Dry Powder Deployment: A guide to MENA’s active startup investors
Many startups are feeling more pressure than ever before, and MAGNiTT has been receiving lots of requests from our community asking about investor plans until the end of 2020. As part of our constant drive for data transparency and accessibility, we interviewed many of the region’s leading investors (VCs, CVCs, and angel groups) to ask about their capital deployment plans until the end of 2020.
Based on the answers received, we approximate that at least 100M is yet to be deployed in seed and early-stage startups in MENA.
The questions we asked the investors were:
• Do you have Dry Powder [capital to deploy] until the end of 2020? [In this article, we’ve only included investors who said yes and shared some deployment plans/approximations with us]
• Approximately how much capital are you looking to deploy, and in how many investments?
• How much of the capital you have earmarked to deploy before the end of 2020 is allocated for new investments? [rather than follow-on investments in portfolio companies]
• Has your industry or stage focus changed as a result of COVID-19 until the end of 2020?
Dry Powder navigation guide
We have clustered the responses by the country of investor HQ [countries listed alphabetically] and then also sorted the investors alphabetically, so that you can navigate the information with ease:
• Bahrain - 500 Startups
• Egypt - EdVentures, Modus Capital, Sawari Ventures
• Jordan - Beyond Capital, Silicon Badia
• Kuwait - Savour Ventures, SEEDS Partners
• Lebanon - IM Capital, Seeders, Lebanese Women Angel Fund (LWAF)
• Morroco - Maroc Numeric Fund, Outlierz Ventures
• Saudi Arabia - Derayah Ventures, Hala Ventures, Falak Business Hub, NOMU Ventures, TasHeel Holding Group (THG), Tech Invest Com, Wa'ed Ventures
• UAE - Dtec Ventures, Dubai Angel Investors, Enabling Future, EQ2 Ventures, Middle East Venture Partners (MEVP), Mubadala Capital, Nuwa Capital, Shorooq Partners
For currently fundraising startups: We have also included Investor Application links for the investors running applications on MAGNiTT. Check out all 77 investors and accelerators running applications.
We have edited some responses for brevity and clarity.
• We have nearly completed the deployment of all first checks and are actively evaluating and investing in follow on investments through 2021.
• We expect to invest USD 3-4M across 10-15 follow on deals.
• We have nearly completed new investments for the fund. Almost all the capital will be deployed to follow on investments.
Apply for funding to 500 Startups
EdVentures [Education-focused CVC, invests in seed and growth-stage companies]
• We will invest from USD 100K to 200K per startup and we will invest in 1 to 4 new startups until the end of this year.
• Our thesis remains unchanged -- focusing on EdTech investments.
Modus Capital [Sector-agnostic VC fund, invests in idea development and growth-stage companies]
• We are looking to deploy USD 4M - 6M in 10-15 companies.
• 80% will go towards new investments.
• We are focusing more on the sectors that have a positive correlation with the current and anticipated post-COVID environment, but also focusing on opportunities to invest as a function of adding market-share and/or value-added to existing portcos. A slight adjustment in strategy to capitalize on the changing dynamic.
• We don’t see the current developments affecting our position beyond the envisaged timing of follow-on/bridge rounds. We have USD 4M - 6M earmarked for potential follow-on rounds across our entire portfolio.
• Generally, we are maintaining business as usual, filtering through pipelines and we are honoring all our term sheets. We are planning to deploy USD 15M - 20M by the end of 2020 over approximately 8 investments.
• It is still too early to determine a new focus, if any.
Beyond Capital [CVC investing in seed-stage companies]
• As of today, USD 1.25M is to be deployed into early-stage companies.
• We expect to deploy USD 500K in new companies by the end of 2020 with a ticket range of USD 25K-100K.
• We aim to deploy USD 2.5M into the Funds of Funds pillar, where we support fund managers that aim to establish or prolong their presence in the Jordanian market by investing in early-stage companies.
• BeyondCapital is aware of the opportunities presented during the COVID-19 crisis. We see this as an opportunity to provide our portfolio companies with the much needed support.
• Given the clear working-capital constraints felt by entrepreneurs, BeyondCapital allocated USD 500K as ‘Rapid Response Capital’ for portfolio companies.
• In MENA, we would typically invest an average of USD 3M/ticket (up to USD 5M) with each of our funds averaging 10 - 20 investments.
• Most of our capital will go towards new investments.
• We recognize that the future leaders of digitization across MENA are being built at this moment. We are positioning ourselves to help those founders and their teams navigate the challenges. As we have always been focused on tech startups, and as our entire region is embracing digitization, our investment focus will not change. Neither will emphasis on exceptional founders.
Apply for funding to Silicon Badia
Savour Ventures [Food-focused accelerator and investor]
• We have between USD 250K to USD 750K to deploy.
• 50% will go towards new investments.
SEEDS Partners [VC fund investing in seed-stage companies]
• Although we prefer not to limit our investment activity to an annual set number of investments (as opportunities can arise at any time during any economic situation), we will most probably be shifting our focus to specific industries that can benefit from shifting consumer behaviour during (and after) this pandemic.
• We can say that we will probably be investing in no more than 1-2 companies this year, although we can most certainly keep an eye on many more companies for future investments. Our ticket sizes will be from USD 100K to USD 1.5M.
• The majority of our capital is available for new investments. We do have a specified amount that we keep for follow on investments.
• Our focus hasn't changed as much as it has adjusted. Our focus since inception has been disruptive industries in tech, mainly Fintech, Edtech, Business software solutions, and innovations in Health and Fitness. Many of these industries are reacting positively to the changing consumer behaviour that the COVID-19 pandemic has caused.
Apply for funding to SEEDS Partners
IM Capital [VC fund], Seeders [angel group], and Lebanese Women Angel Fund [angel group] - all investing in pre-seed to growth-stage companies in Lebanon
• There is Dry Powder between IM Capital, funded by the United States Agency for International Development (USAID), and Seeders-LWAF Angel groups (managed by IMCapital). Up to USD 5M is to be invested in seed and early-stage ventures by December 2020.
• It is worth mentioning that we’ll launch a new program “IM Ventures” by Q2 2020 worth USD 38M, which would invest up to USD 5M in Green-Eco and ICT by December 2020, with a particular focus on Social Impact investing as well.
• Seeders-LWAF Angel Group (managed by IMCapital) are looking to invest up to USD 1M in new seed and early-stage ventures by December 2020, with a 50% quota to female-led ventures. IM Capital will consider matching Seeders-LWAF Angel group investments.
• IM Capital and its Angel Groups were created and will remain with a main focus on early-stage businesses. As for the industries, we are more focused on COVID-friendly industries including e-commerce, steaming services, last-mile delivery, healthcare, and agri-tech.
Maroc Numeric Fund [IT-focused VC fund investing in seed and growth-stage companies]
• Our fund size is around USD 13M. We are willing to invest it in as many Moroccan startups as we can.
• Up to USD 4M is allocated for new investments.
Outlierz Ventures [VC fund investing in seed-stage companies]
• We are looking to continue our investment rhythm of around 5+ deals per year with average tickets of USD 50K - USD 250K - or slightly smaller.
• Our investment thesis hasn't changed. We have put a stronger accent on some of its elements: we invested in Seed and pre-Series A tech-enabled companies that are solving a fundamental problem in key industries in Africa, with a primary focus on Morocco, Egypt, Nigeria, and Kenya.
• It has strengthened our interest in healthtech, fintech, and other industries that are benefiting from the crisis.
Derayah Ventures [VC fund investing in seed and growth-stage companies]
• Derayah Ventures started in 2019 and is still early in the deployment stage.
• We are still open and have sufficient capital to invest in multiple startups in Seed and Series A stages. We are bound by thesis and therefore open to investing in startups that fit this thesis.
• A good portion of our capital is to be deployed to new investments given the fact that we are still a new fund. A good portion will also be allocated to our portfolio companies raising again this year.
• Shortfalls do not enforce major changes in our focus. The things it affects are in regard to tactics and terms.
Apply for funding to Derayah Ventures
Hala Ventures [Sector-agnostic VC investing in seed and growth-stage companies]
• The capital we are looking to deploy ranges between USD 6M to USD 8M and the investments are 8+.
• We are looking to deploy USD 3M to USD 5M in new investments.
• Our focus has not changed as a result of COVID-19, but we have been giving more time to the portfolio companies who are currently struggling, and being more selective when it comes to looking at new potential ventures.
Apply for funding to Hala Ventures
Falak Business Hub [A hybrid between an accelerator, incubator, coworking space, and angel investment firm, investing in seed, launch, growth and prototype testing companies]
1. Falak Angels [angel network investing in pre-seed and seed startups]
• Falak Angels is a local accredited angel group with active angel members onboarded who are looking for deal-flow.
• Falak Angels’ average ticket size is USD 50K - USD 200K per deployment. The number of deals concluded depends on quality of deal-flow and matching with relevant angel members. There is a potential for SVC co-matching application as well
• We remain sector-agnostic. That being said, we do have a preference of certain sectors over others. This is dependent on several factors (like overall portfolio allocation and exposure, current market conditions & outlook, our ability to add value to the startup given sector and stage of business).
• Sectors and startups that we prefer are fintech, logistics, ed-tech, med-tech, productivity tools, IoT, B2B platform catering to complex enterprise problems, Direct-to-consumer marketplace selectively.
2. Falak (Direct Investments) [Investing in pre-Series A & Series A startups]
• We invest directly in startups from Falak or Falak's partners. Falak is working on an upcoming investment vehicle for further deployments.
• Ticket sizes range from USD 100K - USD 2M. There is no mandate to close a specific number of deals.
Apply for funding to Falak
NOMU Ventures [VC fund investing in early-stage companies]
• We go 200% in this year on new ideas, we are always looking for talented founders at the pre-seed stage.
• We are an evergreen VC, so we invest by the talented founders and star ideas.
• We focus on the future of the marketplace models and raising the state of entrepreneurship in Saudi Arabia. That is in our DNA and has not changed.
Apply for funding to NOMU Ventures
TasHeel Holding Group (THG)
• We have USD 2M - 5M to deploy. The amount will cover new investments only.
• We have not changed our focus due to COVID-19. We do both early-stage (travel tech, logistics tech, enterprise SaaS, sharing economy) and late-stage (e-commerce/on-demand platforms, digital health, fintech, and foodtech) are the respective sectors.
Apply for funding to THG.
Tech Invest Com [VC fund investing in maturity and growth-stage companies]
• We invest off balance sheets, when we see a business model we like so we don't have a hard target. We are looking to do USD 5M - 15M over 4-7 deals.
• At least 50% will go towards new deals.
• COVID-19 has not affected our focus, but we are being more conservative when we examine projections and valuations. Even when examining businesses that would benefit from the current situation due to market dynamics and other factors, such as logistics issues impeding e-commerce growth.
Apply for funding to Tech Invest Com
Wa'ed Ventures (Saudi Aramco’s venture investment arm) [CVC investing in seed, growth and maturity stage companies)
• We are an evergreen investment fund.
• We will be targeting 6 to 8 deals; USD 10 to 15M capital deployment.
• Roughly one-third will be targeted for follow-on investments.
• Our focus remains largely sector and stage neutral, with a focus on early and growth-stage technology or tech-enabled ventures. Targeting startups and technologies within fintech, IOT/ICT, AI & robotics, digital transformation, and IR4.0 related applications.
Apply for funding to Wa’ed Ventures
Dtec Ventures [Government VC fund investing in early-stage companies]
• Dubai Silicon Oasis Authority has allocated capital to Dtec Ventures for making new investments and supporting existing portfolio companies with follow-on funding throughout 2020.
• The capital we deploy will be based upon the available opportunities. In addition, we also expect to see some adjustments in startup valuations which will help to quickly recover to the pre-COVID-19 level.
• We do not have a specific split between new and follow-on investments as it will depend on opportunities. We also keep our focus on supporting Dtec startups first and the entrepreneurs who belong to our community.
• We are agnostic to sectors within tech. Our focus will be much more on supporting founders that have a strong affiliation/business within Dubai (with growth ambitions).
Apply for funding to Dtec Ventures
• We recently closed a capital raise round and as of yet, we have not deployed any of the new capital.
• We are taking a conservative view on new investments for the next six months and are planning to allocate a significant percentage of our new capital for follow-on rounds and liquidity facilities for the star performers among our existing portfolio companies.
• We will probably look to deploy around USD 1.5M (and up to USD 4M with member-co-investments) across 5-6 deals between now and the year-end.
• We remain open and opportunistic towards new investments in areas that we are interested in right now. We will most likely utilise one third of our earmarked capital for new deals this year.
• Our focus has shifted towards business preservation and liquidity. We may utilise venture debt as a means to provide emergency liquidity to existing portfolio companies or new companies in the coming 6 months.
Apply for funding to Dubai Angel Investors
• We are investing out of the two partners' family offices balance sheets and do not run a fund. Hence we can invest opportunistically.
• Normally we do only a few deals per year of around USD 1M - USD 2M in total, this hasn’t changed in principle because of overall market conditions.
• For 2020 we haven’t planned any follow-on investments. But that could change depending on market conditions.
• We have always run a diversified portfolio across stages and investment classes. What had changed already long before COVID-19 was the shift away from seed-stage to more later stage opportunities, and non-venture cash-flow businesses to balance our portfolio.
EQ2 Ventures (ex-Choueiri Group) [CVC investing in seed-stage companies]
• We have around USD 5-10M this year (including what has been disbursed already) to deploy, and we will most likely have more next year.
• We aim to deploy 30-40% for new investments.
Middle East Venture Partners (MEVP) [A tech-focused VC fund with offices in both the UAE and Lebanon, investing in growth-stage companies]
• We have more than USD 100M in Dry Powder.
• We intend on investing around USD 15M this year across 3-4 investments.
• 60% of the capital we intend to deploy is allocated for new investments. Our focus for the coming year is investing in COVID-19 resilient business models.
• Our stage focus has not changed. However, we will be placing a greater emphasis on investments in business models that can withstand the effects of the current pandemic as well as cater to changing consumer behavior and demand.
Apply for funding to MEVP
Mubadala Capital [An Abu-Dhabi based fund that invests in growth-stage companies]
• Mubadala Capital’s US$250 million MENA venture fund was launched in the second half of 2019 and, due to our highly selective investment approach, the vast majority of the capital is yet to be deployed.
• Given that we are early in our fund’s life cycle and our portfolio currently consists of two companies, Bazyat and Midchains, most of the capital will be deployed into new investments.
• We are not targeting a specific number of investments or a certain amount of capital to be deployed by year-end. Our investment activity will be driven by the type of opportunities that meet our criteria: those which have exceptional management teams and strong business fundamentals. We will also consider companies that have the potential to scale, and so will benefit from Mubadala’s global presence and network. Finally, we will continue to monitor the economic landscape to ensure the timing of our investments is apposite.
• Many of the biggest tech companies of today were built in challenging times, and our approach is to look for ambitious and tenacious founding teams with innovative ideas and exclusive business models. We are consistent in focusing on sectors that will have a transformative and widespread impact, including fintech solutions, tech-enabled healthcare, logistics & mobility, and smart enterprise.
• We are looking to invest USD 5M by the end of the year across 5-7 companies.
• We’re looking beyond the trends that have already been accelerated by COVID-19 and the economic downturn (e-groceries, e-commerce, and its ecosystem which are exploding), and at areas that will witness growth as second or third-order effects of the situation. For example, companies that might emerge to highlight that the way we think about employment/labor is changing, or those that provide solutions as markets “deglobalize” their supply chains.
Apply for funding to Nuwa Capital
Shorooq Partners [An Abu-Dhabi based VC fund that invests in seed-stage companies]
• Historically, Shorooq has been extremely disciplined and selective in its investment process, making 1-2 investments per quarter. We will continue to invest at a similar pace throughout the year.
• Our ticket size ranges between USD 250K - 2M.
• COVID-19 has not affected our focus. We still focus on tech companies with Fintech, Software, Platform and Tech-enabled business services as principal subsectors. Concurrently, we continue to refine our evaluation frameworks to ensure that companies we invest in are more adaptable and recession resilient.
Apply for funding to Shorooq Partners
With Mawdoo3, Jamalon, and HyperPay raising a combined $33M in total funding in 2019, it was a record year by funding for the Jordanian startup ecosystem. Learn more about one of MENA's oldest ecosystems in our 2019 Jordan Venture Investment Report.