MENA PEA report by Ahmad Gharbieh

is a nonprofit entity committed to supporting and developing the private equity and venture capital industries in the Middle East and North Africa.

4th Venture Capital in the Middle East & North Africa Report 2013 Year in Review

October 2014 Photo by FrĂŠ Sonneveld

WITH GRATITUDE The MENA Private Equity Association extends its sincere appreciation to Thomson Reuters - Zawya for sharing primary data and industry insights that informed this annual report. We are most grateful to KMPG for developing the report analysis. KPMG Brad Whittfield, Associate Director, Private Equity and Sovereign Wealth Funds, KPMG Charlotte Harris, Associate, KPMG Vikas Papriwal, UAE Head of Transactions and Restructuring, KPMG Zuhaib Khan, Assistant Manager, KPMG

Its free news site, Zawya.com, attracts C-level professionals from the business and finance world providing breaking news powered by Reuters as well as content from major regional providers. Zawya.com Arabic offers a broader selection of news genre for the Arabic speaking community, reaching graduates up to senior level managers from across the MENA region. Empowering entrepreneurs and SME community within the UAE, BusinessPulse.ae, offers the environment to support success through its news, featured articles and business tools designed specifically to guide businesses through each stage of development as well as inspire professionals with success stories from across the region. Through its services, Zawya empowers nearly 1 million professionals with the insight and transparency they need to conduct business effectively by empowering them to build profitable relationships.

Thomson Reuters - Zawya Ali Arab, Product Manager, Zawya Financial Solutions, Thomson Reuters Josiane Assaad, Content Manager, Zawya Investment Monitors, Thomson Reuters Youmna Akiki, Research Associate, Zawya Investment Monitors, Thomson Reuters KPMG is a global network of professional firms with over 155,000 staff in member firms across 155 countries. KPMG in the UAE was established in 1974 and has grown to 750 professional staff led by more than 25 partners, across 8 offices in the country. We work closely with our colleagues in offices throughout the MENA region and across the world. Zawya, a Thomson Reuters business, is the preeminent source of Middle East and North Africa business intelligence. Our membership solutions provide unique content and tools including detailed profiles on public and private sector companies in the region, unparalleled reporting on MENA markets, asset classes, and details of regional projects to provide in-depth analysis for investors and business professionals in order to make more informed investment decisions and build profitable relationships.

The report contributors We also extend our thanks to the thought leadership participants and the Associationâ&#x20AC;&#x2122;s VC Task Force.

Photo by 120H

Mena VC investment data ................................... 1.1 1.2

Definition of Venture Capital in the MENA region ........................................................ Data Criteria .........................................................

Introductory message ..........................................

Venture Capital In The MENA Region ..........

6 6 6

Philip Boigner, Vice President - Dubai Silicon Oasis Capital

3.1 3.2 3.2.1 3.2.2 3.3 3.3.1 3.4

Investments ......................................................... Transactions ......................................................... Sector Focus ......................................................... Regional Focus .................................................... Funds Raised ........................................................ Cumulative Funds Raised ................................ Exits .........................................................................

10 12 12 13 14 15 15 16

Entrepreneurship versus business as usual in MENA- the ‘new reality’

Rami Al-Karmi, Founder - Arcoten Holdings

5. 6. 7.

Interview with Mustafa Sadek Mustafa Sadek, Founder and Managing Partner of UrbanBuz

The missing link: the role of legal clinics in supporting MENA’s start-up ecosystem .................

Ayman A. Khaleq, Managing Partner (Dubai), Morgan, Lewis & Bockius Philip Dowsett, Senior Associate, Morgan, Lewis & Bockius

About The MENA Private Equity Association ....................................................................... 7.1 7.2

Members Directory ........................................... Private Equity And Venture Capital Firms In MENA .................................................................

32 34 36

1.1 Definition of Venture Capital in the MENA Region:

Definition of Venture Capital (VC) in the MENA region

Mena VC Investment Data

C is defined as the provision of longterm equity investment and strategic support by financial investors to innovative, scalable companies at the early growth stage. Key criteria used to define VC investments also include: • • • • •

Investments are in non-listed companies (private companies) Investment commitment over the life of the deal can average USD 3 to 5M but can also reach up to USD 15 million A typical plan exit through IPO, mergers & acquisition, management buy-out or trade sale Above average returns expected Seed/angel or investments by non-

financial shareholders do not count as VC VC is not confined solely to technology investments, but technology is often a core factor that creates the level of scalability required in a VC deal. 1.2 MENA VC Investment Data The data covers only structured VC funds that meet the MENA PE Association VC criteria. The data does not cover direct investments, seed, incubation or investment programs investing in VC. In addition, readers with an interest in the Maghreb can also refer to the AMIC (Morrocan PE Association) Reports, which cover Moroccan funds in detail, using different criteria.

Data Criteria The funds included in the data analysis are those defined in terms of self-reporting by fund mandate or fund manager as VC funds or SME growth capital funds. At this stage of industry development, no attempt was made to determine whether such self-reported funds meet the criteria above. This report also includes growth equity SME investment firms that invest in a wide variety of SMEs including those in traditional industries as well as earlier stage venture deals. The analysis was prepared based on data sourced from the Zawya Private Equity Monitor. KPMG member firms have not initiated any primary research in relation to this draft report

and have not sought to establish or confirm the reliability of the data provided by Zawya. •

The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is or will continue to be accurate. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

In analysing and determining the parameters of available data, it has been necessary to apply certain criteria, the most significant of which are as follows: • •

•

Funds managed within the MENA region but whose focus is to invest solely outside the region are excluded. Investment size represents the total investment (both the debt and equity portions). However fund size only considers equity invested, as we have no visibility on debt exposure by funds. The fund-raising totals are the amounts closed/ committed for fund-raising funds, closed funds, investing funds, fully vested funds and liquidated funds. Statistics are based on the ‘market’ approach and funds are categorized based on the intended destination for investments (as defined in a fund’s announced mandate) as opposed to where the firm is located. With regard to multi-region funds, we have included these to the extent that there is a focus on the MENA region.

Fund Size: In the case of funds yet to make a first close or where no close information is available; fund size is equivalent to the target amount and is noted as such. For funds achieving at least one official close, fund size is reported as the capital raised to date, while for funds that have made a final close, the fund size is the total capital raised. Rumored funds are excluded. MENA: For the purpose of this report, MENA refers to the following countries in the Middle East and North Africa: Algeria, Bahrain, Egypt, Iraq, Jordan, KSA, Kuwait, Lebanon, Libya, Morocco, Oman, Palestine, Qatar, Sudan, Syria, Tunisia, UAE and Yemen.

Photo by Kelley Bozarth

The Changing Tides of the Venture Capital (VC) Industry in MENA

The Changing Tides of the Venture Capital (VC) Industry in Mena 9

T By Dr. Philip Boigner, Vice President — Technology Investments, Dubai Silicon Oasis Capital

he state of the MENA VC ecosystem has evolved quite significantly over the last year. Notably, a number of managers have started to raise funds toward the end of 2013 which let us hope that 2014 will be better year for fundraising. New funds are targeting a size of $30 million to $65 million, which shows that venture capital (VC) investors are confident to find good deal flow and potential exits for their portfolio companies in the coming years. Especially, international acquirers and follow on investors of regional companies are contributing to the excitement and positive outlook for VC in the region. Cobone, bayt.com and Dubizzle were probably the most talked about companies in 2013. The trend looking forward appears to be later stage investments – which in the Middle East means Series A and B. The Lebanese Central Bank has significantly contributed to the buzz by announcing that banks will make sizeable funds available to start-ups, SMEs and venture investors in Lebanon. It is great to see a government actively supporting the start-up and SME funding scene. On the back of these news several Lebanese entities are preparing to raise “Series A” funds, which opens the question on how much of these funds can be deployed in a relatively small country. Even though, the investment landscape has become much more colorful and exciting, some of the prevailing issues are still present. Most investments done by institutional players as well as many deals executed by angels and incubators are still into offshore holding companies, most notably BVI. Onshore corporations and regional free zones for the most part lack preferred share structure and many other forms of regulation desired by VC. IP protection is supported by strong legal regulation in countries such as the UAE, however investors and entrepreneurs are wary about the experience and expert judgment of a legal system used to Shari’ah law proceedings. Not surprisingly, we have not seen many IP protection filings. Valuation, much more an art than a science in the Middle East, and are far off what entrepreneurs are commanding (and receiving) in Silicon Valley. Taking in consideration that regional comparable companies are close to non-existent, the experience

... the experience of the VC investor and limited number of deals that have been publicized are the main tools for valuing start-ups and fast growing SMEs” of the VC investor and limited number of deals that have been publicized are the main tools for valuing start-ups and fast growing SMEs. Club deals are still going strong as investors like to share risk and have limited funds available to deploy. It remains to be seen if the deal sharing and co-investing will be impacted when some of the fundraising GPs start deploying their new capital. Overall, 2013 has been a good year for the VC industry. We have seen more deals being closed and more money being deployed. To date, in 2014 this trend has continued so that we can all look into the future quite optimistically.

3. Venture Capital In The MENA Region 10

Photo by Lacey Raper

Venture Capital in the MENA Region 3.1 Investments As the MENA region continues to feel the impact of the global financial crisis together with political instability in some countries, available data suggests that the VC industry experienced a decrease in deal activity during 2013. However, deal activity during the last three years (2011 to 2013) is substantially higher than 2008 to 2010. The medium to long term outlook for MENA’s VC industry remains positive as strong macrofundamentals continue to drive the region’s economic recovery. While the industry in general continues to

3.2.1 Sector Concentration by volume

(2008 to 2010: 77 VC deals in total)

invest cautiously, investment activity during the last three years is indicative of VC investment opportunities in the region and the industry’s growth despite geo-political challenges. This is a key achievement for the region’s VC industry which, arguably, remains fairly nascent and in the early phases of it’s development life cycle. We note that, given the nature and size of VC investments, a significant portion are either not publically announced or, if they are announced, the value of the investment is not. For the purposes of our analysis below, we have focused on transaction volume as opposed to value.

Other 17% Information Technology 38%

Financial Services 5% Food and Beverage 5% Services 5% Media 8% Telecoms 9%

Industrial Manufacturing 13%

The IT and software sectors continue to be the most popular amongst VC investors. Of the total transactions in the region’s VC industry since 2011, 49 percent were in the IT and software sectors. There have been 103 completed IT and software transactions since 2006, of which 69 occurred during the period 2011 to 2013.

51 50

We note “others” primarily represents the agriculture, telecom and retail sectors.

40 34

Sector concentration by volume (2011 to 2013: 139 VC deals in total)

30 17

17 Other 19%

11 10

Industrial Manufacturing 5%

2006

2007

2008

2009

2010

2011

2012

2013 Source: Zawya Private Equity Monitor

3.2 Number of VC transactions since 2006 During the last three years 140 VC transactions were completed compared to 77 during the three years 2008 to 2010. This upward trend has not been seen in MENA’s wider private equity industry which has 12

demonstrated relatively flat performance, where 260 private equity transactions were completed during the last three years, compared to 267 from 2008 to 2010.

Information Technology 49%

Food and Beverage 6% Media 6% Consumer Goods 7%

Services 8%

3.2.2

Country Concentration by volume (2008 to 2010) 3.3

VC annual funds raised 8

250 7

208

$ millions

5 5

150 4 107

121

100

10 2006

2007

2008

2009

2011

2012

2013

No. of VC funds raising

Country concentration by volume (2011 to 2013)

Cumulative funds raised since 2006

3.3.1 Cumulative funds raised since 2006

Jordan 8%

594

600

565

500 UAE 10%

444

Egypt 17%

Units

400

Tunisia 14%

Based on available data, Lebanon, Egypt and Morocco lead the MENA region in terms of the number of VC investments with 27, 24 and 24 transactions from 2011 to 2013, respectively. While the total number of VC deals in Egypt increased from 8 in 2008 to 2010 to 24 in 2011 to 2013, it remains exposed to political volatility and saw a reduction in VC activity from 9 deals in 2012 to 6 in 2013.

Morocco 17%

UAE continues to demonstrate resilience to the global financial crisis as the number of VC deals increased from 12 in 2008 to 2010 to 16 in 2011 to 2013. The increase in VC activity is primarily attributable to the Information Technology, Services and Consumer goods sectors which accounted for six out of the UAEâ&#x20AC;&#x2122;s eight VC deals during 2013.

310

312

2008

2009

337

300

200 102

100 10 0

2006

2007

0 2010

VC funds raised

Lebanon 20%

Others 12%

2010

2011

2012

2013

No. of VC funds raising

200

Following a strong fund raising year in 2012, there were $29 million of VC funds raised in MENA during 2013. Although MENAâ&#x20AC;&#x2122;s macro-economic fundamentals remain strong, fund raising remains difficult reflective of a general lack of deal flow in the region, lingering effects of the global financial crisis, and the continuing political instability in key regional markets. That said, it is encouraging to note that there has been an increase in the total value of funds announced in MENAâ&#x20AC;&#x2122;s wider private equity industry (although we note that many are yet to close) during 2013 compared to prior year ($2.6 billion in 2013 compared to $1.8 billion in 2012). Available data continues to reinforce the marketâ&#x20AC;&#x2122;s shift in focus from large buyout funds to VC and growth capital funds over the last three years. While this shift to growth capital is not VC specific it does impact the VC industry as the growth capital funds in the region remain a key funding source of finance for the VC industry. Funds raised by growth capital focused funds increased from $302 million in 2008 to $922 million in 2013. 3.4 Exits The impact of the global financial crisis on liquidity, valuations and investor appetite has resulted in longer than anticipated holding horizons for VC investments. Based on available date, there have been no VC exits during 2013. Much like the PE industry, the VC industry has increased its focus in recent years to maximising value from existing investments through strategic and operational performance improvements. One would expect that, as the regional economies stabilise and liquidity in the market continues to improve, an increase in the number of exits will occur in the short to medium term.

Photo by Sebastian Muller

Entrepreneurship versus business as usual in MENA — the ‘new reality’

f I could offer you only one tip for the future, embrace entrepreneurship would be it. Near future that is, and not in any way belittling the importance of sunscreen!

Rami Al-Karmi, Founder of Arcoten Holdings

Put aside the “Everybody’s free to wear sunscreen” song humor aside, but some can argue that turmoil in the Middle East, be it the situation in Syria, Palestine, Sudan, Egypt, Iraq (in short most of the middle-eastern countries), can cause many people to assume that the risk to invest in the region is too great. But on the contrary, investments in the region along with the startups’ entrepreneurial ecosystem are actually growing. To put it in a simpler and more direct manner, some investors continue to see opportunities in MENA. They managed to find and invest in the fast growing online business models that figured out how to operate really well during the turmoil – that has arguably become the norm now. That, in addition to a unique market, with high growth potential, growing demands, and most importantly a market that continues to buy, shapes the goal of securing lucrative market exits for these investments. But what is driving all this? Why are we witnessing this massive shift towards entrepreneurship versus business as usual? I think nothing describes it better than the scene where Gordon Gekko (played by Michael Douglas in the movie Wall Street: Money Never Sleeps) addressed a crowd of twenty-something anxiously listening: “I’m not talking about consoles. I’m talking about people. You don’t know it yet. But, you are the ‘NINJA’ generation... You have no income, no jobs... no assets.” Fast-forwarding across all the lectures in

macro-economics frameworks and analysis, we arrive at the conclusion that it seems the ‘NINJA’ generation is getting it, and taking matters in their hands by taking action instead of surrendering to the status quo. Of course, this did not take place in isolation. A number of factors have been nurturing a new breed of MENA entrepreneurs for while. But before getting into those factors, lets agree on the definition of “entrepreneurship” and how it differs from the Small and medium enterprises (SMEs) or small and medium-sized businesses (SMBs) that the banking and international organizations such as the World Bank, the United Nations and the World Trade Organization (WTO) prefer and use elaborately. In their definition, Small enterprises – are enterprises where personnel numbers fall below certain limits – outnumber large companies by a wide margin and also employ many more people. SMEs are also said to be responsible for driving innovation and competition in many economic sectors. Not to belittle in any form or manner the value SMEs/SMBs bring to the economical growth and development equation but what bothers me is the often mix up between what this segment really needs to grow versus the ‘banking-based’ tools for small-to-medium (SME or SMB) development that I believe should be described as “ponzi job creation” initiatives. Now back to entrepreneurship versus SME/ SMB world. Would you be really interested in investing in a venture that is “small” and by definition plans to grow and become a “medium” enterprise? Wouldn’t you rather back an entrepreneur with a startup seeking to scale it up into an enterprise!

Although ‘entrepreneurship’ has become to an extent a cliché term used widely across the Arab world – most of the people I know have the word ‘entrepreneurship’ mentioned in their Linkedin header or job titles, I have to be frank before claiming that I know anything about the topic. The first time I was introduced to the term ‘entrepreneurship’ was while reading an invitation I received from the US Department of State back in 2010 to attend the Presidential Summit on Entrepreneurship as part of a delegation of 13 Jordanians. The letter back then addressed me as a “serial entrepreneur” and it was quite enjoyable to figure out what the meaning was of the title they decided to bestow upon me, and how what I have been involved in since I was 19 years old–my mom has year after year described it as ‘naive and crazy’ - can be described as an act of ‘entrepreneurship’. Entrepreneurship to me can never be a job description or a title. Entrepreneurship is a state of mind, an attitude of perseverance towards identifying and acting on solving problems while others are simply satisfied by arguing, blaming or getting depressed. I would like to believe that within time, entrepreneurs develop a special set of lens that help them see clearly through all what others see as challenges and obstacles, followed by the use of their special skills to recruit and get access or control over resources that are not originally within their disposal to create value that is delivered within a repeatable and scalable business model. Although there has been two loosely connected entrepreneurship ecosystem landscapes going on for some time in the

region: one suffering from severe scarcity in resources and the other, on the contrary, pouring tons of resources on it, both hoping to land a ‘silicon valley-adapted’ job-creation model that works. I would say that most of the efforts to boost and activate an entrepreneurial ecosystem in MENA including the government funded, private sector led or non for profit, incubators, accelerators, business plan competitions, etc... – although not aligned, and in most of the cases caused more harm than value or were misleading to startup founders – are starting to pay off. Reading a study by Endeavor that tracked the effect of a high impact enterprise in boosting the entrepreneurial ecosystem was a true eye opener to me. Zooming the lens of the study to the MENA region would show you how the effect of Fadi Ghandour – founder of Aramex – investing in startups like his investment in Samih Toukan and Hussam Khoury’s Maktoob (acquired by Yahoo in 2009) would ripple across a large number of startups and founders for years to come. Same thing applies to tracking how HIKMA Pharmaceutical Group has been instrumental in supporting a large number of startup founders is just mind blowing. HIKMA was founded by Dr Samih Darwazeh (Said’s father), now publicly listed on London Stock Exchange, together they grew the group from zero revenues in 1978 to 1,365 Million Dollars of group revenue in 2013, and more than 7,000 employees is just a fraction of the true success indicators behind the story of HIKMA. For a while, most of the viable activity taking place in the MENA entrepreneurial space has been what can be classified under ICT Business to Business (B2B), or

Entrepreneurship is a state of mind, an attitude of perseverance towards identifying and acting on solving problems while others are simply satisfied by arguing, blaming or getting depressed”

“unsexy business models” as referred to by Dave McClure, founder of 500 start-ups that grew in a few years to be one of the top global seed accelerator programs in silicon valley [Disclosure: Author is a mentor and LP at 500 startups]. Unlike other active investors, 500 startups does invest in unsexy business models. And worthy of note is that 500 has invested in 11 MENA based startups till date, and partnered with ZAIN (the leading MENA mobile operator) to create ZINC, as a partnership platform acting as a bridge between silicon valley and Amman as a hub for the Arabic region’s entrepreneurial activity. 500 startups’ investment thesis has the ‘Arabic language and Arabic speaking Internet audience’ specifically mentioned as a target area of focus.

What the new breed of MENA entrepreneurs are getting to understand is that the best way to create a billion dollar consumer Internet company is to build a digital transaction business where buyers and sellers connect and a better environment for the transaction to take place is facilitated. If we look at the publicly traded US Internet companies worth more than USD 1 billion, nearly 70% of them are companies built around a digital transaction business model, while all but one – Amazon – of those firms do not deal with physical goods. Almost all of these companies started around facilitating digital ‘information-led’ commerce. They have built category-defining platforms that manage to attract large communities of either businesses or consumers, in addition to providing them with value against a pain they used to suffer from. As for Arabia, we now have a region with one of the highest Internet and smartphone penetration rates in the world, with Arabic declared as the fastest-growing

language online and Saudi Arabia being the record-holder of the highest replay rate of YouTube videos on mobile in the world for at least a couple of years now. Arabic consumers equipped with the mobile-first mindset is expecting a lot: They will plan a trip, buy a ticket, a gift, a ride, a meal, make a reservation or a hotel booking, organize a night out and, in the UAE at least, they are expecting to do all of their government transactions 24/7 through their phones by 2015. The best of these digital transaction companies are the ones that can seamlessly integrate consumers’ interests, social network presence and context to deliver a super-relevant mobile experience, directing most of their spending habits with comfort and addictive ease. But before you start dreaming in the clouds of billion-dollar valuations. Lets go back to the basics of a start-up, as Steve Blank (Senior entrepreneurship lecturer, Best selling author, and creator of Customer Development model) states: “A start-up is a temporary organization, designed to discover a repeatable and

About: Rami Al-Karmi is an LP & Mentor at 500 startups, a proud geek, investor, and widely recognized advisor and expert in corporate venturing, strategy, corporate entrepreneurship, building lean startup ecosystems, business model innovation, and digital distribution growth through viral marketing and big data. In 2013, he founded Arcoten Holdings as his advising/ investing vehicle where he partners with corporates, accelerators, and incubators to build lean startup ecosystems, and helps

scalable model. Start-ups are not small versions of large companies”. Rather they are different in every possible way – from goals, to measurements, from employees to culture. Very few skills, process, people or strategies that work in a startup are successful in a large established company and vice versa because a startup is a different organizational entity than a large established company. “There is no such thing as an entrepreneur with ‘vision’. It is all ‘hallucination’ until the founders get out of the building and validate their business model by being engaged with customers.” continues Steve Blank. I believe a massive shift has started in how we do business in MENA, we are very close to a tipping point that cannot be jeopardized by the constant turmoil and for those insisting on wearing the dark gloomy goggles, I leave you with the latest book by Sir Richard Branson founder of Virgin Group – which comprises more than 400 companies – interestingly titled “Screw Business as usual”.

companies through providing expertise in growth, hands-on mentorship, access to capital, and helps companies iterate product and grow fast. With a footprint that till date includes more than 100 mentored, advised, or invested individual companies. This footprint also expands to bring the lean startup mindset to MENA ecosystem players FastForward accelerator in Ramallah/Palestine, VentureLab Accelerator in King Abdullah University for Science and Technology (KAUST) in Saudi Arabia, Qatar Business Incubation Center (QBIC), and ZINC (ZAIN Innovation Campus) in Jordan as an umbrella for the partnership between 500 startups and ZAIN’s Corporate Entrepreneurship Responsibility (CER) division he helped cofound. From time to time, he also likes to build and adopt companies with friends and partners inside Arcoten.

“

If I could offer you

only

one tip for

the future, embrace

‘entrepreneurship’

would be it. Near future that is, and not in any way belittling the importance of sunscreen!

”

Photo by Nicola Perantoni

Views of an Entrepreneur

5. Q&A with Mustafa Sadek, Founder and Managing Partner of

UrbanBuz

Entrepreneurs do not only need incubation houses or accelerators... but to provide them with an environment where they can freely collaborate and exchange ideas with each other”

Q: “It is hard for a startup to get funding in this region”. A statement that is on most entrepreneurs lips nowadays.. Do you relate to this statement? I personally relate to it to a large extent; however, I believe this is a somehow misleading or at least an in-accurate statement. To say that it is hard to get funding here means that it is easy to get it somewhere else, which is not true. It is hard to get funded anywhere in the world especially if we are talking about first-time entrepreneurs. After being in this market for more than 4 years and as a first-time entrepreneur myself, I came to realize that the real challenge is not about getting funded but about seeking funding from the right investors who fully understand the nature of a startup so they can help the aspiring entrepreneurs in ways beyond funding. Q: When comparing the VC ecosystem in the MENA region to that of Silicon Valley, how far behind are we? Everyone likes to compare our VC ecosystem to that of Silicon Valley in the US, as it stands today, which is fine but the key question is whether we are comparing two equally mature ecosystems. Some argue that it took more than 50 years for Silicon Valley to get to where it is today, yet we tend to overlook the fact that, the VC space in MENA is at its very nascent stages. Whether we, the entrepreneurs, like it or not, the whole venture capital movement along with Silicon Valley was created by investment bankers who were looking for new ways to generate wealth. So it was logical for them to look for smart people with some track record who were trying to setup their companies and technology back then was “l’ordre du jour” so it was the natural candidate for such a new venture (pun intended), and that was the birth of Silicon Valley.

Fast forward to today and specifically in our region and you will see a similar pattern where investment bankers and people with wealth are trying to find ways to create more wealth outside the traditional channels which up until recently, was mainly focused on real estate and traditional brick-and-mortar businesses. One would look at this as a good sign, even though a bit late, but an encouraging one. The problem, however, is that the people who are trying to kick-start the startup and entrepreneurship market, are coming at it with a simplistic approach, with no real cooperation, underestimating how complex the journey can be and how different the investment approach should be, especially in technology Startups. What is making things even worse sometimes is the continuous unfair comparison between entrepreneurs and entrepreneurs in the US or in Europe, which does not make sense at all. Q: What role does Education play in creating a successful ecosystem? Very few VCs in the region are thinking and acting outside the pure realm of funding.. I truly believe that for entrepreneurship to thrive you need to encourage innovation and creativity and yet, entrepreneurs will never thrive in this region unless the mindset changes and all obstacles that may curtail entrepreneurs’ full potential are lifted. Needless to say our education system is outdated and if we are really counting on the education system to be overhauled then we need to be extremely patient as it is a long process. This is where the private sector needs to step in and create alternative programs to prepare and train the new generations and train to think like an entrepreneurs, to create their own jobs, to take risks, to accept failure, and most importantly to think big and bold.

Views of an Entrepreneur 25

Q: Where do we stand in terms of knowledge sharing and mentoring here in the region and are incubators and accelerators providing this environment? Entrepreneurs do not only need incubation houses or accelerators at this stage because the idea of incubation is not to give an entrepreneur a desk and a phone but to provide them with an environment where they can freely collaborate and exchange ideas with each other. This is something that incubators in the region are overlooking because there is a mindset here of competing not collaborating, of secrecy instead of sharing and most importantly, there is a huge stigma about failure to the extent that some ideas do not see the light for the mere fear that they will fail. Q: What do Entrepreneurs need the most, apart from funding? The whole notion of creating a VC market to throw money at startups is in my opinion, a misguided one. I don’t think early stage entrepreneurs need a lot of money at the start but what they need the most is for obstacles to be removed from their path, and there are many. In other words, they need help in navigating the legal infrastructure which is changing all the time; they need the right introductions to business owners or the relevant enablers who can help grow the startup. Passive investing, which is heard of quite frequently, even though attractive to me as an entrepreneur, is at this stage not helpful at all.

in this region still expect the majority, if not all, of their startups to succeed. This goes back to the risk-averse mindset that is established here. That needs to change. I have heard many VCs saying that they would only fund startups based on a model that mimics a similar company in the US or Europe. With all due respect, that is not entrepreneurship, this is simply playing it safe and it goes against everything that entrepreneurship and venture capital should be about. Q: What message do you have for VCs in the region? The gun shot hands-off investment approach that works in the more developed eco-systems like the US, does not work here. Here, VCs need to be more involved with creating value for their portfolio companies, they need to be more hands on; and therefore more focused in their investment approach. You will always have entrepreneurs coming up with great ideas and ambitious plans but unless you build a system for them to thrive then they will not come forward and you will end up funding businesses disguised as startups and not true startups.

in general and customer loyalty and engagement in specific. So we set out to understand the market by talking to the businesses directly and collect our own data. That’s how UrbanBuz was born, it was a painful process but it allowed us to have a better understanding of the market right from the source and then to create something to address the specific needs of that market, which proved to be rewarding to us. We did this for a while before we decided to approach investors which made the conversation with them easier, as we had by then a fully functional relevant product with paying clients. That’s why we were offered more money than what we were asking for at the time and we decided not to take money from some. Also the experience of the founding team played a big factor in getting us to where we are today, which is something you do not see in a lot of the startups here. Even with that

we had no illusions about what it would take to start something like UrbanBuz here and we knew that we needed a lot of help. So we adopted the lean startup approach where we built a company that is agile enough so we can react to what we hear from the market and quickly adapt to it and so far we have been fairly successful at that. We made some assumptions and the market proved them wrong but we were able to quickly adjust and come up with an even better solution. The funny and sad thing is I always get asked if we copied our idea from somewhere else and when I answer no I see this surprise look on the face of the people. Unfortunately there are a lot of startups here doing just that but we have decided from day one to create something that not only would be able to compete globally but that would change how businesses think of customer loyalty and customer engagement and this is what we will continue to do.

Q: What are some of things you are doing with UrbanBuz to overcome some of those challenges?

Q: Are regional VCs ready to adopt the concept of “failure”?

From the first day, I wanted to create something that can compete globally and so copying an idea from the US was not going to allow us to do that. We not only wanted to change how the market of customer loyalty is defined, but we wanted to be the leader in what we call the new customer loyalty field.

Everyone knows that the majority of startups end up failing but for some reason, investors

One of the challenges we faced is the lack of information in this region about the market

About: Mustafa has over 18 years’ experience in the technology field, with a focus on building online consumer platforms from the ground up. Previously he managed teams at Intel (USA) where he built an Enterprise User Portal; and Nike (USA) with responsibility for their B2B e-commerce platform, which generated revenues of over $4bn in2009. Mustafa’s technology development background helps him lead UrbanBuz’s progress from the front, and leverage his expertise in the constant evolution of an agile and dynamic customer loyalty platform.

The missing link: The role of legal clinics in supporting MENA’s start-up ecosystem

The missing link:

The role of legal clinics in supporting MENA’s start-up ecosystem ence does not span the board spectrum of legal issues arising under early stage venture investing. This has triggered the need for international law firms to step in and to be creative in applying alternative fee arrangements that would make their services more readily accessible by entrepreneurs and start-ups. However, in some instances pro bono-based solutions are needed particularly in the early days of a start-up’s cycle and in markets where even steeply discounted fees are out of the reach of the majority of entrepreneurs. Ayman A. Khaleq, Managing Partner (Dubai), Morgan, Lewis & Bockius

he success of the regional private equity industry has been followed by a rapid rise in the number of regionally-focused venture capital funds who built strong links with start-up incubators and academic centers across the region. However, one can also detect a missing link in what can otherwise be considered to be a bright start. While start-ups are currently better positioned than at any time in the past to access angel investments and can rely on regional and international venture capital funds and platforms to raise multiple investment rounds, the opportunity to fully benefit from such ecosystem is hampered by their limited access to quality and specialized legal and other services. What ensues is a situation in which start-ups have access to funds but - in parallel - are unable to navigate the web of legal, transaction, structural, operational, regulatory and compliance issues. This, ultimately, hinders their ability to freely operate a business, create maximum value for fund raising and

number of initiatives have been successfully implemented in a number of cities (particularly those that make it a point to attract entrepreneurs and the individuals behind the creative industries), and can provide a base from which a more localized model can be implemented across the MENA region. One such example of is the “Neighborhood Entrepreneur Law Project” (NELP) in the United States, which our law firm, Morgan, Lewis & Bockius, participates in. NELP’s mission is to provide low to mid-income microentrepreneurs with the legal services

Philip Dowsett, Senior Associate, Morgan, Lewis & Bockius

financing series, or build up to a successful exit route. Most entrepreneurs, we and our clients encounter, appreciate and value the importance of receiving quality legal service. However, in view of the generally significant financial outlay and lack of continued security of income required in launching a start-up, these entrepreneurs are unable to afford, or reasonably justify over other issues and expenses, such legal services particularly when addressing issues relating not just to setting up their business, but also the manner in which it will be funded, operated and managed. A labyrinth of legal issues relating to corporate forms, licensing, foreign ownership, employment, incentive schemes, intellectual property, and governance are few of the issues that need to be addressed. In many of the regional communities where such entrepreneurs are based, there is a very limited number of lawyers and law firms who have genuine experience in such legal issues and even where they do, such experi-

Most entrepreneurs... appreciate and value the importance of receiving quality legal service” This article aims at providing examples of successful legal initiatives that focus on pro bono support for start-ups, and examples of the type of issues that such legal services should aim to tackle in the Middle East and North Africa (MENA) region. While a number of regional cities, such as Amman, Beirut, Cairo, Jeddah and Riyadh are net contributors to the regional start-up industry, the UAE (and Dubai specifically) has the type of characteristics, including legal systems and access to capital, that would and should make it a prime location from which such specialized legal support can be extended, on a pro bono basis, to such start-ups.

necessary to get their business started off on as sound a footing as possible, through conducting an intake with potential clients before referring them to firms like ours for pro bono representation. Such intake process provides an important screening function. For example, during this process, NELP reviews the potential client’s household income to make sure it qualifies for pro bono services and also considers its business plan to assess what stage the new business is at and the seriousness of the client about the project. Factors such as whether the business intends to contribute to an economically depressed community are also considered.

Tried and tested initiatives

Pro bono attorneys then assist these entrepreneurs on a range of matters such as incorporation and tax issues, commercial lease negotiations, and permit applica-

In developing a structure for a legal clinic, there is no need to reinvent the wheel. A

tions. (By way of example, a recent case we undertook involved drafting a fiscal sponsorship agreement for a start-up that connects senior citizens with underprivileged elementary school children for tutoring assistance). In addition, volunteer attorneys have the opportunity to participate in limited advice small business legal clinics where they advise New York City based small business owners on a range of issues without engaging in an ongoing representation. There are other efforts to expand the availability of pro bono legal services for small business. For example, recently more than 150 New York City attorneys from over 30 firms, including Morgan Lewis, participated in a one day Small Business Legal Academy, organized by the Association of Pro Bono Counsel (www. apbco.org), where over 200 fledgling small business owners were able to attend workshops on topics such as Not-for-Profit Formation, Employment Law and Personnel Management, and also meet individually with lawyers to discuss specific legal issues. The importance of localizing legal services At 50,000 feet, entrepreneurs in the Middle East face the same obstacles and challenges as those in even the most mature and accommodating start-up environments in the world. That said, there are additional issues and challenges which are inevitably encountered by all start-ups in the MENA region, but equally on the flip-side, many advantages, including, not least the often tax free environment. Set out below are certain key considerations and issues that we see encountered by start-ups and entrepreneurs during the early life of the enterprise and in accepting venture capital or private equity invest-

The missing link: The role of legal clinics in supporting MENA’s start-up ecosystem 29

Although sponsorship is generally an appreciated and accepted practice across MENA, there are many complexities and pitfalls with these arrangements and it is important to ensure the arrangement is reasonable and addresses certain pertinent issues and gives the entrepreneurs the necessary protections” 28

ment. As a law firm regularly advising on venture capital and private equity at various financing stages, in the absence of legal advice and addressing certain issues at an early stage, significant time and expense can often be expended in rectifying these issues or getting the start-up “investment” ready. By also addressing these issues at an early stage, entrepreneurs can succeed in value creation from the outset and making investment more attractive and improve the premoney valuations of their companies. The list of issues discussed below is in no way intended to be exhaustive but is intended to be indicative of certain key aspects that should be given consideration Ownership and Sponsorship. The MENA region, with the exception of certain countries, differs from the Western world in respect of incorporation of companies and is significantly more onerous and restrictive. More relevant for GCC companies, unlike, for example, the United Kingdom where you can purchase a shelf company immediately for around US$50, there is no similar concept in many MENA countries and incorporation is a much longer, drawn out and costly process. Additionally, certain countries (including the UAE) for onshore incorporations requires a local sponsor who holds a minimum percentage of the share capital of any UAE limited liability company. This, however, generally does not beneficially entitle that person to that percentage of profits and quite often the local sponsor will, through separate agreement, assign any voting rights and economic rights attributed to its shares in consideration for an annual fee. Although sponsorship is generally an appreciated and accepted practice across MENA, there are many complexities and pitfalls with these arrangements and it is important to ensure the arrangement is reasonable and addresses certain pertinent issues and gives the entrepreneurs the necessary protections (for example, to change out the sponsor at the relevant time). An

alternative to local ownership is to incorporate in a freezone where 100% foreign ownership is permitted which, where possible, is often the preferred route of establishment for entrepreneurs and Dubai has excelled in creating a very accommodating landscape in respect of its freezones. However, with the wide range of freezones available it is important to ensure the correct free zone is chosen or such can lead to future hindered operations. Structuring At the beginning of a start-up’s life one of the more significant expenses is the establishment costs and accordingly, and understandably, most start-ups are often structured with ownership directly into the onshore operating entity. Although this is often sufficient for initial operating and ownership purposes, due to often simple and unsophisticated corporate and commercial laws in the MENA jurisdictions, as well as limitations on share transfers, MENA jurisdictions are often non-investor friendly jurisdictions, and also fail to adequately protect founders where outside investors are introduced. Accordingly, quite often VC and PE firms as a condition to investment will require corporate restructuring to provide an offshore ownership regime (for example, in the Cayman Islands or British Virgin Islands) which will wholly-own the local operating entity (subject to local ownership requirements) and all shareholders will reside at the offshore level. This allows much more certainty on the applicability of agreed investment provisions, for example, there can be different shares classes (often not possible in MENA jurisdictions), drag rights, tag rights and other transfers all of which can be enforced (which is not the case often in MENA countries) and allows for more flexible governance. Although it is often understandable why start-ups are not initially structured offshore, with cost the primary concern, such restructurings can

become complicated if not prepared for in advance or positioned correctly. Licensing Again, in contrast to Western countries, most MENA countries require companies to obtain and annually renew a specific licence setting out its permitted activities. There are certain activities which may be possible in some areas of a country and not others (for example, in the UAE with a free zone licence, activities are meant to be restricted to operation in that freezone). Accordingly, it is important to ensure that the correct licence is obtained and advice received on the permissibility of country wide operations. Corporate Governance As outlined above, MENA jurisdictions often do not provide sophisticated corporate governance regimes and as, commonly, civil law jurisdictions, can lack certainty in the determination or applicability of certain laws, regulations or guiding principles. Also, given that quite often amending constitutional documents of MENA entities is an involved process, structuring governance correctly from the outset can avoid continued operational issues. Accepting Investment Finding and securing investment from a VC or PE investor is a key and monumental moment in the life of a start-up. It demonstrates the achievements of that entity to date as well as its potential, and that first stage of VC/PE investment can be the most importance financing stage of a start-up. That said, there are many issues to be aware of in accepting such investment and in the absence of specialised legal advice, entrepreneurs can often expose

themselves unwittingly to significant risks. Investor Rights In accepting VC or PE funding, an investor will expect certain rights, which is beyond the scope of this article, but one such a right will generally include board and veto rights over certain decisions, such as raising debt, opening new branches, incurring CAPEX over a certain threshold, and commencing litigation. At this stage it is imperative for the founders and operators of a business to ensure that, although veto rights are inevitable and market, such are not too extensive and far-reaching so as to unduly hinder the day-to-date operations of the company, which is not in the interests of either party but can often be the result of an over-zealous investor and ill-advised founder Another key set of rights an investor will commonly require are rights regarding the transferability of shares. For example, an investor will want to lock the founders up for a certain period, will likely require pre-emption rights over any transfers of shares, drag rights (i.e. the ability of the investor to compel the transfer of shares, which a founder needs to be very conscious of as it can entitle a person to sell the entire company), down-round protection (i.e. if shares are issued in the future at a price lower than the investor paid, it gets “made-good” (although the levels of redress vary and can be complicated)) and potentially a “liquidation preference” (i.e. a preferred or first participating return on their investment). Intellectual Property Start-ups can often involve intellectual property ownership or licensing, and

in such cases this can be where the real value of the company lies. Accordingly, it is imperative to ensure such intellectual property is adequately protected, but often due to the specialized nature of intellectual property this is often overlooked. Due to its intrinsic value to those intellectual property focused companies ensuring the intellectual property is protected is key for both value creation and value preservation for start-ups. Financing Start-ups may seek to obtain debt financing, bid-bond facilities or overdrafts and in such cases the arrangements will often be on the banks standard terms. However, quite often start-ups will avail loans from friends and family and in order to avoid confusion or uncertainty papering all loans, as well as other related party transactions, however simply, can help create strong corporate governance and in itself created a more “investable” company (this applies to ideally documenting all arrangements). Governing Law and Dispute Resolution A common misconception is that operating in a country requires using the law of that country for any agreements entered into. Although this may be the case and local entities may require using that law, there is often no obligation to do so and quite often parties prefer more sophisticated laws to govern more complicated transactions, with English law being the preferred choice. However, each and any governing law comes with its own nuances and ideally material transactions are reviewed by a qualified lawyer to ensure there are no issues under the law of choice.

The missing link: The role of legal clinics in supporting MENA’s start-up ecosystem

Employee Incentives Where start-ups are cash strapped or seeking to preserve cash-flow, often incentives other than high salaries are offered to employees, advisors and consultants, which also encourage performance, commonly in the form of “sweat equity”. However, such is often more a promise of equity than an actual allotment often because MENA countries are not accommodating for issuing multiple minority shareholdings, but also often because the start-up does not have a sophisticated governance regime to accommodate such. Incentive schemes can be complicated, and it is important to ensure that such is documented between the relevant parties to avoid any claim for an unintended equity allotment further down the road. Also, as soon as a formal share incentive scheme can be implemented such is advisable, as one of the paramount matters of interest to an investor is who has claims over shares and what their ownership percentage looks like following their investment and on a fully diluted basis. The UAE as a hub for pro bono legal clinics The case for the UAE as a legal hub for the

provision of legal services to start-ups on a pro bono basis is strong and encouraging. Aside from the favourable tax free status of the UAE, the governments of Dubai and Abu Dhabi are actively participating in providing their support by establishing companies that function as accelerators such as Silicon Oasis Founders and Twofour54 to fund and guide entrepreneurs and start-ups at their initial stages. For example, further to providing financial support, Twofour54, an Abu Dhabi Government initiative and enterprise, recently spearheaded the introduction of a new visa category that is expected to be implemented soon for entrepreneurs to start a business in the UAE aiming to provide a cost-efficient and viable alternative to the current expensive residency visa. The foreign ownership issue has always been an obstacle when it comes to opening a company in the UAE as the laws of the country would oblige a foreigner owner to let go of 51% of his share capital to a UAE partner. Dubai took major steps to deal with such obstacles in order to attract foreign entrepreneurs and startups to the country establishing more than 13 tech free zones where an owner would retain 100% of his company’s

share capital. Free zones deal with visa matters as well as they now provide entry permits to those entrepreneurs and startups who want to register their companies within. Dubai free zones are built in a manner that will accommodate thousands of entrepreneurs and startups providing office space for their companies to operate. All of which shows real intention by Dubai to attract startups and reduce challenges that may affect their growth and operation.

form the type of initiative that can provide a tangible boost to the region’s start-up industry particularly in the technology field. While formulating such initiatives may prove time consuming, individual lawyers or law firms can always adopt local pro bono programs within such space. Finally, adopting the proposed pro bono approach can also be viewed as a way for many international law firms to give back to jurisdictions where they operate on a tax free basis.

But more importantly, the human capital that can be found in the UAE (and in Dubai specifically) is the key reason why the country is well-placed to bridge the “legal support” gap. A number of professionals are investing, not just through the institutions they represent and the funds they manage, but also personally, and formal and informal angel investors clubs are taking shape. Such clubs can provide an excellent platform through which legal support can be provided. More importantly, there are more international law firms in the UAE than in any other regional jurisdiction and many of those law firms offer the type of legal services that regional entrepreneurs need but in most cases cannot afford. Those law firms also work within a much broader legal community that includes in-house lawyers who advise the public or private sector, and together can

More importantly though, it is our view that if this region is to address the type of social and economical issues that arise as a result of the massive population growth, much more needs to be done by the private sector, while governments would merely provide an enabling environment. Such activities by the private sector, and the professional set-ups behind it, ought to utilize pro bono initiatives hand-in-hand with “for profit” activities. We also believe that the MENA Private Equity Association is an extremely useful conduit that can establish a link between the regional PE and VC industries and its support echosystem including consultants, lawyers and accountants on the one hand, and entrepreneurs who can benefit from the existence of such legal clinics on the other. We plan to continue to work with association on making this vision a reality.

“

More importantly, there are more international law firms in the UAE than in any other regional jurisdiction and many of those law firms offer the type of legal services that regional entrepreneurs need but in most cases cannot afford...

” Photo by Sonja Langford

Photo by Adam Przewoski

About The MENA Private Equity Association

The MENA Private Equity Association is the sole representative body to promote the MENA private equity and venture capital industry across the globe, to key stakeholders. Its primary goal is to facilitate the knowledge sharing in order to encourage overall economic growth and build trust with investors, regulators and the public regionally and internationally. Our mandate: • • • •

Enhance transparency through industry statistics and information sharing to build trust in the industry. Offer a platform for collective knowledge sharing from top practitioners to develop best practice guidelines in various industries. Leverage on expertise of leading lawyers and consultants to keep an open dialogue with regional regulators. Bring together members and experts from different industries to participate in our member-only flagship, roundtable events to help our members identify investment opportunities and build new contacts.

We help the PE/VC community through these specific initiatives: • • • • •

Issue the Annual Private Equity & Venture Capital reports on yearly basis. Reach out to family offices and Investors in the GCC region and raise awareness about the members of the association and the important role they play in growing companies. Gather GP’s, industry professionals as well as operators in Education, Healthcare, Retail, Oil & Gas, IT, Consumer Goods, F&B, Financial Services and others, to help them identify investment opportunities. Issue white papers summarizing the roundtable discussions. Tie-up with other Associations in Europe, North America and Asia to offer comemberships, discounted rates to attend global events, customized training programs and exposure to global research.

www.menapea.com

Members Directory

7.1 MEMBERSâ&#x20AC;&#x2122; DIRECTORY The Abraaj Group Dubai International Financial Centre (DIFC) Gate Village 8, 3rd Floor PO Box 504905 Dubai, UAE Global Offices: Istanbul, Mexico City, Mumbai, Nairobi, Singapore, London info@abraaj.com www.abraaj.com Al Masah Capital Dubai, UAE Abu Dhabi, UAE Kuwait Singapore +971 4 453 1500 nrupadityasinghdeo@almasahcapital.com www.almasahcapital.com Amwal Al Khaleej Riyadh (HQ), KSA, +966 11 216 4666, Riyadh@amwalalkhaleej.com Dubai, UAE, +971 4 327 5875, dubai@amwalalkhaleej.com Cairo, Egypt, +202 2736 3742, cairo@amwalalkhaleej.com www.amwalalkhaleej.com Capital Trust Group The Euromena Funds Beirut, Lebanon UK USA +961 1 368968 wassim@capitaltrustltd.com www.capitaltrustltd.com Cedar Bridge Partners Dubai, UAE info@cedar-bridge.com www.cedar-bridge.com Colliers International P O Box 71591 +971 4 453 7400 Dubai, UAE www.colliers.com Dubai Silicon Oasis Authority Headquarters Building PO Box 6009 Dubai, UAE +971 4 501 5374 dhorska@dso.ae www.dso.ae 34

EFG Hermes Private Equity Egypt Tel: +20 (0)2 3535 6499 Fax: +20 (0)2 3537 0942 Building No. B129, Phase 3, Smart Village Km 28 Cairo Alexandria Desert Road 6 October 12577, Egypt UAE Tel: +971 (0)4 363 4000 Fax: +971 (0)4 362 1170 Level 6, The Gate, West Wing, DIFC Dubai, UAE pegroup@efg-hermes.com www.efg-hermes.com Eversheds Global Offices: Abu Dhabi, Amman, Baghdad Doha, Dubai, Erbil, Riyadh (in association with Dhabaan& Partners) +962 6566 0511 nadimkayyali@eversheds.com www.eversheds.com Growthgate Capital Corporation B.S.C. Manama - Bahrain (Registered office) Building 247, Office 653 Road 1704, Diplomatic Area 317 + 973 17 518734 + 973 17 518787 Kingdom of Bahrain Dubai - UAE (Branch office) Level 11, Emirates Towers Sheikh Zayed Road, PO Box 36330, Dubai - UAE + 971 4 3302220 + 971 4 3301133 Beirut - Lebanon (Representative office) Beirut Central District 157 Marfaa Saad Zaghloul Street + 961 1 974412 + 961 1 974413 corporate@growthgate.com Gulf Capital Al Sila Tower, 25th Floor Sowwah Square Al Maryah Island PO Box 27522 Abu Dhabi, UAE +971 2 671 6060 info@gulfcapital.com www.gulfcapital.com

International Finance Corporation (IFC) 2121 Pennsylvania Avenue, NW Washington, DC, 20433, USA +1 202 473 3800 www.ifc.org King & Wood Mallesons Suite 303, Level 3 Park Place Sheikh Zayed Road PO Box 24482 Dubai United Arab Emirates T: +9714 328 9900 F: +9714 328 9911 E: dubai@me.kwm.com Malaz Capital Suite 510, Al Akaria III, Olaya Street Riyadh, KSA +966 1 4601644 info@malazcapital.com www.malazcapital.com Masdar Capital Masdar City Presidential Flight Khalifa City A Abu Dhabi, UAE P.O. Box 54115 +971 2 653 3333 info@masdar.ae www.masdar.ae Morgan, Lewis & Bockius LLP Emirates Towers Offices Dubai, UAE PO Box 504903 +971.4.319.7934 www.morganlewis.com

PineBridge Investments Middle East B.S.C (c) GBCORP Tower, 13th floor Bahrain Financial Harbour District PO Box 58 Manama, Bahrain +97317111888 www.pinebridge.com Qatar First Bank Suhaim Bin Hamad Street PO Box 28028 Doha, Qatar +974 4 483333 information@qfib.com.qa www.qfib.com.qa ReAya Holding Suite 3007, 3rd floor Kheriji Plaza, Madinah Road PO Box 127232, Jeddah 21352 Jeddah, KSA +966 2 6676777 +966 2 6656333 info@reayaholding.com www.reayaholding.com TVM Capital MENA Limited DIFC Gate Village, Building 4 PO Box 113355 Dubai, UAE Global Offices: Germany, USA schuehsler@tvm-capital.com www.tvm-capital.ae Waha Capital Etihad Towers, Tower 3, Level 42 & 43 PO Box 28922 Abu Dhabi, UAE +971 2 667 7343 waha@wahacapital.ae www.wahacapital.ae

7.2 Venture Capital Firms in MENA Accelerator Management Company

Malaz Group

Accelerator Technology Holdings

Maxula Gestion

Alternative Capital Partners

Middle East Broadcasting Corporation LLC

Amen Invest

Middle East Venture Partners

Arab Business Angel Network

Minah Partners

Arbah Capital

MITC Capital

Ascent Group

Mobily Ventures

Berytech S.A.R.L.

National Technology Enterprises Company

Catalyst Investment Management Company

New Enterprise East Investments

CDG Capital CERT Capital

Nile Capital

Creative Edge Technology

Qatar Capital Partners Riyad Capital

Daman Investments PSC

Sadara Ventures

EFG-Hermes Private Equity

Saffar Capital Limited

Estithmaar Ventures (GP) Limited

Saudi Company for Technological Development and Investment

Fidelium Finance Genero Capital GFH Capital Limited GroFin Advisory IdeaVelopers Ikdam Gestion Innovation 360 Fenox Venture Capital Intel Capital Interactive Ventures Holdings Iris Capital

Sawari Ventures Sherpa Finance Club Sinbad Ventures The National Investor Private Joint Stock Company TIMAR Ventures General Partner Limited Tuninvest Finance Group Tunisie Valeurs United Gulf Financial Services North Africa Upline Investment

IT Ventures/Nile Capital

Venture Capital Bank B.S.C.

Khalifa Fund for Enterprise Development

Vodafone Egypt Telecommunications Company S.A.E.

Lebanon Invest Asset management SAL

Wamda

Disclaimer: The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is or will continue to be accurate. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

Photo by By Martin Dรถrsch