“AS the largest Venture Capital (VC) in the region, Middle East Venture Partners (MEVP) has more than $200 million in assets under management across five funds, with over $100M attracted in co-investments. We have a team of 23 highly experienced VC professionals and 40 portfolio companies, and a solid track record with value added investors such as telecom operators, media groups, and financial institutions,” said Walid Hanna, founder and chief executive officer, Middle East Venture Partners (MEVP).

MEVP recently announced a partnership with Mohamed Alabbar, who acquired a non-controlling stake in MEVP. “We are excited about this partnership with Alabbar being a recognized leader with an incredible track record in business and entrepreneurship. Since our partnership, our pipeline has already increased and we are looking into more strategic opportunities across the region.

“We have a strong portfolio of companies across most tech verticals, including several leaders in key sectors, such as new media, fintech, healthtech and e-commerce marketplaces — with several synergy opportunities across companies. Among some of the leading names in our portfolio are Anghami, the leading music streaming platform in MENA, Altibbi, a leader in digital healthcare in the region, YGAG, a leading digital gift card marketplace in MENA, The Luxury Closet, a leader in second-hand luxury in MENA, and Wego, a leading travel portal,” Hanna said.

As for investments in Saudi Arabia, Hanna said “Saudi Arabia is one of the largest markets in the region in terms of wealth and population making it one of the biggest markets for tech companies looking to expand regionally. The growth-stage tech companies we invest in typically have a presence in Saudi Arabia or have plans to expand there. In addition, Saudi youth are some of the most digitally connected in the region and they are demanding locally relevant tech-based solutions that cater to them. Tech startups are creating and delivering these new services; however, as they reach the next stage of growth, which requires more capital, they are finding it difficult to attract funding. In many cases the funding has lagged behind the pace of change and adoption of technology and this is where MEVP comes in.

“We believe that there is significant opportunity for growth, especially for later-stage and growth tech ventures. We recently launched our fifth fund, MEVF III, with a target size of $250 million and we aim to invest in innovative early-stage and growth-stage tech companies across the region.”

“As the market is showing more liquidity and more exits, our new fund MEVF III will help to provide growth capital for these emerging local champions. We can help them with larger-ticket growth capital as well as operational and strategic expertise. We are always on the lookout for rising Saudi stars, and we are actively looking for a full-time Saudi venture partner to support us locally in Saudi Arabia to encourage and bolster the tech startup ecosystem. In addition, we are considering opening an office in Riyadh to have a more permanent presence and further support Saudi growth-stage businesses,” said Hanna

On challenges that MEVP might face in Saudi market, Hanna commented: “The challenges in Saudi Arabia are similar to those encountered in other markets in MENA. The regional technology sector lacks Series B and late stage growth capital. International investors are reaping the rewards of the opportunity in later stage funding in the MENA region. Such “capital void” highlights a compelling opportunity for MEVP, and other VCs, to play a significant role in this nascent space.

“In addition, as with the rest of the region, there needs to be further encouragement of technology-based education and training for youth to develop their talents and prepare them for jobs that require these skills. If we are looking to have the region compete on a global level, local talent needs to be nurtured from today. Furthermore, certain regulations can be eased to allow startups and small businesses to grow and thrive in a challenging and competitive local and global business environment we will then see a more thriving entrepreneurial ecosystem that drives innovation and caters to the requirements and aspirations of future generations.”

According to Hanna investing in tech start-ups has two sides. On the demand side, there are over 300m tech-savvy consumers hungry for digital goods and services. There is high Internet penetration and high smartphone penetration. Digital consumers want to learn and shop on their mobile phone, yet e-commerce only accounts for 2% of retail in MENA.

On the supply side, there was more than $800m invested last year with the strong possibility to break $1bn this year. There is a significant spike in interest from global tech companies and local corporates into this region. In the past year Amazon acquired Souq (pivoting from their traditional approach to build locally); Emaar Malls acquired a majority stake in Namshi to expand their online retail presence; Delivery Hero acquired Kuwaiti food delivery rival Carriage.

“We believe this momentum will attract more buyers to the region and validate the tech investment potential in the Middle East. More importantly, it underscores the importance to have local partners who understand the complexities of this large bloc with different regulations and different tastes across the region. It is clear that demands from the consumer and businesses are growing faster than the capital available for these tech companies. There are emerging local champions reaching next level of growth with increasing capital needs and that is where our new fund will be positioned.”

About the new fund, he said, MEVF III will focus on key six tech sectors with attractive growth potential: new media, ecommerce/marketplaces, fintech, healthtech, edutech, and travel.

MEVP invests in companies that provide real solutions to this region given its challenges in a complicated market with local needs. The startups must have scalable business models and proven product-market fit, solid and proven economics with organic traction. With regards to the entrepreneurs, MEVP supports founders with a strong track record of success and sector knowledge expertise have the ability to build MENA market leaders.”

On the future of VC investments in the region, Hanna said that VC investments in MENA (as % of GDP) amounted in 2016 to 0.03%, significantly less than in the US (at 0.4%) and even much less than in India (at 0.2%). This is just one descriptive factor at the tremendous opportunity for growth. The MENA region presents an attractive opportunity for venture capital investment due to favorable macro-economic conditions, rise of local champions, lack of equity funding, and realization of exit opportunities. The region has a total population of about 345 million, and with one common language and a shared culture, the region represents a large market for consumer and B2B tech companies.

“We believe that now is the beginning of a big tech play in MENA. We are seeing rapid changes and adoption of technology by consumers, businesses, and governments. The shift from offline to online is happening now and the region is starting to experience the digital disruption like rest of the world. Some governments are trying to diversify economically with new initiatives into the technology and other sectors. The current macro environment is very attractive.

“MEVP wants to transform local economies — be the agent of positive change and disruption through building home grown tech champions that defend our local commercial interests. And to achieve this, we need to provide financial, strategic and operational support to local tech-based companies,” Hanna said

MEVP, established in 2010, is now the oldest and one of the largest and most established independent venture capital firms in the region involved in building the thriving tech entrepreneurial ecosystem. MEVP invests in innovative, early-stage and growth-stage businesses run by talented entrepreneurs located primarily throughout the Middle East, North Africa and Turkey (MENAT) region.

MEVP team is highly experienced and is a solid track record with value added investors. VC is important to drive the tech entrepreneurship in the region, especially to unlock the potential of its tech-savvy youth, with more than one-third the population below the age of 25. VC encourages these youth, as well as the region’s creative innovators- those that have brilliant ideas waiting for support in funding to grow.