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Alabbar fund looks to jumpstart MENA VC market

Technology is the main driver of change in most economies  and advances in everything from aviation to construction, tourism and others, is changing business globally. In the MENA region as well, driverless cars, flying taxis, construction survey drones, 3D printing, Building Information Modelling, Hololenses in car designs and others are transforming the way we live.

Middle East Venture Partners (MEVP) recently launched a $250 million Middle East Venture Fund III (MEVFIII), the third of its kind, targeting investment in innovative early- and growth-stage technology companies in the MENA and Turkey regions.

Mohamed Alabbar, shareholder of MEVP, founder of the e-commerce platform and chairman of Emaar Properties, had announced last May that he is entering into a strategic partnership to create a leading VC investment platform.

He said: “A new generation of tech-savvy young digital entrepreneurs is driving the growth of this region’s digital ecosystem. Their innovative ideas can bring transformational changes to the local economies.”

“MEVP’s new fund will support emerging local tech companies with dedicated capital, specialised expertise and operational support enabling them to reach their next level of growth,” he added.

Tech fund well pretty dry

MEVP, which has a current investment portfolio in more than 40 ventures and currently manages four regional technology-focused venture capital funds with more than $120 million in assets under management and $100m in co-investments, said that venture capital investments in MENA were less than 0.03 per cent of the GDP in 2016, significantly lower than 0.2 per cent in India and 0.4 per cent in the US.

This means the region’s tech innovators and entrepreneurs might find their ideas simply ending up as footnotes, rather than leaving a positive footprint on the future of humanity.

Moreover, the depressing regional numbers are bad news for tech-savvy consumers, entrepreneurs and businesses in MENA, because it doesn’t enable the region’s thirst for progressive, functional and competitive technology.

Walid Hanna, MEVP Founder and CEO, said: “ There remains a significant lag in the amount of capital available for growth stage venture capital funding. MEVFIII aims to address this gap.”

AMEinfo had recently reported MEVP also investing in Wego, the largest online travel marketplace in the MENA.

 VC pick up in Q2 2017

It was a slow start for MENA VC in Q1 2017, with 72 per cent less investments compared to Q1 2016, according to a report by MAGNiTT, an online platform for entrepreneurs and investors in the Middle East.

With first quarter numbers off to $36 million from 35 deals, it looks like it would never reach investments worth $889m in 2016.

Q2 saw a much improved performance according to MAGNiTT, raching $290m on 88 deals.

“Data transparency is at the core of decision-making for MENA stakeholders, whether they are investors raising funds, corporates looking to create innovation or government entities looking to devise policy decision making,” said Philip Bahoshy, founder and CEO of MAGNiTT.

According to Arabia Monitor, an economic research company, the growth and development of e-commerce and fintech (financial technology) in the MENA region accounts for only 0.71 per cent of its total GDP currently, compared to three per cent for the rest of the world.

Most active UAE VCs

According to a recent report by CBI insights, a company that mines data and knowledge contained in patents, venture capital financings, M&A transactions and startup and investor websites, the most active venture capital investor based in the UAE by number of unique companies funded since 2012 is Wamda Capital, with 20 unique investments.

Next comes Flat6Labs Abu Dhabi, with 18 investments, followed in third place by BECO Capital, with 12 companies funded.

The ten most active VC firms in the UAE have all invested in three or more tech startups, the company said.