VentureSouq, an investment firm based in the UAE that focuses on early-stage technology businesses, has announced the launch of a $50 million venture fund focused on the FinTech sector.
Mena FinTech Fund I will provide funding to FinTech and software-as-a-service companies. The fund is backed by major regional investment firms such as Abu Dhabi’s Mubadala Investment Company, DisruptAD, Abu Dhabi’s holding company ADQ’s venture capital platform, Saudi Arabia’s Jada Fund of Funds and Saudi Venture Capital Company, Bahrain’s Al Waha Fund of Funds, and OFC, The Olayan Group’s Middle East investment arm.
It will concentrate on key subsectors such as payments infrastructure, alternative credit, digital banking, property technology, insurance technology, and personal financial management, and will collaborate closely with regional entrepreneurs at the forefront of financial disruption.
Mena’s FinTech ecosystem is still in its “very early days,” but the sector’s foundational layers are beginning to face disruption, according to Suneel Gokhale, a general partner at VentureSouq.
“In our opinion, now is a great time to invest in what we believe will be the next batch of FinTech unicorns [start-ups valued at $1 billion or more],” Gokhale told The National on Sunday.
“We believe it was just a matter of time; you have FinTechs challenging incumbents all over the world with better user experiences and less friction, and in the end, better products that hack distribution will win more often than not.” Consumers and businesses in Mena want to benefit from this as well, and we are now at a point in time when talent, access to capital, and government/regulatory support are all very strong, resulting in the rapid emergence of FinTech challengers, particularly in the UAE, which is now universally regarded as a great place to build a business and a life.”
The region’s FinTech sector is gaining traction as more consumers turn to digital payment services, which has been accelerated by the Covid-19 pandemic, creating an opportunity for companies, particularly start-ups, to provide new and additional services to meet the growing demand.
According to a report by consultancy firm RedSeer, one out of every four investment deals in the Middle East in 2021 will be in FinTech, which will account for roughly a third of all funding raised – $2.1 billion in 220 deals.
According to recent Bain & Company research, online sales in the Mena region are expected to triple to $28.5 billion by 2022 from $8.3 billion in 2017.
VentureSouq’s fund has invested in start-ups throughout Mena and Pakistan. Among its investments are the UAE FinTech platforms Baraka, FlexxPay, NymCard, and Verity, as well as Pakistan’s Creditbook, PostEx, and Abhi Finance.
The fund also invested in Egypt’s Trella, Dayra, a gig economy financial platform, and Yassir, an Algeria-based ride-hailing app, among other companies that will be announced in the coming months.
“As Mena’s first vertical venture fund, assembling the right LP [limited partner] base was critical.” “We needed partners who could not only understand where the region is on the evolutionary curve, but also help our portfolio companies navigate the difficult regulatory and funding terrain in Mena,” said Maan Eshgi, a general partner at VentureSouq.
“In order for us to achieve the results we require, our portfolio companies must have access to not just one market, but the entire Mena region.” We believe we have the right stakeholders to help us gain access to that larger market.”
VentureSouq was founded in 2016 and has operations in the UAE, Egypt, and Saudi Arabia, and has invested in more than 200 companies worldwide.