Investment expert and venture capital fund manager in the UK, Mundhir Al-Shahoumi, discusses Libya’s Startup Support Fund – A Positive First Step and Challenges to Success.
At the beginning of this year, the Libyan government announced the establishment of a fund to support startups as part of the “1,000 Entrepreneurs for 1,000 Projects” initiative. This step is significant in fostering entrepreneurship and innovation in the country. As a further indication of the government’s commitment to this sector, the Prime Minister issued Decisions No. (121) and (122) of 2025, restructuring the Startup Support Fund under a new name: “The Fund for Supporting and Guaranteeing Startup Financing for Creators and Innovators.” These decisions grant the fund an independent legal personality and financial autonomy while maintaining its direct affiliation with the Prime Minister’s office.
This article provides an overview of Libya’s initial steps in supporting entrepreneurship and innovation through the creation of a dedicated startup fund. It also highlights the challenges related to ensuring effective governance and efficient resource allocation. Ironically, as I write these words, I am following the British Chancellor’s Spring Budget Statement, which includes a new package to support the innovation economy and startups in the UK—just one day after Libya’s own announcement. This underscores that fostering innovation is no longer confined to national boundaries but has become a global issue.
The article examines the importance of strong governance to prevent misallocation of funds and bureaucratic interference in investment decisions. It explores the startup lifecycle from the initial idea stage to the initial public offering (IPO). Additionally, it differentiates between market-driven venture capital investments and government grants, which may sometimes lead to unhealthy dependency. The article emphasizes the need to diversify financing tools, drawing on the experiences of entities like Saudi Venture Capital Company and the British Business Bank, while limiting government stakes in venture capital funds to 25% to avoid bureaucratic pressures.
Furthermore, the article stresses the importance of enforcing existing laws rather than enacting new legislation, simplifying administrative procedures, and modernizing education systems to produce qualified human capital. It also underscores the need to enhance digital infrastructure, including network improvements, electronic payment systems, and digital government services. Additionally, it advocates for ensuring a fair competitive environment, protecting intellectual property, eliminating corruption and monopolies, and embracing failure as a necessary step toward success.
Finally, the article calls for localizing expertise by building domestic venture capital capabilities and attracting international investment funds, while drawing lessons from countries like Estonia, Rwanda, Colombia, and Ukraine, which have successfully cultivated mature entrepreneurial ecosystems despite their diverse contexts.
In conclusion, while the establishment of the Libyan Startup Support Fund marks an encouraging beginning, it must be accompanied by a comprehensive national strategy that includes legislative reform, human capital development, infrastructure modernization, and high-level governance in managing initiatives—especially in light of the growing global awareness of startups and innovation-driven economies as key engines for growth and employment.
Strong Governance to Avoid the Agency Problem and Misallocation
The first priority for those managing the fund is to ensure a strong and transparent governance framework for its operations. Government funding is inherently susceptible to what is known as the “agency problem”—the risk that the incentives of fund managers and officials may diverge from the best interests of stakeholders (entrepreneurs and society). Without effective governance, the fund may experience resource misallocation, leading to the financing of unviable projects or the selection of startups based on loyalty and connections rather than merit and competence. Many experiences have shown that the absence of controls and transparency leads to wasted public funds without achieving the intended developmental impact.
To avoid this dilemma, the fund’s management structure must be designed to maintain relative independence and specialized expertise. It may be beneficial to involve private sector experts and investors in evaluation and decision-making committees to ensure that projects are assessed objectively based on market standards. Additionally, clear accountability and performance measurement mechanisms should be established—such as tracking the success rates of funded companies and their employment and growth levels—while also building an internal and external oversight system to prevent conflicts of interest. Transparency is key to trust: announcing selection criteria, providing information on funded projects and the allocated amounts, and explaining the reasons behind selections all enhance credibility and reassure entrepreneurs that opportunities are equally available to all based on quality and innovation.
Good governance is not a bureaucratic luxury but a fundamental prerequisite for the fund’s success. It determines whether financial support will be directed to the right recipients—those with viable, scalable ideas—or if it will be squandered without impact.
From Initial Idea to IPO: Mapping the Innovation and Startup Ecosystem
Understanding the dynamics of innovation and entrepreneurship in Libya—like in any economy aspiring to modernization—requires comprehending the journey a startup takes from being a mere idea in the pre-seed stage to reaching an initial public offering (IPO). Throughout this journey, various entities and services interact to form what is known as the startup ecosystem. Below is an analytical overview of the key funding stages, the roles of different players, and the supportive services that enhance success opportunities.
Regarding funding stages, a startup typically begins in an initial phase where the feasibility of the idea is tested, often funded through personal savings (bootstrapping) or support from family and friends, sometimes benefiting from small grants. This phase, known as “Pre-Seed,” is dominated by fundamental questions about the viability and execution of the idea. Next comes the “Seed” stage, where the project transitions from a theoretical concept to a Minimum Viable Product (MVP). At this stage, angel investors or small venture capital funds enter to provide funding and mentorship.
Once the startup begins generating revenue and showing growth potential, it moves into the “Early Stage – Series A,” which requires broader support from venture capital funds and co-investment agreements with government entities or private companies. In the “Growth Stage – Series B, C,…,” the startup has demonstrated the viability of its business model and seeks regional or global expansion, necessitating larger funding from institutional investors and possibly private equity firms that typically enter at later stages. The final exit occurs through an IPO or acquisition, allowing early investors to realize returns while enabling the company to mature further, either in the stock market or under the umbrella of a larger corporation.
These stages require a complex network of stakeholders ensuring the availability of necessary funding and expertise. Entrepreneurs lead the way, serving as the visionaries and strategic drivers of the project. Angel investors, typically individuals with industry or business experience, provide small-scale funding in early stages along with hands-on guidance. Venture capital funds, on the other hand, pool money from limited partners—such as pension funds or high-net-worth individuals—and entrust general partners to invest in promising startups in exchange for equity stakes. Venture capital plays a crucial role in financing growth and development while adding value through strategic guidance and extensive market connections.
In later stages, private equity firms play a parallel role, focusing on larger companies with stable business models, injecting significant capital to accelerate expansion or restructure ownership before an IPO or acquisition.
Beyond investors, the startup ecosystem is enriched by various supporting entities. Business incubators nurture early-stage ideas by providing co-working spaces and administrative guidance, while accelerators offer intensive training programs and limited funding over short periods, usually culminating in investor pitch events. Large corporations may engage in strategic or investment partnerships with startups, sometimes acquiring them as part of their expansion strategies.
Government entities play a crucial role through ministries and regulatory bodies that issue business-friendly laws and tax incentives, as well as through public funding programs that offer grants or subsidized loans. Additionally, academic and research institutions contribute by funding R&D and promoting scientific innovation, while professional service firms (legal, accounting, and consulting) ensure startups comply with financial and legal regulations, setting them on a path of sound governance from the outset.
Complementary support services are essential to streamline startup operations. Specialized legal and accounting services reduce administrative burdens for founders and enhance investor confidence when evaluating opportunities. Training programs and business consulting help teams develop leadership, marketing, and resource management skills. Furthermore, robust technological infrastructure is a critical enabler of tech-driven and innovative ventures.
Networking events and conferences also play a vital role in connecting founders with industry experts and investors. When combined with government incentives, capacity-building programs, and startup bootcamps, these elements collectively create a thriving ecosystem that supports companies at every stage—from ideation to public listing.
In conclusion, fostering an innovation ecosystem is not merely about providing investment capital; it requires a coordinated effort across the entire value chain—from passionate entrepreneurs to angel investors, venture capital funds, private equity firms, and supportive services such as regulatory frameworks and academic capacity building. When these components function in harmony, startups are better positioned to succeed locally, expand regionally, and eventually integrate into global financial markets. The resulting success translates into job creation, increased competitiveness, and broader economic growth.
Venture Capital vs. Government Grants: Which One Builds a Healthier Startup Ecosystem?
The importance of venture capital in fostering a healthy startup ecosystem becomes evident when compared to traditional support methods like government grants. While some may consider any government funding for startups as a form of investment, market-driven investment fundamentally differs from injecting funds as direct subsidies or grants.
What is Venture Capital?
Venture capital is a high-risk investment where a venture fund becomes a partner in a startup, sharing both risks and rewards. This model provides strong incentives for both investors and entrepreneurs to achieve success. A venture capitalist focuses on funding promising projects that show growth potential and future profitability, offering not only capital but also mentorship, expertise, and networks that help the startup scale rapidly.
For entrepreneurs, venture capital funding comes with expectations of tangible results and high growth rates, driving them to continuously improve efficiency and innovation to retain investment.
On the other hand, while direct government grants may be useful for funding very early-stage projects or encouraging new ideas, relying on them as a primary funding source can create unhealthy dependency among startups. Free or nearly free funding can weaken the motivation for sustainable growth and cost control. Additionally, government entities—despite their good intentions—often lack the specialized investment expertise of venture capital funds, particularly in assessing market risks and success opportunities.
Striking a Balance in Libya’s Startup Support Fund
Libya’s startup support fund must strike a balance between offering grants and prizes to encourage entrepreneurship while also adopting a venture investment approach for scalable projects. Funding based on commercial standards—such as feasibility studies, solid business plans, and market opportunities—fosters a culture of responsibility and merit in the startup ecosystem.
This way, government funding becomes a catalyst for attracting more private investment rather than replacing it, allowing startups to grow at the required pace while aligning government and private sector efforts to build a more sustainable innovation ecosystem.
Diversifying Funding Tools to Ensure Sustainability
To ensure a continuous flow of capital in the startup ecosystem, efforts should not be limited to a single funding method. Many governments now support venture capital funds by acting as the “lead investor” rather than directly investing in startups.
When the government commits initial capital, it builds investor confidence and encourages others to participate, while avoiding the administrative burden of managing investments that require specialized expertise.
For example, institutions like the Saudi Venture Investment Company and the British Business Bank (through its Venture Capital Catalyst Funds) use incentive mechanisms to attract co-investors—whether individuals or funds—into investment partnerships. These mechanisms allow fund managers to reallocate up to 50% of government returns to private investors, enabling them to achieve higher profitability, which in turn attracts more private capital. In this approach, the government accepts lower returns on its investment in exchange for increasing private investor profits, ultimately expanding the private sector’s role in funding startups.
From an institutional perspective, it is recommended that government contributions not exceed 25% of a venture fund’s total size. This is not about avoiding accountability but rather preventing venture funds from becoming entangled in bureaucratic complexities due to excessive government oversight. Maintaining strategic supervision while leaving operational management to general partners ensures that funds operate with international standards and best practices, preventing lengthy bureaucratic procedures that could hinder investment decisions.
Encouraging Emerging Fund Managers and Angel Investment
These programs are not limited to experienced fund managers; “Venture Fund Accelerator Programs” have emerged to equip new fund managers with the necessary support and guidance to launch new funds. This expands the availability of local financing for startups and strengthens the venture investment ecosystem in the long run.
At the same time, various entities are promoting angel investing as an integral part of financial diversification strategies. For instance, the Saudi Venture Investment Company launched a “Co-Investment Program with Angel Investors” to establish angel investment as a key component of the local market. This program serves as an entry point before large venture funds emerge, creating a growing base of early-stage investments that can later secure larger venture capital funding.
Complementary Funding Tools for a Holistic Approach
Other financial instruments—such as government grants, soft loans, tax incentives, incubator and accelerator programs—play complementary roles in addressing startups’ needs at different growth stages. Combining these mechanisms with private sector empowerment in venture capital funds is an effective strategy to avoid reliance on a single funding source while ensuring the continuity of the Startup Support Fund and its related activities.
Ultimately, this creates a flexible and multi-channel funding environment, enabling startups to access appropriate financial and institutional support at every stage of their growth journey.
Updating Legislative Frameworks and Facilitating Company Formation
Undoubtedly, the legislative and procedural environment in Libya is in urgent need of real activation of existing legal provisions, particularly Law No. (23) of 2010, to align with aspirations for building a digital and entrepreneurial economy. International indicators clearly highlight the magnitude of the challenge: Libya ranked at the bottom of the global ease of doing business index, according to the 2020 World Bank report, reflecting the presence of complex bureaucratic barriers that hinder entrepreneurs even before they start. While issuing new laws may be an option at certain times, the real focus should be on activating and applying the existing legal provisions and simplifying them as much as possible to achieve the desired objectives.
In this context, the services provided by Law (23) of 2010 should be activated, with specific revisions made to remove ambiguities or non-application in some of its provisions. These frameworks should also be aligned with the requirements of the digital age, so that starting and registering businesses takes days (not months) via an electronic system. For example, Estonia—leading in digital bureaucracy—demonstrated that remote company formation within minutes is possible if there is the organizational will. Similarly, procedures for closing companies or bankruptcy should be simplified, offering unsuccessful entrepreneurs a quick opportunity to return with new ideas without bearing a long-lasting stigma that could prevent them from re-entering the market.
While a “startup-specific law” is still an approach adopted by many countries, the Libyan reality calls for activating what is already available, issuing executive regulations, and complementary decisions for its implementation, so that entrepreneurs gain the incentives and privileges they need. This includes simplifying registration and licensing requirements (e.g., reducing the minimum capital requirements) and protecting investors’ rights. At the same time, a “one-stop-shop” government window could be established to receive all requests and permits, coordinating with various concerned bodies—without the need to issue an entirely new law, as long as Law (23) allows such arrangements through appropriate ministerial decisions.
On the other hand, commercial laws and regulatory frameworks still require regular review to remove restrictions that no longer align with the characteristics of the digital economy (e.g., the requirement for a fixed physical office or outdated provisions from the pre-internet era). The same applies to bankruptcy and labor laws; they should be updated to keep pace with flexible employment methods and provide innovators with a reasonable degree of mobility. At the same time, technological innovation requires enhanced intellectual property protection and easier patent registration so that idea creators feel secure when presenting their solutions in the market.
Furthermore, recent developments in banking sector laws highlight the need to clarify the roles and responsibilities of the Central Bank of Libya and the Capital Market Authority, particularly regarding the regulation of investment fund creation and facilitating their establishment processes. The 2012 Banking Law update introduced some ambiguity regarding powers, prompting the formation of a joint committee between the Central Bank and the Capital Market Authority. However, this committee has not convened in years, leading to delays and confusion in the approval mechanisms for investment funds. Therefore, it is essential to reactivate this institutional path and activate the joint committee to reduce bureaucratic friction that impedes the establishment of new funds or complicates their procedures. Accelerating licensing mechanisms and approvals—according to existing legal paths—is a crucial step in improving the investment climate.
In general, creating a legal and procedural environment that does not burden entrepreneurs is a necessary condition for the success of the “Startup Support Fund.” Regardless of the availability of liquidity and funds, if procedures remain tangled or powers are inefficiently distributed among various bodies, entrepreneurs will lose their motivation to establish their businesses locally. Therefore, it is crucial to activate the provisions in the existing laws—not just call for new laws—through issuing clear executive regulations, deeper coordination among regulatory bodies, and enhancing transparency and speed in the establishment and licensing process. Only through this comprehensive approach can a legal environment be built that drives the digital economy and enables Libya to meet the demands of entrepreneurship in the current century.
Linking Universities to the Entrepreneurial System and Developing Human Capital
No startup ecosystem can thrive without a qualified and innovation-driven human capital. Here, the role of universities and educational institutions stands out as the primary source of entrepreneurial ideas and technical and managerial skills. This was clearly highlighted when the Prime Minister referred to the presence of representatives from 26 universities and business incubators during the launch of one of the entrepreneurship initiatives, which is an encouraging step that should be built upon.
In reality, universities can become natural incubators for an entrepreneurial culture if effectively linked to the broader economic system. This can be achieved by integrating specialized entrepreneurship curricula—even at the secondary education level—aimed at teaching students the fundamentals of project creation, business management, and technological innovation as part of their courses. Additionally, creating incubators and innovation centers within universities is critically important, as it allows students and graduates with ambitious ideas to access guidance and initial financial or funding support (whether through research grants or funding competitions), as well as coworking spaces overseen by professors and professionals.
Another area worth focusing on is supporting the culture of research and development, alongside linking academic research to practical applications in the market. Professors and researchers can be incentivized to convert their research findings into products or startups through clear intellectual property policies between universities and innovators, in addition to funding applied research projects in partnership with the industrial sector. In this same framework, the active involvement of the private sector and government bodies in training and preparing youth for the labor market is crucial, through providing internship opportunities in technical and business fields and offering mentoring programs. The contribution of successful entrepreneurs and professionals from the Libyan diaspora in providing training courses and workshops can enhance the skills of local talent and better prepare them to handle real market challenges.
In addition to the role of universities, investment should also be made in developing the skills of the broader youth population. Technical and digital skills—such as programming, digital marketing, product design, and project management—have become central to the modern economy, though they may not be sufficiently widespread in the current workforce. Therefore, launching short-term training programs and intensive boot camps that link their outcomes to emerging market needs will help bridge the skills gap and enable young people to capitalize on opportunities in the entrepreneurship sector.
Education and training represent the fuel that drives the innovation engine. Without trained competencies capable of seizing opportunities, no funding or financial incentives will have a long-term impact. Thus, building solid human capital is one of the key pillars in any national strategy aimed at supporting and stimulating the growth of startups.
Improving Digital Infrastructure and Tech Zones
The success of any tech project or digital platform is unimaginable in an environment lacking fast internet or electronic payment systems. Therefore, Libya must prioritize the development of digital infrastructure on par with the creation of a startup support fund. This necessarily includes improving and expanding communication networks, investing in fiber optic networks, and enhancing mobile coverage (4G and beyond), which would pave the way for the emergence of world-class digital applications and cloud computing services. Undoubtedly, ensuring the competitiveness of the telecom sector, whether in terms of prices or service quality, adds flexibility to the market and encourages entrepreneurs to innovate new tech solutions.
Along with physical infrastructure, regulatory bodies such as the Central Bank of Libya must work with relevant institutions to provide an advanced legislative environment for fintech and electronic payment systems. Establishing “Regulatory Sandboxes” is one of the effective models in this regard, as it allows startups to test innovative financial solutions without immediately going through a complex series of licenses and regulations. The experiences of Singapore, Hong Kong, and the UK have proven that such regulatory flexibility opens the door for innovation in electronic payment platforms, digital banks, and other modern financial services. In return, integrating the development of electronic payment systems and digital infrastructure requires the launch of advanced and secure national payment systems, motivating banks to provide payment gateways for startups and support the spread of e-wallets and mobile payments. No doubt, linking these reforms to the expected role of the startup support fund would provide additional momentum to the fintech sector by offering funding and guidance to companies working on building and developing these services.
In addition to this regulatory role, the government should set an example in adopting technology by digitizing its services, such as commercial registration, tax permits, and electronic payments. This approach not only saves time and effort for entrepreneurs but also creates a primary market for local tech services. International experiences – such as Estonia, which launched over 99% of its services online – have proven that implementing an effective e-government enhances efficiency and transparency, paving the way for the private sector to build specialized applications.
Moreover, the government, in collaboration with the private sector, can create “Tech Cities” or “Innovation Zones” that offer the latest digital services and logistical facilities under one roof, similar to the Innovation City in Kigali (Rwanda). Such zones – even if initially small – can provide co-working spaces, high-speed internet, prototyping labs, along with rent subsidies during the startup phase. In addition, they may offer production facilities like digital manufacturing labs, 3D printers, and electronic equipment, encouraging knowledge exchange and fostering competitive collaboration and collective innovation.
Updating the digital infrastructure in this way will not only ease the tasks of startups but also amplify the benefits of digital transformation for the entire economy. As robust internet networks, reliable electronic payment services, and digitized government services become available, the attractiveness of Libya’s business environment to investors and regional companies will increase, raising its position on the investment map of the region.
Building a Competitive and Entrepreneurial-Friendly Environment
Entrepreneurship is not satisfied with funding or infrastructure alone; it also requires a cultural and legal climate that stimulates experimentation and creativity, while protecting fair competition. When markets are open to new ideas and entrepreneurs can advance without undue obstacles, innovation becomes a fundamental growth driver. To achieve this goal, focus can be placed on several key principles.
First is the protection of intellectual property. Naturally, innovators are unlikely to take risks in developing their inventions unless they are confident that their national law protects their rights and pursues infringements quickly. Strengthening patent and trademark registration frameworks and addressing any violations decisively will enhance the confidence of idea owners that their creations are protected and valued, encouraging further development and research.
Second is cultivating a culture that accepts failure. The prevailing perception in our societies, as in many parts of the world, places commercial failure in the realm of social stigma. This view needs to change, so that failure is seen as just a step in the learning process. Many successful global entrepreneurs went through a series of failures before achieving success. The government, educational institutions, and media can play a vital role in highlighting success stories – which also discuss the failures that preceded them – alongside updating bankruptcy laws to allow smooth exits from any failing project without long-term obstacles.
Regarding markets, combating monopolies and opening space for newcomers requires the liberation of various sectors from the dominance of monopolistic companies or influential entities. Monopolies not only discourage entrepreneurs but also stifle innovation and progress. Therefore, clear government policies that prevent monopolies and allow new players to enter the market – and perhaps reconsider exclusive privileges – will encourage entrepreneurs to confidently enter these sectors.
It is also important to remember that combating corruption and promoting transparency are cornerstones of a healthy business environment. When an entrepreneur is forced to pay a bribe or faces competitors benefiting from their connections to power circles, the spirit of initiative will not last long. Therefore, it is essential to strictly implement anti-corruption laws and adopt transparent governance in public contracts and procurement processes. This ensures equal opportunities for startups and qualified companies, while streamlining procedures and reducing bureaucracy, which automatically reduces corruption risks by minimizing direct interactions that some may exploit.
Providing this competitive, fair environment and fostering a culture that allows for experimentation – including the right to fail – will unleash creativity. When a young Libyan realizes that their new idea will be treated fairly and their success achieved through hard work and innovation, and when they are confident that the legal system protects their intellectual property and gives them another chance if they stumble at first, they will be encouraged to venture into entrepreneurship. These intangible factors, including culture, values, and institutions, make the difference between an environment that nurtures ideas and opens up horizons and one that stifles them and closes the doors.
Training Local Talent in Venture Capital Investment
Despite the availability of funding and favorable legislative steps, the key question remains: who will manage this system? The success of any entrepreneurial ecosystem requires individuals who can understand the intricacies of investing in startups, assess and nurture ideas, and drive them toward greater horizons. In Libya today, where venture capital is a relatively new field, there is a pressing need to build capable local teams in fund management and the operation of incubators and accelerators.
To achieve this, official bodies and partners can launch specialized training and support programs. On one hand, training venture fund managers can be done through courses and workshops held in partnership with regional funds or international experts with extensive experience in this field. Participants can learn the basics of evaluating startups, structuring investment deals, managing portfolios, and even the exit process. Additionally, groups of Libyan professionals can be sent to receive hands-on training at successful venture capital funds abroad, gaining direct practical experience. Simultaneously, building the capacity of incubator and accelerator operators requires a deep understanding of entrepreneurs’ needs—whether in training, business model development, or finding investors—which can be supported through mentoring programs overseen by regional and international incubator networks. This could include inviting managers from well-known accelerators to spend time in Libya to train local teams or sending Libyan teams abroad to learn from external accelerator experiences.
On the other hand, it is difficult to imagine a complete venture capital model without a vibrant community of individual investors who finance the very early stages of a project. This community can be built by organizing introductory meetings and workshops that bring wealthy individuals together with entrepreneurs, introducing them to angel investing mechanisms and risk-sharing models. The more local investors understand the nature of venture investment, the broader the funding base will become for promising projects from their inception.
In this context, it is crucial to attract international venture capital funds to create funds dedicated to the Libyan market. Sovereign wealth funds or innovation funds could require that at least 20% of the capital invested by those funds be allocated to the local market. In other words, for every dollar the state invests in an international fund, $1.20 will be pumped into Libyan startups, thus enhancing the actual value of invested capital. This approach not only brings in capital but also opens doors for knowledge exchange, as interacting with international fund experts contributes to refining and developing local teams’ skills in managing investments and emerging projects.
In addition to these programs, incentives could be offered to encourage the return of skilled Libyans in the diaspora who have valuable experience in tech companies or international funds. These incentives would encourage them to contribute to building the local venture capital sector, either as fund managers for new funds or as specialized consultants. The combination of global knowledge with a deep understanding of the local context is what will create an environment conducive to the growth and sustainability of a strong venture capital industry in Libya.
This highlights that money alone does not guarantee success; rather, it is the minds capable of utilizing it to serve the interests of startups and achieve the desired economic returns. By building local capacity in venture capital investment and entrepreneurial mentorship, we ensure that funds and initiatives—such as a startup support fund—are managed at a high level of professionalism and deep understanding of the market and entrepreneurship. This will pave the way to achieving desired development and innovation goals.
Lessons from International Experiences
While each country has its own unique conditions, the experiences of some countries have presented inspiring models for building thriving entrepreneurial ecosystems, even in the face of significant challenges. Estonia, for example, emerged from the Soviet Union in the 1990s with limited resources, but it bet early on digital transformation and the creation of an e-government, becoming one of Europe’s most distinguished countries in emerging technologies relative to its population. Offering 99% of government services online paved the way for the emergence of global companies like Skype and Bolt, driving the pace of attracting international investors.
Similarly, Rwanda, an African country that suffered devastating conflicts in the 1990s, embarked on a reform journey that made it one of Africa’s best business environments. By simplifying procedures, fighting corruption, and investing in education and infrastructure, Rwanda ranked 38th globally in the 2020 Ease of Doing Business Index. Innovative projects like the use of drones for delivering medical supplies proved that development and innovation are not exclusive to wealthy countries, provided there is genuine will and sound decision-making.
In Latin America, Colombia’s experience demonstrates how inclusive economic growth and supportive government programs can unlock the potential of entrepreneurs. The city of Medellín, once known for its lack of security, has transformed in recent years into a thriving hub for innovation and technology, hosting startups and tech centers. Recent statistics show that the number of tech startups in Colombia grew by about 30% in 2023, reaching 1,720 companies, reflecting the effectiveness of governmental reforms and directions.
On the other hand, Ukraine, despite facing extreme hardships due to war and conflict, has demonstrated its ability to withstand and continue excelling in technology. Companies like Grammarly and GitLab are living examples of the strength of Ukrainian skills in software development. Ukraine’s startup ecosystem was ranked 46th globally in 2024, despite all the obstacles, showing that investment in minds and technical infrastructure can thrive even in times of crisis, as long as the global market remains open to those ideas.
These varied experiences demonstrate that nothing is impossible with a clear strategic vision and genuine political will to support the entrepreneurial sector. What they all share is a comprehensive approach to reform, starting with infrastructure and education, moving through stimulating legislation, and culminating in a culture that rewards initiative and hard work. This is precisely what Libya needs as it paves its way toward building a promising ecosystem for startups.
Towards a Comprehensive National Innovation Strategy
Ultimately, the establishment of a startup support fund is an ambitious and welcomed step towards diversifying the Libyan economy and supporting innovation. However, this step will remain limited in its impact unless it is followed by an integrated approach that addresses all components of the entrepreneurial ecosystem mentioned. The development of a comprehensive national strategy for entrepreneurship and innovation has become an essential necessity. This strategy must be led by the government with a spirit of partnership with the private sector, civil society, and universities. This plan should be based on a number of key pillars:
- Good governance and transparency in managing initiatives and funds, to ensure the efficient allocation of resources.
- A diverse financing system that combines government support with private investment based on market standards.
- Legislative reforms that make the process of founding and operating businesses easier and more encouraging.
- Investment in minds through education and specialized training to create a new generation of innovators and entrepreneurs.
- Advanced digital infrastructure that connects Libya to the digital age and opens doors to the new economy.
- A competitive environment that encourages and rewards individual initiative, while protecting the efforts of those striving.
- Strong institutional capabilities capable of managing the system effectively and continuously monitoring its progress.
There is no doubt that benefiting from lessons learned from international experiences and adapting them to the local reality will help avoid common mistakes and accelerate the learning process. Government investment in innovation is no longer a luxury, but rather a fundamental necessity to ensure the formation of a modern and diversified economy that meets the aspirations of youth, provides them with job opportunities, and challenges them creatively. However, achieving this goal requires scientific planning and sound management of the various components of the system, to avoid missing the valuable opportunities that lie ahead.
Libya now finds itself at a decisive crossroads; it is either the beginning of an economic renaissance, or the loss of another opportunity amid several challenges. The final path depends on the decisions and actions taken today and in the coming months. We hope these steps will rise to the level of the aspirations and ambitions of Libyan youth, building a brighter and more prosperous future.
