QIA to take a position $1 billion in worldwide and regional enterprise capital funds

The Qatar Funding Authority (QIA) is launching a $1 billion enterprise capital (VC) fund of funds for worldwide and regional enterprise capital funds, the sovereign wealth fund introduced on Monday.

This system, in line with QIA, seeks to draw worldwide VC funds and startups to Qatar and the broader Gulf Cooperation Council (GCC) area, with a selected deal with the fintech, edtech, and healthcare sectors.

Much like typical fund-of-funds constructions, QIA’s initiative will make investments not directly via different VC funds but additionally make focused co-investments with collaborating funds. The sovereign wealth fund desires to bolster the variety of startups and improve the provision of VC funding inside Qatar because it makes an attempt to slender the hole with extra established ecosystems in neighboring international locations reminiscent of Saudi Arabia and the United Arab Emirates (UAE).

Gulf sovereign wealth funds (SWFs) just like the Abu Dhabi Funding Authority, ADQ, Mubadala, Saudi Arabia’s Public Funding Fund, and Qatar’s QIA collectively invested over $73 billion throughout numerous asset lessons in 2022, in line with Global SWF, a web-based tracker. These funds, aiming to scale back reliance on oil, have more and more poured cash into tech startups within the area, hoping to nurture a thriving enterprise capital trade.

This technique has seen some success. In 2023, Saudi Arabian startups alone raised $1.3 billion. Moreover, information from Magnitt reveals that solely 45% of traders got here from outdoors the MENA area, indicating rising maturity within the native enterprise capital ecosystem, which obtained $2.6 billion in funding final yr.

Till now, solely the PIF had beforehand established devoted funds for tech entities. Nevertheless, in contrast to Jada, the PIF’s $1 billion fund of funds and Saudi Enterprise Capital (SVC), which targets each enterprise capital and personal fairness funds, QIA’s fund of funds focuses solely on enterprise capital funds, marking the primary of its variety within the area.

“There is currently no dedicated pool of capital in Qatar for companies that are past seed funding and are ready for Series A to Series C funding rounds. Building a well-connected startup ecosystem network in Qatar is fundamental to diversifying the country’s economic base in the long term,” stated QIA CEO Mansoor Ebrahim Al-Mahmoud in an announcement. “QIA is launching this program to help ensure that innovative businesses can readily access capital and support from VC funds, enabling them to scale operations and expand market presence in Qatar, across the GCC, and ultimately onto the international stage.”

The QIA requires fund managers searching for funds to display a robust observe file and actively take part within the Gulf’s VC and startup ecosystem. This entails establishing operations, a senior-level presence in Qatar, and outlining growth plans throughout the GCC.

It will likely be fascinating to see how this new directive aligns with QIA’s earlier investments earlier than right this moment’s fund-of-funds launch. Traditionally, these wealth funds have backed international startups primarily within the U.S. and Asia, with restricted ties to the Gulf area. QIA, for example, has investments in Builder.ai, Mukesh Ambani’s Reliance Retail, Singapore AI advertising and marketing platform Insider, Africa’s telecom operator Airtel Africa and Indian startups Swiggy and Flipkart.