerging markets, as well as development partners and experts/practitioners working in these regions to collaboratively work policy, program and financing solutions leveraging knowledge from the latest research and working in thematic based groups on target areas specific to country needs.

The objective of this year’s conference is to improve the ability of young firms to access early stage equity financing and advisory services in order to promote employment, innovation, and economic development. The event will be co-hosted by the World Bank, the Lebanese Ministry of Economy and Trade, and Kafalat, Lebanon’s national credit guarantee agency.

The conference will focus on the range of financing models needed by young firms including support proof of concept, early stage seed funding for start-ups, and venture capital financing to reach growth stage. The conference will also present emerging innovative financial tools including peer-to-peer lending, impact investing, and digital finance to support business expansion. Market issues will be discussed including pipeline development, due diligence, portfolio risk management, and exit options, via both retail and apex level engagements. This event will bring together financial and equity investment institutions, business support service providers, and policymakers at both national and local levels.

*A recent report released by the US Small Business Administration revealed that over 4-year periods from 1994 to 2008, US gazelles created 10.7 million jobs during each 4-year period, while all other businesses shed 4.1 million jobs.

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Event Objectives

• Share international best practice regarding early stage innovative financing to support employment, productivity, and broader economic development objectives of client governments
• Improve the ability of young firms to access early stage equity financing and advisory services in the Middle East North Africa region and other emerging markets
• Provide a forum for national policymakers to share strategies for promoting entrepreneurship, innovation, and economic competitiveness
• Develop common best practice principles and priorities for early stage innovation financing and young firm growth in the MENA region
• Note: Target number of participants = 100 / mix of public authorities, private investors, entrepreneurs, and business development support services