This interview was held by Burak Buyukdemir and the article written by Milambo Kabeleka, the contributor author at Startup Turkey. This is part of a series of interviews with top venture funds in Europe by Startup Turkey.
An Interview with Firas Ezzeddine
Firas Ezzeddine, a former consultant at a strategy consulting firm is a major contributor to Lebanon’s growing Tech hub, as Cedar Mundi’s Investment Manager. With a background in working with startups as AltCity’s Startup Activities Coordinator, He comes with a wealth of knowledge to the Investment Fund. Our chat with him gave us a preview into the Lebanon Venture Capitalist firm Cedar Mundi and how it has been a pivotal player in bringing more tech companies to the region.
Cedar Mundi is a Beirut based Venture Capitalist fund founded in 2016, it aims to be the leading VC contributing to building Lebanon as a tech hub for early and mid-stage startups engaged in the Middle East. It focuses mainly on series A growth investments, in and around the region of Beirut. Their fund size is currently at 44.5 million dollars. Their average ticket size ranges from 1 to 3 million dollars. The sweet spot being 1.5 million, to allow some room to follow-on the initial investment.
In terms of investment, Cedar Mundi has no specific region they like to invest in. They like to invest in growing companies that are willing to set up shop in Lebanon and offer their products/ services to the GCC region (both R&D and Commercial) through a regional HQ in Beirut. So if any foreign company wishes to establish a commercial presence in the region through a strategic investor, they will be asked to set up a local regional entity in Beirut to service a local area.
The highest value of the Cedar Mundi fund is not just their investment, but also their network. 25% of their fund comes from a Kuwait-based Asset Manager called IFA Kuwait; a 6+ Billion Dollar consortium with an Investment portfolio spanning four verticals: Hospitality Management, Financial Tech, Food & Beverage, and ICT.
This network enables Cedar Mundi to connect with a lot of big companies in the IFA network. They leverage that network to add value to their portfolio companies, where they don’t just inject capital and wait for results, but try to integrate the startups within the IFA’s network of companies. The aim is to get them contracts within the group so that there is value creation on the revenue side. A member of Cedar Mundi is assigned to actually attend the meetings with them and ensure a smooth sign on.
Startups can apply to Cedar Mundi directly through the website or through referrals. A pitch pre-assessment is conducted by Cedar Mundi to rule out the investment opportunities that don’t align with its investment mandate. Everyone that applies is given a chance to pitch; they try to be as reachable and as transparent as possible.
When selecting startups, they rarely consider companies at seed stage; instead, they look at companies that have a product with a good market fit, and which have proven their business model in the country they originally operate in. Their investment comes in to help the companies expand to the Gulf Cooperation Council (GCC) through a regional HQ in Beirut.
Cedar Mundi has a standard screening process for the Startups they invest in. It is worth noting some of the red flags that stand out for Firas during interviews, such as; unpreparedness by the Startup Founders, which is always too obvious through the lack of clear delivery of the pitch and incapability to answer the standard interview questions. Co-founders that do not complement each other also raise concern during the screening process. The other negative attributes noticed include; a lack of maturity, founders that show aggression during interviews when asked questions and finally, founders with unrealistic evaluations, which is a very common trait with series A companies.
“It all depends on the product” Firas believes. For certain products, it works better to release a simple version of the product (MVP) and get some feedback from the target market, while sometimes you want to make sure you have the perfect product before launching, which often takes quite some time.
As far as rejected startups that grew into big companies go, we have quite a few. There is one company that we rejected, that has grown into a successful company over the years.
As a wrap up to our interview, Firas, shared with us his advice for Startup Founders intending on applying for funding. The first would be to do your thorough research before approaching VCs. In the event that you are called to pitch, have another key member of the team with you in the room, both support and to show a team spirit. As you get interviewed by different members within a VC, find the person who seems the most convinced/ intrigued by your pitch.Identify your champion in the room, even if that person is a junior; these are the people that do most of the assessment work and can advocate to have your startup pass to the due diligence process.