BECO Capital: 2019 Will See Mega-Exits Thanks to MENA VCs

Alexis Baghdadi, Oct 02 2015

Venture Capital (VC) activity in The MENA has grown in the past 12 months according to research by BECO Capital, a regional venture capital firm focused on technology investments in the GCC.

BECO Capital has published a list of the 109 players in the MENA’s VC ecosystem (the “Big Four”), arranging them in a format based on the periodic table of elements (a table of chemical elements arranged by order of their atomic number).

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Of these 109 players, 19 are regional VC firms and 7 are international ones. Additionally, 12 regional conglomerates have set-up VC businesses. Other operators include: tech acquirers (16); angel investors (14); incubators/accelerators (14); angel groups (11); and micro VCs (6).

Finally, BECO Capital found there are 10 players in growth/late stage investments, echoing the concerns of Dany Farha, CEO of BECO Capital, who felt that the technology sector was vastly underfunded in the region.

In April this year, Farha had cited the lack of local regulations that encourage or support startup funding as the main reasons why the Arab world is lagging behind in that sector. At the 8th MIT Pan Arab Conference on growth and sustainability in the region's evolving landscape, he advocated more allocations from sovereign wealth funds (SWFs) and institutional investors to the top VC firms.

In the meantime, the startup ecosystem has started maturing with the arrival of new players, particularly in light of government initiatives such as Lebanon’s Central Bank Circular #331 and the Kuwait National Fund for SME Development.

Currently, VC players are seeking to deploy the $150 million remaining from the $250 million they raised over the past 3 years.

BECO Capital has raised about a quarter of funds committed so far this year, with a mandate to provide tech startups in the UAE, Saudi Arabia, Egypt, and Lebanon with growth capital, operational improvements, and support in creating value. The firm said this remaining capital might not go entirely to new investments. BECO Capital has acquired stakes in Careem, Propertyfinder, and Bayzat.

According to Farha, the region will start to reap the benefits of these long-term investments by 2019 and start witnessing mega exits, including the region’s first “unicorns” (tech companies expected to break the $1B valuation ceiling).

“The VC ecosystem (Big Four) need to generate at least one US$150 million exit every year starting in 2019 onwards for our deployment to yield VC returns for investors. Such a momentum for exits will bring more money into the ecosystem, creating a healthy positive feedback loop and ensure its sustainability and overall wellbeing,” said Farha.

See related: The Top Corporate Venture Capital Programs in the GCC

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