Spotlight on Founders

Regular readers will note that our cap intro events in the Gulf exist to help Fund Managers and Founders raise capital. We’ve talked at length about asset managers who join us but today we wanted to specifically talk about founders and set the scene for venture capital investing in the region.

As a reminder, we help founders typically raising > $5m who have a genuine plan to grow their business in the region.

Put simply, there has never been a better time for start-ups and scale-ups to raise capital from the Middle East.

There are three main investor groups who attend our events that deploy assets in early-stage companies:

  1. Family Offices – this is the fastest growing group of investors that we see in the Middle East. Rarely does a week go by without a new family setting up shop in the Gulf. Naturally, there is a plethora of Emirati-owned single and multi- family offices. However, the fact that both the macroeconomic and fiscal conditions in the Gulf are so much better compared to the majority of Western economies, there is an ever growing list of single families relocating and importantly moving their investment teams and hiring local talent into the family office. Naturally, the increasing pool of capital moving to the region has led to more and more multi-family offices setting up in the region too. Like with the GCC’s sovereign funds, both the single and multi- family offices allocate a large percentage of assets to both early stage venture funds and direct investment opportunities. As you may expect, there are more and more locally-based entrepreneurs raising capital from this investor group. However, at this time there are simply not enough businesses to accommodate all of the early-stage capital that is looking to be deployed. Therefore there has never been a better time for a business to raise capital from Middle Eastern families, so long as your business has the intent and plan to grow into the region.

  2. Private Banks – the logic for the increasing number of Family Offices in the region also applies to the growth in the number of Private Banks and Wealth Management firms. However, there is a slight nuance here, in that we find that the Banks and Wealth Managers in our patch are very open to taking meetings with founders of early stage businesses. This is in stark contrast to G7 Banks where any (small) allocation to venture is usually facilitated via funds (and often to household names we all know, often raising vintage 63)! Such is the appetite for alternatives in the Gulf that clients demand access to direct early stage deals, and therefore the Private Banks and Wealth Managers play a key role for founders looking to raise capital.

  3. Venture Capital – with the likes of American University (AUD), Harvard Medical School, and Duke being present in the Middle East, there is no surprise that more entrepreneurial talent is staying in the region and setting up innovative businesses, which naturally has led to more VC firms. Names like Wamda CapitalRAED VenturesArzan VC and Beco Capital are just a few examples of the Gulf’s leading venture firms. Of the three investor groups listed here, this is where having a local story is most important. Many of these firms, particularly those who are backed by a Sovereign entity only deploy assets into companies who are looking at changing the Gulf for the better. That’s not to say that you can’t raise capital if you’re not currently physically in the region or selling to the region. But you MUST have a genuine and actionable plan that addresses the Gulf. Bonus points for firms who are attempting to solve problems within healthcare, digital or education.

Make no mistake about it, the rapid rise of venture capital in the Middle East has not happened by accident. As we often write about in this forum, themes seem to trickle down from the sovereign level. Whilst we have not specifically mentioned sovereigns as a specific investor group above, they are the fundamental proponent of this movement. Hub71 – Abu Dhabi’s global tech ecosystem (backed by the governments of Abu Dhabi and Bahrain) is just one example of the sovereigns’ focus on early stage investment. And we have no doubt that this trend will only continue to grow, particularly after the signing of the 2020 Abraham Accord between Israel, the UAE and Bahrain.

So if you’re a founder raising capital and want to unlock the wall of capital from the Gulf, get in touch to find out how we can help you.