Venture Capital Mena Report

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Venre Caa n e Me Ea an Nr Arca Rer

The informaon contained herein is of a general nature and is not intended to address the circumstances of any parcular

individual or enty. Although we endeavor to provide accurate and mely informaon, there can be no guarantee that such

informaon is or will connue to be accurate. No one should act on such informaon without appropriate professional advice

aer a thorough examinaon of the parcular situaon.

tAblE of CoNtENts

01. introduction 03

02. definition of Vc in MenA 04

03. iMportAnt note 05

04. MAcro oVerView 06

05. the Vc ecosysteM 07

06. Vc in gcc 08

07. Vc in leVAnt 10

08. Vc in north AfricA 1309. MenA Venture cApitAl inVestMent dAtA 18

10. legAl chAllenges for MenA Vc 22

11. snApshot of MenA Vc firMs 25

12. Angel/seed & other 27

13. sociAl Vc 28

14. incubAtors/technology pArks

& relAted entities

29

15. directory 3116. directory- Angel/Seed & other

inVestMent firMs

35

17. directory- SociAl Vc 36

18. Appendix 37

19 MenA priVAte equity AssociAtion 44

20. supporter profiles 45


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iNtRoduCtioNtarek Kar, Raa Enerre devemen

Venture Capital (VC) is a long term enterprise and as such it has the luxury of looking past immediate polical volal-

ity and beneng from the long term economic trend of high growth in the MENA region, where change lies,

opportunity abounds. Economic reform has been underway in the region for over ten years and has produced growth

rates that put MENA in the top er of emerging markets. Moreover, with the demographic dividend that the fast

growing populaons of MENA provide the opportunity for venture capital is increasing signicantly year on year.

In reality, the Venture Capital industry is just beginning to take o in our region and the number of VC deals closed

in 2009 and 2010 is almost triple the number of deals closed in the 2 years prior to that. Moreover, Venture Capital

professionals in the region expect those gures to rise even further over the coming 18 months. Similarly on the

fund raising side, we noce that Venture Capital funds raised in 2010 alone were almost equal to the total number

of funds raised in the 4 years before that. This is a strong predictor of expected future acvity on the deal making

side in the Venture Capital space.

It is worth nong that in MENA the growth equity segment is also developing rapidly. Firms in this space may invest

in a wide variety of SMEs including those in tradional industries as well undertaking investments in earlier stage

venture deals.

Like every nascent market there are challenges to the development of a Venture Capital industry in our region,

enforceability of certain tradional VC investment terms and structures, market educaon and the depth of the

sophiscated investor pool. However, with very strong macroeconomic fundamentals and a potenal pan-Arab con-sumer market of 400 million, the current underinvested nature of the Venture Capital industry clearly suggests that

the opportunity signicantly outweighs the challenges.

With the rise of more and more entrepreneurs, the formaon of new funds, and solid demographic and economic

fundamentals, the medium to long term prospects of the industry look very bright for investors and entrepreneurs

alike.

1

VC Taskforce Others

his report was a collaborave eort between the MENA Private Equity Associaon, the VC Taskforce Team, Zawya and industry professionals.

pecial thanks go to Ghazi Ben Othman for providing a signicant poron of the report content.

Tarek Kabrit, Riyada Enterprise

Development

www.riyada.com

Ghazi Ben Othman, Malaz Capital

www.malazcapital.com

Walid Hanna, Middle East

Venture Partners (MEVP)

www.mevp.comFeroz Sanaulla, Intel Capital

www.intelcapital.com

Ali Arab, Zawya

www.zawya.com

Nicholas Mc Donagh, Saar

www.saar.com

Basel Roshdy,

IT Ventures/Nile Capital

www.nile-capital.com

Amer Mardam Bey, Siraj Capital

www.sirajcapital.com

Tarek Asaad, Ideaveloperswww.ideavelopers.com

Sami Beydoun, Berytech

www.berytech.org

William C. Fellows,

FSVC

www.fsvc.org

Andrew Lewis, Norton Rose

www.nortonrose.com

Raymond Soueid,Booz & Company

www.booz.com/me

Yousef Hamza, Envestorswww.envestors.ae

Robin Amlt

www.cpinancial.ae

Brad Whiield, KPMG

www.ae-kpmg.com


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dEfiNitioN of VC iN MENA

key criteriA used to define Vc firMs AndtrAnsActions Also include:

investments must be in non-listed companies (private companies),

investment commitment over life of deal should be around USD1 million-USD15 million,

there must be a plan to exit,

high expected returns,

VC excludes seed/angel/direct investments, and

VC is not conned solely to technology investments, but technology is oen a core factor that

creates the level of potenal scaleability required in a VC deal.

2

Venture Capital in the MENA region is dened as the provision oflong-term equity investment and strategic support by nancial

investors in innovave, scaleable companies at early growth stage.


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The VC denion above was recently developed by the MENA VC Taskforce (April 2011). Note that the criteria

used in VC data analysis on page 4 uses separate criteria. This report also includes growth equity SME investment

rms that invest in a wide variety of SMEs including those in tradional industries as well as earlier stage venture

deals. The funds included in the data analysis are those dened in terms of self-reporng by fund mandate or fund

manager as VC funds or SME growth capital funds. At this stage of industry development, no aempt was made to

determine whether such self-reported funds meet the criteria above.

The analysis was prepared based on data sourced from the Zawya Private Equity Monitor.

KPMG member rms have not iniated any primary research in relaon to this dra report and have not sought to

establish or conrm the reliability of the data provided by Zawya.

The informaon contained herein is of a general nature and is not intended to address the circumstances of any

parcular individual or enty. Although we endeavor to provide accurate and mely informaon, there can be no

guarantee that such informaon is or will connue to be accurate. No one should act on such informaon without

appropriate professional advice aer a thorough examinaon of the parcular situaon.

In analysing and determining the parameters of available data, it has been necessary to apply certain criteria, the

most signicant 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 porons).

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/commied for fund-raising funds, closed funds, invesng

funds, fully vested funds and liquidated funds.

Stascs are based on the market approach and funds are categorised based on the intended

desnaon for investments (as dened in a funds announced mandate) as opposed to where the rm is

located. With regard to mul-region funds, we have included these to the extent that there is a focus on

the MENA region.

f s: In the case of funds yet to make a rst close or where no close informaon is available; fund size is equiva-

lent to the target amount and is noted as such. For funds achieving at least one ocial close, fund size is reported

as the capital raised to date, while for funds that have made a nal close, the fund size is the total capital raised.

Rumoured 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, Palesne, Qatar, Sudan, Syria,

Tunisia, UAE and Yemen

n Aa: Our VC transacons and fund data on North Africa (in parcular, the Maghreb region) are limited. This

is partly because many of the funds in this area have a mandate that covers Africa, whereas the data analysis in this

report is limited to those funds with a focus on MENA. We aim to provide further depth of coverage on the Mahgreb

in future reports.

iMpoRtANt NotE3


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MACRo oVERViEwRamn se, b & Cman

The need to provide sucient employment for burgeoning young populaons makes it clear that the countries of

the MENA region must develop a more organic, boom-up approach to providing jobs and driving economic growth,

with a signicant role for small and medium-sized enterprises (SMEs).

That will require a signicant increase in entrepreneurship, and higher value and impact entrepreneurship. This

entrepreneurship cannot be limited to the historical forms of self-employment in the region, characterized by small

shops and other relavely unsophiscated businesses. Rather, the regions new entrepreneurs will have to develop

innovave products and services with the intent to build large businesses of their own. VC rms that could support

this wave of growth may look to a number of regional economic growth drivers, including populaon growth, naturalresource availability, and overhaul of major infrastructure.

There will be several sectors where strong entrepreneurial input will be necessary. Start-up companies that can, for

example, quickly develop human capital soluons for larger companies will have signicant market opportunies.

Other sectors that will make good use of Start-ups include tourism, mining and marime, healthcare, and renew -

able energy. While the technology sector is relavely underbuilt, the regions focus on informaon technology in -

vestment is opening up many new opportunies for specialty rms especially rms that can help create regional

analogues to some of the IT VC-backed success stories in Europe and North America.

Another area of opportunity is the missing middle those businesses with an enterprise value between USD500,000

and USD8 million. Even where entrepreneurs are able to secure seed and early funding from friends, families and an-

gel investors, there remains a gap between this stage and that where private equity or commercial banks are willing

to take a stake. This nancing gap is especially acute in those sectors which have not tradionally enjoyed investor

support in some parts of the Middle East: sectors such as educaon, technology, tourism, and hospitality.

For those venture capitalists that enter the region and develop a strong enough network to develop potenal deals,

the opportunies will not only be manifold, they will come without the compeon that greets their counterparts

in other regions of the world.

Although the region represents a signicant opportunity for VC rms, there are sll issues to be addressed. Fund

managers recognize that their chief impediment in the region is simply a lack of deal ow. Not enough aconable

ideas are available for review and funding, and those ideas are not always backed by management teams with strong

capabilies. Entrepreneurs need strong support at every stage of the start-up process, requiring a great deal of me

and eort from VC rms.

This absence is due partly to the lack the components that mark entrepreneurial acvity elsewhere: a cultural

willingness to fail, a wide network of potenal mentors and supporters, a legal and regulatory system that makes it

possible to start and run businesses eecvely, and a mature technology industry.

Even if deal ow picks up, the region sll needs to address some structural aws. In certain markets, for example,

bankruptcy laws and procedures do not make possible the orderly dissoluon of assets. This creates signicant un-

certainty in a market where failure is common. Laws regarding contracts, corporate structures, corporate

governance, legal ownership and post-IPO lock-ups and exits further complicate the future of VC acvity in the re -gion. Yet these challenges are more than oset by the potenal that the region oers to VC rms able to get

involved and guide the entrepreneurs they are hoping to fund. If the deals begin to percolate in enough volume, the

region will become one of the globes great new VC territories.

4


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thE VC ECosystEM5

VC rms, incubators, and other enes in the VC Ecosystem

(Map shows head oce locaons only - many of the enes below cover a broader or country scope. Map is also for

illustrave purposes and does not include all the stakeholders in the regional VC ecosystem)

Online Business Plan Competitions

Wamda

www.wamda.com

MIT Arab Business Plan Compeon

www.fsvc.org

Arab Crunch

www.arabcrunch.com

Arabia 500 Compeon

www.nortonrose.com

StartUpArabia

www.startuparabia.com

Mashro3ak Hakeeka (Arabic Only)

www.booz.com/me

Egypreneur


MedVentures

www.envestors.ae


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VC iN GCCGa ben oman, Maa Caa

6

oVerView

VC and entrepreneurship acvity in the GCC is dominated by two countries:

Saudi Arabia, the largest economy in the region, and

the UAE, the most dynamic economy in the region.

However, overall, the level of entrepreneurship acvity in the GCC remains below par when compared to similarlysized regions in emerging markets.

Entrepreneurship acvity in Saudi Arabia is driven by the large number of engineering graduates coming out of the

top Saudi universies. With the incepon of KAUST, Saudi Arabia is well-posioned to connue to dominate the re-

gion in terms of engineering quality and output. The UAEs entrepreneurship acvity connues to be dominated by

expatriates, whether from the Arab world, Europe or Asia.

The business environment in the UAE is very favourable to aracng entrepreneurial expatriates.

However, the concept and the benets of venture capital are sll largely ignored by all instuonal and governmen-

tal investors and sponsors in the GCC. The ability to make reasonable nancial returns in tradional sectors such as

infrastructure and real estate, combined with a general lack of understanding of the VC asset class, means that VC

rms and funds are sll scarce in the GCC, especially when compared to other more tradional forms of nancing.

Kingdom of SAudi ArAbiA KSA

e: Over the last two years, Saudi Arabian authories have been invesng heavily in improving and

expanding their educaonal capabilies across the whole spectrum from kindergarten to universies. The country

has also been establishing all-encompassing technology parks in the main regions of the country Jeddah, Riyadh

and Dhahran. These parks are referred to as Techno Valleys. Their purpose is to oer entrepreneurs integratedfacilies that can help them easily establish their companies. In addion to the Techno Valleys, Saudi Arabia is in

the process of establishing industry specic clusters that are intended to integrate all of the various elements of the

ecosystem needed for each of those industries. Finally, the countrys exisng technology incubators, research facili-

es and leading universies connue to enjoy signicant support from the government.

All of this educaonal infrastructure and support should lead at some point, to signicant entrepreneurship acv-

ity in Saudi Arabia. However, at the moment, the creaon of new start-ups in Saudi Arabia is limited and dispersed.

There are examples of successful start-ups in Saudi Arabia in the Internet, mobile and IT spaces that have achieved

revenue scale and are already protable. Most if not all of these companies, however, have achieved their success

with no VC funding, l ile mentoring or support and none have beneted from the exisng clusters or techno parks.


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With more VC funding and support, the output of innovave start-ups in Saudi Arabia should increase signicantly.

The country already graduates signicant numbers of engineers and has invested heavily in the infrastructure of

technology parks. The country now needs to invest in the last crical piece of the puzzle: venture capital, to make

this happen.

V caa: As in most GCC countries, the concept of venture capital is foreign in Saudi Arabia. Interesngly,

the very rst venture capitalists in history could well be Muslim investors using the concept of Mudarabah (an

Islamic nance concept, whereby an investor entrusts money to a manager who uses his skill and knowledge to

create value, and prots are shared between the investor and manager).

united ArAb eMirAtes

e: Entrepreneurial acvity in the UAE and, in parcular, in Dubai is quite extensive. The countrys

world class infrastructure and ease of doing business makes one of the preferred locaons to establish new com -

panies, especially in technology. Entrepreneurial acvity in the UAE covers the full gamut of new technologies from

mobile to social media to online adversing. It also covers hardware technologies but to a much lesser degree. En-

trepreneurs in the UAE tend to be expats from the neighbouring Arab countries who have decided to that it would

be easier to establish their companies in the UAE than in their home countries.

However, some signicant hurdles make the UAE environment relavely dicult for start-ups. Indeed, the very

high cost of living in the UAE is a signicant impediment to the success of cash-strapped start-ups. In addion, thelack of qualied engineering talent coming from domesc UAE universies makes scaling operaons for start-ups

expensive and me consuming. Most entrepreneurs tell us that, ideally, they would prefer to keep the engineering

operaons of their start-ups in their home countries, while establishing sales and markeng operaons in the UAE.

Long term, if this trend accelerates, then the UAE would be at risk of losing signicant economic opportunies ed

to such start-ups.

V caa: VC rms that are based in the UAE tend to target region-wide investment opportunies and not

just those in the UAE. As such, there are few if any VC rms focused exclusively on the UAE market. Compared to

other asset classes such as private equity and buy-outs, VC remains an out-of-favour asset class in the UAE. This is

most likely due to the smaller size of the funds and the enormous amount of post-investment work that needs to

take place to achieve the expected nancial returns. The current landscape of VC acvity in the UAE is a mish-mash

of older funds that have ceased to invest, new funds that have not been raised yet, and exisng funds that are

re-gionally focused. Unl exisng nancial players in the UAE that have previously focused on other asset classes

start to pay aenon to venture capital, the VC landscape is likely to remain weak and diused. An example of the

industry moving in that direcon is Abraaj Capital (that typically invested in large Private Equity deals) launching

Riyada Enterprise Development fund which focuses on providing growth capital to regional SMEs.

rest of gcc

Acvity in the rest of the GCC in entrepreneurship and VC remains quite limited. The combinaon of low numbers

of local engineering graduates, low number of expat entrepreneurs and low numbers of venture investors hascreated an environment that is not friendly to new start-ups. There are isolated aempts here and there in each

country to kick-start both start-up acvity and to provide access to VC funds. However, most eorts we have seen

are either sll early in their incepon or not encompassing enough to help local entrepreneurs.


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VC iN lEVANtwa hanna, Me Ea Venre parner (MEVp)

7

The Levant is witnessing improving investment condions and a growing interest in its markets. Increasingly, VC is

becoming a viable regional asset class. Jordan and Lebanon are leading the sector with their growing VC ecosystems.

The public sector is also recognizing the importance of VC within the economy and is mulling its future policies and

their likely eect on the industry.

e: The region is set to benet from its wealth of ICT-specialized human capital. The younger genera-

on is increasingly more entrepreneurial. Although some are copy cats, the ripple eect of this currently small wave

of entrepreneurship will have a posive impact in the long run.

V caa: VC rms have an increasing number of challenges to overcome. One is to uphold the deployment

of funds in quality deals. Another is to develop successful exits and realize expected returns in nascent M&A market.

Regulatory structures and the improvement of the legal framework in the region are further challenges to be ad-

dressed by this emerging industry.

The VC concept is lile known to start-ups as demonstrated by entrepreneurs low levels of preparaon when they

reach out to VC rms for funding. They usually display lile understanding of the commitments they are asked to

take as well as unclear understanding of the value they extract from such a partnership. VCs have, therefore, a clear

educaonal role.

While sll almost a green eld, VC has existed in the Levant for some me. However, it has only become acve in thepast couple of years. Intel Capital and Abraaj Capitals Riyada Enterprise Development Funds are the largest funds

acve in the region with Riyada Enterprise Development (an SME growth capital investment rm) having dedicated

funds for Jordan, Lebanon and Palesne. Other companies in Jordan include: Accelerator Technology Holding, Inter-

acve Venture (IV) Holdings (regional funds based in Jordan); and in Lebanon: Berytech Fund, Middle East Venture

Partners (MEVP).

JordAn

Ae saamn, Raa Enerre devemen

e: Jordan is home to a number of successful start-ups that have become household names region-

ally and that have become success stories shared among the youth and would-be entrepreneurs. A new culture of I

can do it too is being born in Jordan as a result of the role models created. Major success stories include: Aramex,

Maktoob, Pharmacy One, Hikma Pharmaceucals, Nuqul Group, Rubicon, Iris Guard, and many more.

Armed with a couple of entrepreneurial success stories while running a country with limited resources and a high

unemployment rate, the Government of Jordan was eager to promote high prole youth entrepreneurship pro-

grams. YEA (Young Entrepreneurs Associaon) and INJAZ (Economic Opportunies for Jordanian Youth Program)

were among the rst iniaves aimed at young people to get them involved in Jordans private sector.King Abudllah II has championed the cause of Jordanian entrepreneurs and the potenal of private sector involve -

ment. A group of progressive entrepreneurs, investors and leading Jordanian gures set up Oasis 500, a program to

incubate, train future entrepreneurs and seed over 500 start-ups. Oasis 500 is currently led by Dr. Ussama Fayyad,

ex-Chief Data Ocer at Yahoo!, who is condent that Jordan has a tech-savvy core community keen on developing

ideas in cyberspace and new technology.


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V aa: The VC and growth capital investment industry in Jordan is sll in the early stages of development.

Within the growth capital funding category, eorts are currently led by Riyada Enterprise Development, an Abraaj

Capital fund focusing on entrepreneurially-run and innovave SME businesses that are scalable into new regional

markets and that can leverage technology to support their work. IV Holdings, a subsidiary of Accelerator Technology

Holdings led by Emile Cubeisy, focuses on investments in the internet, mobile and interacve companies space.

The Angel Investment space within Jordan has been more acve in the past couple of years and specically led by

individuals such as Fadi Ghandour and Maher Qaddura among others. One of many challenges facing Angel Inves -

tors and entrepreneurs was how to nd or connect with each other. These challenges recently prompted Oasis 500

to launch the rst organized Angel Investment Network and Event to promote its rst six Jordanian start-ups to over

150 local and regional Angel Investors. The event was a great success with each demonstrated start-up geng at

least a couple of serious investors interested and currently evaluang the potenal to invest.

Business plan compeons are being proposed and launched. These compeons are creang awareness in the

investor community that there is a ow of entrepreneurial ideas and energy. There is a realizaon that a huge gap

exists in the entrepreneurship ecosystem. The soluon is not in ideas or programs, but in a will to turn ideas into

successes. The seeds for kick-starng the eorts of fostering a more nurturing and praccal ecosystem for entrepre-

neurship in Jordan are just germinang. Its me to become an entrepreneur!

Feroz Sanaulla, Intel Capital points out that Jordan is at the forefront of content and consumer technologies in MENA

In terms of consumer orientated technology, Jordan is where the acon is especially scaleable Arabic content

generaon and ecommerce.

Organizaons that support the entrepreneurial ecosystem in Jordan include:

eav Ja: Launched in 2009 to support high-impact entrepreneurship in the country, it has

already selected 18 entrepreneurs from high-growth Jordanian start-ups including Think Arabia,

Jeeran, Akhtaboot, CADER, among others.

t q raa c e (qrce): A not-for-prot, non-governmental organizaon

which works towards improving naonal development, and aims to be the regions cornerstone for

technology commercializaon and entrepreneurship advancement. The QRCE hosts the Google Award for

the Best Online Business in Jordan, in addion to the Queen Rania Entrepreneurship Compeon.

Endeavor Jordan, The Queen Rania Center for Entrepreneurship, and the Young Entrepreneurs Associaon

have collaboravely put together the Global Entrepreneurship Week event in Jordan. The goal of Global

Entrepreneurship Week is to inspire young people to embrace innovaon, imaginaon and creavity, and

to encourage entrepreneurship around the globe. The organizers have focused especially on posioning

Jordan as a regional hub of innovaon and a leader in entrepreneurial acvity.

b dvm c (bdc): Formed in 2005 to provide management training, funconal

support, and coalion building opportunies to encourage the growth of SMEs and the development of

entrepreneurial capacity within Jordan.


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Ja es dv ca (Jedco): A Government enty established in 2003 to

facilitate enterprise modernizaon, including the promoon of eciency and capacity building in target

enterprises. JEDCOs objecve is to enable Jordanian businesses to maximize the benets of economic

and trade agreements signed by the Government, confront the challenges of globalizaon and penetrate

non-tradional markets.

Amma t ta: A local plaorm that brings engineers, business people, experts, investors,

marketers, entrepreneurs, students and regular enthusiasts from the technology community together on

the rst Tuesday of every month in a casual but structured seng. The main goal behind the program is

to organically forfy and interweave tech-es in Amman to further Jordans posion as the regions Silicon

Valley/Sahara.

pArk: A technology Incubator aiming to provide the needed catalyst to fuel the entrepreneurial process

that is pivotal to Jordans economic development.

Other SME and entrepreneurship support iniaves in Jordan include: the Industrial Scienc Research and De -

velopment Fund (ISRDF), King Abdullah II Fund for Development (KAFD), MeydanValue@Speed Accelerator, Agro-

Industries Business Incubator (Jordan innovaon Center), the Naonal Consorum for Technology and Business

Incubaon (NACTBI) and Jordan Loan Guarantee Corporaon (JLGC).


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VC iN NoRth AfRiCA

egypt

tarek Aaa, ieaveer, n rm Ga ben oman, Maa Caa

e: Egypt is the Middle Easts most populous country and a tradional centre of educaon and con-

tent creaon in the region. Egypan Universies graduate over 14,000 engineers per year out of a total of 330,000

graduates. This large pool of young educated talent is the main driving force behind Egypts healthy entrepreneurial

environment.

A number of promising start-ups have been founded in Egypt in the past two years. These include me too compa-

nies replicang successful models in advanced economies and local plays that are built on local technology or busi-ness model innovaons. In parcular the internet and mobile sectors have seen the emergence of many start-ups.

With 14 million and 60 million Egypan users of internet and mobile respecvely, and with quick uptake of broad -

band connecvity on both wired and mobile networks, Egypan start-ups have the advantage of a large plaorm to

leverage. Innovaons in mobile using technologies such as locaon-based services have allowed many companies to

oer new services to the local market and to disrupt exisng established segments.

An emerging trend in Egypt has been the creaon of cross-border start-ups that operate in a large established target

market, namely the US, as well as in Egypt. Typically, the client-facing organizaon is located in the target market

country and the Egypan organizaon focuses on technology development and operaons.

Although most start-up companies are based in Cairo, the economic hub of the country, Alexandria has seen a fair

share of technology start-up companies. Built on the strength of the renowned Faculty of Engineering at the Alex-

andria University, these start-ups have not only been able to succeed in the Egypan market but also to compete

internaonally, with one creang the globally best-selling paid weather applicaon for the iPad.

On the governmental front, the creaon of the Ministry of Communicaon and Informaon Technology (MCIT) has

sponsored many programs supporng the growth of companies in the sector. The MCIT has clearly changed focus

in 2010 from aracng FDI to the burgeoning oshore business process outsourcing (BPO) sector, which has been

immensely successful in Egypt and has helped the country generate over USD1 billion in 2010 focusing on entrepre-

neurship and innovaon.

The Technology Incubaon Program (TIP) was established by the MCIT to support technology start-ups by provid -

ing premises, business services and strategic advice. Since incepon, the TIP program has supported 27 companies

covering dierent areas of technology and business model innovaons.

More recently, the MCIT has established the Technology Innovaon and Entrepreneurship Center (TIEC) which will

drive the Ministrys eorts in this area going forward. TIEC has announced several iniaves to support technology

entrepreneurship including a partnership to establish Plug And Play, a Silicon Valley incubator, in Egypt.

Venture Capital and Angel Investments: VC investment is a relavely new concept to Egypt with only a small number

of acve players. Egypts largest and oldest venture capital rm is Ideavelopers, the VC arm of EFG-Hermes. Ideav-

elopers manages an Egypt-focused USD50 million fund, sponsored by Government-owned organizaons such asTelecom Egypt, Egypt Post and other banks and insurance companies

8


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As of the end of 2010, Ideavelopers had 14 companies in its porolio including two semiconductor companies, two

electronic payment companies and other start-ups covering dierent areas of innovaon and technology.

Among other investors looking opportunies in Egypt, Cairo-based Sawari Ventures has announced plans to

raise its rst VC fund focused on the mobile sector and announced investments in two Egypan mobile companies.

Riyada Enterprise Developmentwith its dedicated Egypan fund has also announced an investment in an

Egypan IT services company in late 2010.

Angel investment has seen a strong ramp-up in acvity in Egypt in the past two years. The prole of these investors

includes:

established successful businessmen who have created wealth from their exisng businesses, mainly in

the technology sector,

entrepreneurs who have been successful in building technology companies,

senior managers in mulnaonal companies,

cross-industry investors who are interested in the technology sector, and

Egypan expatriates who are successful in other countries (namely the US and the UAE) and are

interested in funding opportunity back home

As of the wring of this report, there was no established organizaon that connects Angel Investors either to each

other or to entrepreneurs. Angel Investment is largely based on personal contacts and investment.

Morocco, AlgeriA, tunisiA & libyA

Ga ben oman, Maa Caa, n rm wam fe, fsVC

The level of innovaon and technology-driven entrepreneurship is below the potenal of the region.

Despite the relave large size of the populaon, the deal ow and entrepreneurial acvity in each country

will remain relavely low for a few more years. As such VC rms need to take a pan-regional approach to

invesng, rather than a single country approach. This will increase the deal ow available to them and en-

able them to tap into a larger pool of human capital and a larger market.

The region needs to tap more aggressively into the entrepreneurship and venture capital communies of

its compatriots residing in Europe and North America (just like China and India beneted signicantly from

the reverse brain drain) to achieve its entrepreneurial potenal.


15/5015


Morocco

e: For the last few years, Morocco has been at the forefront of technology research and develop-

ment in North Africa. The Casablanca region remains its economic hub and the centre of economic acvity, generat-

ing roughly 60 per cent of GDP, but the private sector and authories are aempng to expand investment op -

portunity into the regions. The Government, seeking to boost its technology base, recently opened a second main

technology centre in the new Rabat Technopolis, following the Casablanca Technopark launched roughly a decade

ago and the highly successful Casablanca Nearshore centre, focused on BPO o-shoring for the French-speaking

markets. The new Rabat Technopark is anchored by Nemotek, a collaboraon between a Moroccan technology

company and a leading Silicon Valley technology company, Tessera. Nemotek develops semiconductor products and

hosts its own wafer fabricaon facility. The Government and private sector are also working on a series of sector-focused parks covering technology ranging from automove technology around Renaults new 1 billion producon

centre in Tangiers, to biotech and agricultural technology.

At the Medventures conference in December 2010, Morocco contributed nine technology start-ups in the sectors of

IT, media, healthcare, BPO and consulng. Of the three winners at the conference, one was a Moroccan start-up in

the social media space.

Similarly to Algeria and Tunisia, Morocco produces a signicant number of engineers and business graduates every

year from its many universies. While the output of start-ups and overall entrepreneurial acvity in Morocco in-

creased in 2010 compared to 2009, the actual output connues to be well below the potenal of the country and

well below the compeon in Eastern Europe or Asia.

The relevant authories in Morocco understand the need to promote and support higher-value-added, innovave

rms and start-ups. Iniaves such as Maroc Innovaon, the various technopoli and innovaon cies are steps in

the right direcon. However, the level of eort and funding dedicated to fostering entrepreneurship in technology

sll lags behind needs.

V caa: Morocco has one of the larger VC sectors in the MENA region, but like others, investment has tend-

ed to focus on later stage, more mature rms aer unsuccessful experiences in early stage investments. However,

interest is returning to early stage invesng. The private seed capital/VC fund, Fonds Dayam/Sherpa Entrepreneur

club was launched in 2008. In 2010, the Government launched an early stage fund to focus on funding start-ups, inassociaon with the Casablanca Technopark.

As in many other MENA region countries, there is a tendency in policy-making circles to look at VC as a jobs creaon

tool rather than an asset class that can mobilise private investors to invest in more innovave rms. Given its large

populaon and relavely sizable economy, Morocco should be striving to develop a more diversied VC ecosystem

that consists of mulple early and growth stage rms. All of the elements needed are already present in Morocco

today.


16/5016


AlgeriA

e: Algerian technology entrepreneurship is alive and well. Unfortunately, that acvity is not hap -

pening in Algeria, but rather in France, Canada and Silicon Valley. Algerian technology entrepreneurs in those de -

veloped countries have created hundreds of successful technology start-ups employing thousands of engineers and

generang hundreds of millions of dollars in revenues, in some of the most complex technology sectors such as

solar, networking, and semiconductors.

Despite certain eorts to promote and support technology entrepreneurship in Algeria such acvity remains very

depressed to this day. Programs such Algerian Start-up Iniave (ASI) helped to kick-start some of that acvity and

to raise the awareness for the need to support entrepreneurship. However, lile has come out of this so far.At the Medventures conference held in December 2010, Algeria contributed 10 start-ups in the IT, media, healthcare

and industrial sectors. These start-ups deserve signicant credit because they have achieved their current status

despite the almost complete lack of instuonalized support or funding.

The leading technology park in Algeria is Cyberparc Sidi Abdellah. While it is a posive step, it is far from sucient

to provide the type of support that Algerian start-ups require. Given the state of technology entrepreneurship in

Algeria being signicantly behind that of the rest of North Africa or the Arab world, a signicant and sustained eort

is required just to catch up.

Given Algerias great pool of human talent and its vast resource wealth, the current level of entrepreneurship is well

below the potenal achievable by the country.

V caa: One of the key elements prevenng Algeria from starng to achieve its entrepreneurship potenal

is the complete lack of VC or similar nancing for risky technology companies.

Compared to its Maghreb peers such as Morocco and Tunisia, Algeria lags seriously behind in other forms of entre-

preneurship nancing, especially those focused on young entrepreneurs. There cannot be an increase in entrepre -

neurship acvity in Algeria unl an enabling climate for VC investment emerges.

tunisiAe: In 2010, Tunisia connued to enjoy a level of technology entrepreneurship that was high com-

pared to the size of its populaon and economy. Tunisian entrepreneurship tended to mirror the technology sectors

where the Tunisian economy has found its niche: embedded systems, industrial and chemical. In addion, Tunisian

start-ups connued to be acve in the soware development and Internet spaces.

Indeed, at the Medventures conference held in December 2010, Tunisia contributed 10 start-ups in the following

sectors: IT, media, industrial and robocs, chemical and healthcare. Some of these start-ups had already obtained

support and nancing from various sources inside Tunisia.


17/5017


Tunisia had already set up various technology parks around the country, the most signicant of which is Al Ghazela

north of Tunis. Like other techno parks in North Africa, these parks tend to be more appropriate for larger foreign

technology rms wanted to set up shop in a country for o-shoring development or manufacturing. This park how-

ever is not as well suited for local Tunisian start-ups, because of its relavely remote locaon and the relavely high

cost of rent, etc.

Despite the challenges, technology entrepreneurship acvity in Tunisia remains healthy, especially compared to

the size of the country. In fact, given the polical developments in January 2011 in Tunisia, we expect that entre -

preneurship acvity will signicantly grow in the laer half of 2011 and beyond with Government and internaonal

support.

V caa: When it comes to funding and nancing of SMEs, Tunisia has a relavely long list of opons avail -

able to entrepreneurs, including SME-focused banks. While these nancing opons are welcome, they are not fo -

cused on the specic needs of innovave rms or knowledge-based start-ups. As such, while these rms provided

nancing, they did not provide any appropriate level of mentoring and support needed by entrepreneurs.

All of the components of a successful and robust entrepreneurship ecosystem are present in Tunisia: human capital,

nancing for riskier enterprises, research acvity at universies and instuons and technology parks.

However, like Morocco and Algeria, Tunisias entrepreneurship potenal is much larger than what is currently being

achieved. To begin to tap that potenal, Tunisia needs to establish a true VC sector, needs to streamline its technol-

ogy parks and needs to provide even more support for research and development.

libyA

e: We are not aware of any substanal technology or knowledge-driven entrepreneurship acvity

in Libya in 2010. Indeed, at the Medventures conference held in December 2010, while Morocco, Tunisia and Algeria

and even Palesne contributed 10 start-ups each, Libya did not contribute a single one.

V caa: Similarly, we are not aware of any substanal or instuonalized funding sources for Libyan SMEs

focused on innovaon.


18/5018


MENA VENtuRE CApitAl

iNVEstMENt dAtAbra wman, KpMG

inVestMents

While the VC industry in the region is sll relavely nascent, recent trends have seen a signicant increase in both

deal acvity and fund raising. We note that, given the nature and size of VC investments, a signicant poron are

either not publically announced or, if they are announced, the value of the investment is not. For the purposes of

our analysis, we have focussed on transacon volume as opposed to value.

9

NuMbER of VC tRANsACtioNs siNCE 2006

N

uMbERoftRANsACtioNs

Source: Zawya Private Equity Monitor

The past two years have seen a signicant increase in VC-related transacons with 33 transacons compared to

just 16 in the period 2006 to 2008. This is in contrast to the private equity industry as a whole for the MENA region,which has seen a reducon in deal volume.


19/5019



sECtoR CoNCENtRAtioN siNCE 2006

REGioNAl CoNCENtRAtioN siNCE 2006

For the past ve years, the most popular sectors for VC transacons have been the IT and soware industry with 45

per cent of the total transacons since 2006 (represenng 22 completed transacons).

Egypt and the UAE are the locaons for more than half of the total transacons since 2006 (56 per cent). While

Egypt benets from a large and fast-growing populaon, the UAE is a popular desnaon for fund managers giventhe size and dynamic nature of the economy.


20/5020


Vc funds

ANNuAl fuNds RAisEd

usdM

fuNds RAisEd


CuMulAtiVE fuNds RAisEd siNCE 2000

usdM

fuNds RAisEd


21/5021


Although raising capital connues to be a challenge for fund managers in the region, 2010 saw three funds success-

fully raise USD300 million, a signicant increase from prior years. While this is largely aributable to one parcular

fund which raised USD250 million, it shows that investors are seeing considerable value in the industry.

Due to the lack of informaon in relaon to the value of completed transacons, it is dicult to comment on the

extent to which these funds have been deployed.


22/5022


lEGAl ChAllENGEs foR MENA VCAnre le, Nrn Re

the issues

There are signicant challenges for VC rms invesng in MENA onshore companies (but most parcularly GCC on-

shore companies)* to achieve many of the terms which are regarded as standard for VC investments internaonally.

Many of these terms clash with local law principles which typically apply in the MENA region (which are derived from

various sources, including customary, Shariah, common and civil laws).

A VC investor usually acquires a minority shareholding, while seeking special rights to protect its minority posion

and migate the inherent risks of invesng at an early stage in high growth companies. If VC investors are unableto obtain and rely on these rights because they conict directly with local law principles or, even where no direct

conict exists, their eecveness and enforceability is doubul, then this creates a serious impediment to the devel-

opment of a ourishing MENA region VC industry.

VC investment is a risky and dicult enough business as it is, even with all of the special rights which migate risk

and enhance upside that typically apply internaonally. If these special rights cannot be obtained and relied upon

for MENA investments, then an otherwise comparable VC investment is less viable in MENA than elsewhere.

Internaonal VC investors will be discouraged from allocang funds to MENA investments and MENAs high growth

companies will be disadvantaged in the compeon for scarce VC funding.

Examples of some of the issues confronted for a VC investment in a MENA onshore company are set out in the

table.

10

typiCAl VC tERM dEsCRiptioN MENA loCAl issuE

Preferenalequity terms

The most typical preference right sought byVC investors is the right to receive their capitalback (or in some cases a mulple of that capi-tal amount) in priority to other shareholderson exit/liquidaon (if the exit proceeds sale areinsucient to return all of the capital investedby all shareholders). Preferenal dividend rightsmay also apply, where the preference dividends

accumulate unl a distribuon can be made(and are added to the exit preference if that oc-curs rst).

Most MENA local law jurisdicons donot allow for dierent share classesand the issuance of shares with dif-ferent economic rights conicts withlocal law principles.

Reserved maers- vetorights

A minority VC investor requires a veto right forkey board and shareholder decisions.

Any veto rights personal to an indi-vidual shareholder will need to beenshrined in a separate shareholdersagreement. The praccal enforce-ability of such an agreement may beuncertain in many MENA jurisdic-ons.

Board representaonand board role.

A VC investor oen seeks equal board represen-taon as the majority shareholder(s) or for inde-pendent directors to hold the balance of boardpower. The board will govern the company.

It will be dicult to achieve suchrights and the required board gov-ernance through the arcles alone,so typically the VC investor will also

rely on the shareholders agreement,the enforceability of which will beuncertain.


23/5023


typiCAl VC tERM dEsCRiptioN MENA loCAl issuE

Tranching VC investors oen seek to migate risk bytranching their investment so that the invest-ment amount is released in stages (as requiredto achieve the agreed business plan and wherelater tranches are usually subject to certain de-ned milestones being achieved).

In most MENA jurisdicon all share-holders will need to sign documents(including new memoranda and ar-cles of associaon) at the me newshares are issued. Accordingly, futureshare issues cannot be automated atthe investors discreon and the in-vestor must rely on the enforceabilityof covenants given by all sharehold-ers to sign such documents (which

enforceability may be uncertain).Converble loans A VC investor may wish to provide a converble

loan to meet immediate cash needs prior tocomming to an equity investment (or the eq-uity investment may be subject to certain mile-stones being achieved rst).

If the investor elects to convert andacquire addional shares, similar is-sues as above will apply to the issueof those shares.

Opons/other rightsto issue of addionalshares

A VC investor oen seeks opons and otherrights to leverage its investment at pre-deter-mined pricing.

Same issues as above.

An-diluon protecon A VC investor commonly seeks proteconagainst shares being issued at a lower price in

the future. Typically the protecon mechanismwill require addional shares to be issued to theVC investor to reduce its average price per shareto the new lower price (or a weighted averageprice).

In addion to the issues describedabove which apply to any rights to

addional shares, there will be ad-dional issues associated with issu-ance of new shares for free (or atnominal value).

Drag and tag rights A VC investor typically requires the right to tagalong on the same terms if any other sharehold-er wishes to sell their shares and to drag othershareholders in a sale where it wants to sell (andthe purchaser requires a greater percentageshareholding than the VC investor holds).

Enforceability of tag and drag cov-enants may be uncertain. This cre-ates an addional impediment to theprocedural issues which may applyto any transfer of shares (where therequirement for replacement memo-randum and arcles of associaon tobe signed by all shareholders to re-ect the new ownership which typi-

cally applies under MENA companylaws already seriously impedes ashareholders ability to sell shares ina private company).

Forced liquidaon A VC investor oen has a theorecal right toforce a company sale or IPO if an exit hasntbeen achieved aer a specied period, (typicallyve years from investment).

There are enforcement issues in re-spect of such rights in any jurisdic-on but they will only be magniedin most MENA jurisdicons.


24/5024


A potentiAl solution

As a consequence of the above issues (and others), many VC investments in MENA businesses are channelled through

oshore holding vehicles, parcularly in the Middle East. The Cayman Islands, Brish Virgin Islands and other tax

neutral jurisdicons are generally favoured for GCC investments, (although local oshore/ free zone jurisdicons

such as the DIFC in Dubai or QFC in Qatar might somemes be considered depending on parcular local consid -

eraons ) while EU or Maurius are oen favoured for Maghreb investments. In the Maghreb, fund localisaon is

generally either in EU or Maurius. The investment agreements are also oen governed by foreign laws (parcularly

in the Middle East where English law is predominant, although less prevalent in the Maghreb) and the pares oen

agree to resolve any disputes in foreign courts or by internaonal arbitraon.

If a suitable oshore holding vehicle does not already exist, a restructuring of the investee group will be required

(pre-investment) and local shareholdings ipped up into the oshore vehicle. The oshore vehicle will then be the

economic owner of any local operang companies, although commonly its legal shareholding in any local operang

companies will be restricted by applicable MENA foreign ownership restricons (requiring majority local ownership)

and further structuring devices will be required to ensure the holding vehicle has similar economic rights as it would

have if the local companies were wholly-owned subsidiaries.

All of this sounds complicated and not ideal, but is usually necessary to provide the VC investor with acceptable

investment terms and legal protecon. Local law issues may sll impact on the eecveness and enforceability of

the structure to the extent key assets and enterprise value are sll located locally, but at least the VC investor can

exercise and enforce its rights in a more robust legal environment in relaon to the vehicle which is the ulmate

economic owner of those assets and value.

Another posive factor is that the relevant structures are generally understood and accepted by the local MENA

markets. They do not have to be invested and negoaons are generally focussed on the investment terms them -

selves rather than the acceptability of the structure (as they should be).

* Note that many of the issues described in this secon apply to a greater extent in the GCC than other parts

of MENA.Maghreb and the Levant appear to more aligned with internaonal VC pracce in terms of legal chal-

lenges.


25/5025


sNApshot of MENA VC fiRMs

This chart is designed to provide a brief snapshot of MENA VC Firms. Those of you who read our rst report, The Vee-

ceeprener, Guide to MENA VC, may noce that some of the rms have been re-categorized. VC in MENA is a nascent

industry and sll evolving, and the VC Taskforce recently dened VC as per the denion at the front.

We also exclude details of investment targets outside MENA (i.e., some rms may have a wider mandate to invest in

other geographies, but for the purposes of this report, we provide details that pertain to MENA).

Round B/C in the chart refers to nancing aer an inial seed stage. ICT = Informaon & Communicaons Technol-

ogy TMT = Technology, Media & Telecommunicaons

This report does not aempt to screen or endorse any of the informaon presented below.

11

fiRM

REGioN

(iNVEstMENt

foCus)

stAGEiNVEstMENt

sizE (usd)stAKEholdiNG sECtoR

AcceleratorTechnologyHoldings

MENA Early/second 0.5M-5M ICT/TMT

Amundi MENA 5-15M General

Aureos Capital North Africa Development Minority 2M-20M All sectors(consider smaller invest-ments in health sectorfrom 250K)

Berytech Fund Lebanon Early/Growth 0-1M Minority ICT/Educaon

Capital Invest(BMCE Capital)

Morocco Late Stage VC 2-5M General

Catalyst PE MENA(PrimarilyLevant/GCC)

Early Stage(aer seed/beforegrowth)

1-7M Minority toMajority

Energy (renewable andoil/gas eciency) andwater services and tech-nology companies

CDG CapitalPrivate Equity

Morocco Expansion 1-6M

DAYAM Fund &Sherpa Finance

Morocco Seed 0-650K Minority Innovaon General

Dubai SiliconOasis Fund

MENA Seed & Early(MENA only)/Growth

500k-1M Various Technology

Inlaq MENA Seed/Growth 500k-1M Various Technology

Ideavelopers Egypt Round B/C 1-5M Minority TMT

twofour54Ibkar

Abu Dhabi Seed/Early/growth

500K-5M Various Media and entertain-ment including online,gaming, mobile, tel-evision, animaon andprint

IT Ventures/Nile Capital

MENA All Stages 1-10M ControllingMinority/Majority

Real Estate/Infrastruc-ture/TMT/Healthcare/

Educaon

IV Holdings MENA Angel/Seed 0-2M ControllingMinority

Online services anddigital media


26/5026


fiRM

REGioN

(iNVEstMENt

foCus)

stAGEiNVEstMENt


Intel Capital MENA ICT

Malaz Capital MENA Round B/C 1-2M ControllingMinority

TMT

MarocNumeric Fund

Morocco Angel/Seed/Round B/C

0-1M Minority/Control-ling Minority

TMT/ICT

Middle East

Venture Part-ners (MEVP)

primarily but

not exclusively,Lebanon, Jordanand Syria

Early/Growth 200K-1.5M Inuenal

Minority

Favor consumer tech-

nology and retail sec-tors, but also considerventures in other areas,such as services, logis-cs, food processingand hospitality

Riva Y Garcia Maghreb Late Stage VC 2-5M General

Catalyst PE MENA(PrimarilyLevant/GCC)

Early Stage(aer seed/beforegrowth)

Growth/SME General

CDG CapitalPrivate Equity

Morocco Expansion 1-6M

RiyadaEnterpriseDevelopment

MENA Growth 0.5-15M InuenalMinority

Mulple Sectors

Saar MENA Various Various Various TMT/ICT/Educaon/Retail/F&B/Healthcare,Financial Services &Other

SawariVentures

MENA Early/growth 250K-3M TMT - specic interest inArabic Web Content andApplicaons, FinancialServices and eCom-merce, Mobile Con-tent and Applicaons,

Soware-as-a-Service,and Converged Services

Siraj Capital GCC Early/Growth 0-10M ControllingMinority

All sectors except petro-chemicals, high technol-ogy and biomedical

twofour54 Ib-kar

Abu Dhabi Seed/Early/growth

500K-5M Various Media and entertain-ment including online,gaming, mobile, tel-evision, animaon andprint

Tuninvest-AfricInvest

North Africa All Stages 500K-5M Minority Financial Sector

Upline

Investments

Morocco Angel/Seed 2-12 M General

Rising TideFund

Middle East andNorth Africa

Early/Growth 250k-2.5M various ICT, Mobile Apps, Health-care and Green Tech


27/5027


ANGEl/sEEd & othER12

fiRM

REGioN

(iNVEstMENt

foCus)

stAGEiNVEstMENt


Jabbar InternetGroup

MENA Various 0.5M-5M E-commerce/OnlineRetail Jabbar invests inInternet companies, butis not a typical VC typeinvestment rm)

Oasis 500 Fund Jordan Seed 0-50K Various ICT , Digital Media, andMobile Applicaons

MENA VentureInvestments

MENA Angel / Seed 0 - 250k InuenalMinority

Sector agnosc, looks atpotenal investments inall sectors

N2V MENA Seed/Early/Growth

0-2M+ Minority Internet & mobile

PlugandPlay-Egypt.com

Middle East andNorth Africa

Early/Growth 5k 50k Minority IT

Venture Capi-tal Bank

MENA Seed topre-IPO

300K-120M Minority toMajority

Chemicals, consumergoods, Engineeringprocurement and con-strucon, healthcare, IToutsourcing, real-estatedevelopment, telecomservices


28/5028


soCiAl VC13

fiRM

REGioN

(iNVEstMENt

foCus)

stAGEiNVEstMENt


BambooFinance

MENA Expansion 1 10 M Minority Access to energy,housing, educaon,health care, sanitaon,agriculture, livelihoodopportunies, etc

BarakaVentures

UAE Angel & Seed 0 to 250K Various Digital & social media

Willow Tree MENA Early/Growth 1-10 M InuenalMinority

Health, educaon, foodand nutrion, com-munity development,poverty alleviaon andthe environment.


29/5029


iNCubAtoRs/tEChNoloGy pARKs

& RElAtEd ENtitiEs

14

Algeria Start-up Iniave (ASI) Algeria Promotes the creaon of technology startups be-tween Algeria and the USA

Al Ghazela Tunisia Technology park

Berytech Lebanon A community of inspired and commied young busi-ness leaders engaged in supporng young entrepre-neurs and promong small businesses

Business Incubaon Associaon inTripoli (BIAT)

Lebanon Aims to idenfy, incubate, host, network, train andsupport value-added business opportunies

Casablanca Technopark

Incubaon Center

Morocco Hosts innovave ICT projects

Cyberparc Sidi Abdellah Algeria

Dhahran Techno Valley KSA Research and technology development nucleus withcomprehensive business support

Enterprise Qatar Qatar Enty to support and develop the SME sector in Qa-tar

Envestors UAE A commercial organizaon that connects entrepre-neurs with investors

iPark Jordan iPark ICT Business Incubator is the main incubator inJordan, established under the HCST (Higher Councilfor Science and Technology)

Jordan Innovaon CentersNetwork

Jordan The JIC Network aims at developing an innovaonculture based on a spirit of entrepreneurship ena-bling environmental, internaonal cooperaon andcompeveness, as well as collaboraon betweenthe research community and the business sectorfocusing on the development of innovaon-basedproducts and services, and their markeng and com-mercializaon iPark (see above);

JIC University of Jordan: Agro-IndustryBusiness Incubator;JIC Al Hassan Industrial Estate: Technologyand Industry;JIC Philadelphia University: No sector focus;

JIC Royal Scienc Society: Industrial enterprises

Khalifa Fund UAE Small business funding and development support forEmira Naonals

King Abdulaziz City for Science andTechnology (KACST)

KSA Hosts a Technology Incubators & Parks Program

LBA (Lebanese Business AngelsNetwork)

Plaorm where entrepreneurs are put in contact di-rectly with investors (a service provided by Bader)

Tahrir2

Egypt A newly established incubator in Alexandria

Nebny Foundaon Egypt A plaorm for the launch and growth of early stage

business in Egypt


30/5030


Egypreneur Egypt An online portal/community for Egypanentrepreneurs.

Techwadi Egypt Silicon Valley-based non-prot working to promoteentrepreneurship and foster economic developmentin the MENA region. TechWadi focuses on buildingbridges between the United States and the MENAregion through high-impact mentorship, entrepre-neurship in educaon, and exchange programs toSilicon Valley.


31/5031


diRECtoRy15

Maa CaaMalaz Capital focuses on managing venture capital funds that invest intechnology in the MENA region. The Malaz VC fund is a growth-stagefund focused on ICT sector and targeng private companies in the MENAregion or internaonal companies aiming to expand in the MENA region

p: +966 1 460 1644

e-ma: [email protected]

la: Riyadh-Saudi Arabia

Cear brge parnerCedar Bridge invests in solid and promising MENA companies andmanagement teams, which it supports nancially and operaonally toachieve exceponal growth.

Cedar Bridge prides itself to be an innovave and independent strategicthinker with proprietary deals craed and originated by our investmentteam using their deep sector experse and vast global networks. Wecombine a conservave nancial approach with praccal local opera-onal experse.

Cedar Bridge invests mainly in the core economies of the Middle East-- Egypt, Saudi Arabia, and UAE and focuses on the sectors where ithas extensive investment and operaonal experience, mainly, educaon,healthcare, retail, and transportaon.

e-ma: [email protected]

la: Cairo-Egypt, Dubai - UAE

w: www.cedar-bridge.com

Raa Enerre devemen (REd)Riyada Enterprise Development (RED) is the small and medium enter-prise (SME) investment plaorm of the Abraaj Group. It is a US$500million iniave focused on the Middle East and North Africa (MENA)region, with a focus on providing growth capital for inuenal minorityand, in some cases, majority stakes in SMEs. The target investment sizeranges from US$ 500 thousand to US$ 15 million. RED is sector agnoscbut prefers entrepreneurially run and innovave businesses that are

scalable into new regional markets, and that can leverage technologyto support their work. Its primary focus is on protable SMEs in need ofcapital and instuonal and strategic support to grow. The RED iniaveoperates at both a regional and country-specic level, providing econo-mies of scale and the ability to facilitate geographic expansion of itsporolio companies. The RED team is a dedicated unit within the AbraajGroup that operates solely on the SME iniave through a network oflocal oces that currently includes Dubai, Amman, Cairo, Ramallah andBeirut, with addional local oces being established in target countriesthroughout the region.

p: Dubai +971 4 3191500, Amman +962 6 5347254,Beirut +961 1 964570, Cairo +202 2 4619930, Ramallah +970 22416000

ema: [email protected], [email protected], [email protected],[email protected], [email protected]

la: Dubai -UAE, Amman - Jordan, Cairo - Egypt, Beirut -

Lebanon, Ramallah-Palesne

w: www.riyada.com

MenA priVAte equity AssociAtion MeMber firMs


32/5032


saar

Saar is a MENA, regional nancial services company focused on mul-

sector direct investments in early, growth stage and greeneld business

opportunies. Saar assists entrepreneurs, corporate management teams

and family-owned companies to launch new businesses or to scale or ex-

pand an exisng business regionally.

p: +971 4 373 5777

ema: [email protected]

la: Dubai, UAE

w: www.saar.com

tnnve-Arcinve

The Tuninvest-Africinvest group is mainly targeng growth capital invest-

ments in SMEs that are well-established and posioned in their local

market with the potenal to scale up their acvies on the regional level

to build them into regional champions. We also selecvely consider

VC type investments in industries that we understand very well and

where we think that we can impact the business through close proxim-

ity. Otherwise, we target signicant minority (without excluding major-

ity) posions, while adopng a hands on monitoring approach centreedaround eecve value addion. This, combined with our medium to long

term view (4-6 year holding period), is consistent with the real needs of

African SMEs.

p: +216 7 118 9800

ema: [email protected], [email protected]

la: Tunis Tunisia, Morocco, Algeria, Nigeria, Kenya,

Cote dIvoire

w: www.tuninvest.com


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other MenA Vc firMs/funds

Acceerar tecng hng

Accelerator Technology Holdings acts through a group of companies established in Bahrain and Jordan to invest in

ventures in the ICT value chain in the Arab world.

www.acceleratortech.com

Are

Aureos invests in sustainable small and medium-sized businesses in emerging markets.

www.aureos.com

berec

Berytech provides incubaon, support and hosng opportunies to enterprises operang in the elds of Technology,

Mulmedia and Health. The Berytech fund invests in early growth Lebanese ICT companies. It has 19 shareholders of

which Cisco & Intel Capital, 5 Banks, an insurance company, USJ University, Berytech (the incubator), and Lebanese

ICT companies.

www.berytechfund.org

Caa pE

Catalyst PE is a regional Energy and Water sector product and technology focused private equity rm that also in-

vests in early stage companies in the energy and sector.

www.catalystpe.com

dAyAM fn

The DAYAM fund is backed upstream by Sherpa Finance , a non for prot enty sponsored by SAHAM Group, which

aims to assist and foster Moroccan entrepreneurs.

www.sherpanance.com

da scn oa (dso)

DSOs primary area of investment is high-tech, parcularly mobile, Internet, data centres, Arabizaon/localizaon,

soware/SAAS, seimiconductors, as well as areas such as clean-tech and bio-tech, provided they intersect with the

high-tech sector. DSO oers two types of tech-focused funds for strategic purposes: an early stage fund (for MENAbased companies) and growth stage fund (MENA & non-MENA based companies).

www.dsoa.ae

ieaveer

Ideavelopers is a subsidiary of EFG-Hermes Private Equity, and manages a $50 million fund focused on early stage

technology companies.

www.ideavelopers.com

ine Caa



34/5034


Marc Nmerc fn

Maroc Numeric Fund is the rst venture capital fund in Morocco specialized in the informaon technology and com-

municaon sector with a size of $13m USD. The main investors are CDG, BMCE Bank, AjariWafa Bank and BCP and

the Moroccan Government. Maroc invests only in companies that have their main acvity in morocco and/or their

headquarters in morocco with a cket size between $100K USD to $1M USD at seed/VC stage.

www.mnf.ma

Me Ea Venre parner (MEVp)

Middle East Venture Partners has a MENA focus and invests in the early and growth stages primarily, but not exclu-

sively, in Lebanon and the greater Levant region. The rm favors the consumer technology, consumer products, and

consumer services sectors, but also consider ventures in other areas, such as logiscs, food processing, and hospital-ity, among others.

www.mevp.com

Ne Caa & it Venre

Invests in early stage, start-up, and growth companies in telecommunicaons, informaon technology, and high-tech

sectors in Egypt, the Arab world, and global markets. The rm in low-medium risk businesses. The companys fund

had commied capital of $110 million and focused on Informaon, Communicaon, and Technology companies. The

Fund made 45 investments in a period of ve years, and has made 34 realizaons to date.

www.nile-capital.com

www.it-investment.com

Rng te

Rising Tide is a Silicon Valley-based venture capital fund targeng innovave early-stage technology companies in

MENA in ICT, mobile applicaons, healthcare, and green tech.

www.risingdefund.com

saar Venre

Sawari Ventures focuses on investments in technology-driven companies seeking to build new markets with sig -

nicant growth potenal, in the early and growth stage. The sector focus is on TMT with specic interest in Arabic

Web Content and Applicaons, Financial Services and eCommerce, Mobile Content and Applicaons, Soware-as-a-

Service, and Converged Services

www.sawariventures.com

sraj Caa

Siraj Capital focuses on early stage growth capital investments and opportunisc Islamic nance transacons.

www.sirajcapital.com


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ANGEl/sEEd & othER

iNVEstMENt fiRMs

16

Jaar inerne Gr

Jabbar Internet group was formed aer the sale of maktoob.com, the largest Arabic portal, to Yahoo. Although Jab-

bar is not a typical VC rm, it invests in Internet companies in various stages focusing on the e-commerce and online

retail sector. Jabbar has seven investments in dierent Internet companies including Souq.com the largest Arab

online marketplace. Other porolio companies include Cashu.com,Ikoo.com,Cobone.com, Sukar.com, Joob.com and

Tahadi.com.

www.jabbar.com

MENA Venre invemenMENA Venture Investments provides angel and seed funding to entrepreneurs with ventures that have strong growth

potenal.

www.menaventureinvestments.com

Nana tecng Enerre Cman (NtEC)

hp://www.ntec.com.kw

N2V

N2V is an internet holding company with oces in Riyadh, Dubai, Amman, Cairo, & California, with a core business

of building & invesng in innovave consumer web & mobile ventures.

hp://www.n2v.com

oa 500

Oasis500 is an early stage and seed investment company. Oasis500 nurtures creave ideas in Informaon and

Communicaons Technology (ICT), mobile and digital media. Oasis 500 aims to provide capital to 500 start-ups in

ve years.

www.oasis500.com

pganpaEg

PlugandPlayEgypt is a Silicon Valley-linked company accelerator program, in partnership with Plugand PlayTechCent-

er, an incubator with 280+ technology start-ups in Silicon Valley. The PlugandPlayEgypt program includes facilies

and connecvity, targeted mentorship, seed capital and support, as well as access to internaonal networks.

hp://plugandplayegypt.com

Venre Caa bank

An Islamic investment bank specializing in VC investment opportunies in a variety of elds

www.vc-bank.com

tr54 ikar

twofour54 Ibkar provides nancing and support for businesses and individuals targeng the Arab media and enter-

tainment industry. Our primary focus is to support Arab entrepreneurs and businesses from the region that are will-

ing to be based at twofour54, with the aim of creang a diversied Arabic content creaon industry in Abu Dhabi.www.ibkar.twofour54.com


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soCiAl VC17

bam fnance

Bamboo Finance advises the Luxembourg based Oasis Fund invesng in innovave, commercially viable enterprises

which are designed to generate signicant social impact and aracve nancial return. As of today the fund has

received commitments of $51 million from private and instuonal investors. The fund has an acvely managed

porolio of 12 companies diversied across sectors and geographies beneng low income communies.

www.bamboonance.com

baraka Venre

Baraka supports social ventures and sustainable businesses with a triple boom line. The investment focus is digital

media and online in consumer and business internet within projects that have a high social impact. This includes

creang tools and services that help companies wanng to get more engaged, government agencies looking formore parcipaon and NGOs looking for new ways to give and receive support.

www.baraka.ae

wtree

WillowTree is an impact investment rm that manages social impact funds. The funds invest in for-prot businesses

that are commied to generang posive, sustainable and demonstrable social and environmental impact coupled

with market-based nancial returns. The sectors of interest are health, educaon, food and nutrion, community

development, poverty alleviaon and the environment. Companies of interest are those that have a proven business

model to deliver impact with prot and in need of further nancing to create growth and scale.

www.willowimpact.com


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AppENdix18

The following data provides an overview of the general macro environment in MENA.

menA mAcro-economic dAtA 1

Ramn se, b & Cman

GCC MACRo-ECoNoMiC iNVEstMENt dRiVERs

MAiN stRuCtuRAl fACtoRs of iNVEstMENt lANdsCApE

(sElECtioN, NoN-ExhAustiVE)

Key Input forenabling

Economic Acvity

Factors driving Demand for

Products and Services from the Region

BusinessEnabling

Infrastructure

Instuonal

Framweork

Availability of

CapitalGDP(2) Populaon(2)

Forecasted

Populaon

Growth(3)Enabling Infrastructure(4)

Index of Economic

Freedom (IEF)(5)

la/gdp(1) $us b. M. cAgr10-20

ia. s / gdp A ., iefUS

= 81

gcc 50% 1,222 41.1 2.0% 29.6% 69

Bahrain - 24 2 1.5% 27.2% 76

Kuwait 61% 150 26.4 2.0% 37.0% 68

Oman 38% 62 5.3 1.9% - 68

Qatar 47% 153 2 2.6% 25.0% 69

Saudi Arabia 42% 544 26.4 2.0% 31.8% 64

UAE 61% 290 5.3 2.1% 24.2% 67

The GCC countries, with 41 million inhabitants, represent roughly 12 per cent of the total MENA populaon, and

have an overall GDP of around USD1,220 billion. The GCC populaon is expected to grow at a CAGR of two per cent

in the next 10 years, increasing consumpon opportunies.

With an average infrastructure spend to GDP rao of around 30 per cent, the GCC constutes a major part of overall

MENA demand for infrastructure capital, which is esmated by the OECD to reach more than USD300 bill ion for the

next 10 years. In Qatar, the governments road, rail, port and airport expansion plans, which will be the focus of near-

term investment, amount to over USD60 billion.

1.All chart gures (GDP and Populaon) are as of 2011, unless otherwise specied.

Sources used include: Central banks, Global investment house, The Arab World Compeveness Review 2010;

United Naons Populaon Fund; IMF; World Bank, Global Insight 2011 data; Economic Intelligence Unit, Nomu-

ra; Standard Chartered (data collected as average of 2007-08-09), Heritage Foundaon Index of Economic

Freedom 2010 Report; Economic freedom is measured based on business, trade, scal, monetary investment,

corrupon and labor freedoms along with government size and property rights


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GCC iNVEstMENt sECtoRs

The telecommunicaons sector in general, seems aracve in the GCC.

According to the UAE ministry of health, the healthcare sector is increasingly aracng large amounts of invest-

ments even aer the crisis in the UAE

The tradional sectors in the GCC remain aracve such as the oil equipment, services and distribuon and the gas,

water and mul-ulies


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lEVANt MACRo-ECoNoMiC iNVEstMENt dRiVERs



Key Input for

enabling

Economic Acvity



Business

Enabling

Infrastructure

Instuonal

Framweork

Availability of


Forecasted

Populaon


Index of Economic

Freedom (IEF)(5)


ia. s / gdp A ., iefus

= 81

lva 58% 283.7 66.1 1.9% 38.8% 58

Lebanon - 42 4.3 0.7% - 60

Jordan 75% 30 6.6 1.5% 38.8% 66

Syria 42% 66 23 1.6% - 49

Iraq - 147 32.2 2.3% - -

The Levant countries house around 66 million inhabitants and have an overall GDP of around USD284 billion. While

the Levant populaon is expected to grow at a CAGR of 1.9 per cent over the coming 10 years, the GDP is expected

to grow at around 8.8 per cent on a nominal basis; as such the GDP per capita is expected to increase substanally.

This will translate into increasing consumer spending in domesc markets.


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lEVANt iNVEstMENt sECtoRs

Fixed line telecommunicaons, the support services and the banks seem to be aracve

The banking sector is relavely secure and aracts deposits from the region, growing the sector substanally as well

as generang returns. This was proven on the Lebanese scene during the last crisis where Lebanese banks, due to

prudent asset allocaon and regulatory restricons, maintained stability and growth, aracng more funds from the

GCC and other countries

Note: Analysis excludes Iraq and Syria for lack of data


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NoRth AfRiCAs MACRo-ECoNoMiC iNVEstMENt dRiVERs



Key Input for

enabling

Economic Acvity



Business

Enabling

Infrastructure

Instuonal

Framweork

Availability of


Forecasted

Populaon


Index of Economic

Freedom (IEF)(5)

la/gdp

(1)

$us b. M. cAgr10-20 ia. s / gdp A ., iefus = 81

n Aa 38% 627.8 215.1 1.4% 35.7% 55

Egypt 42% 185 86 1.5% 32.0% 59

Tunisia 62% 48 10.5 0.8% - 59

Morocco 79% 102 32 1.0% 27.3% 59

Algeria 29% 177 36 1.3% 44.3% 57

Libya 16% 50 6.5 1.5% - 40

Sudan 1% 66 44.1 1.8% - -

The North African populaon is expected to grow at a rate of 1.4 per cent per year over the next 10 years. Mean -while the GDP is expected to grow at 7.5 per cent

Infrastructure spending in North Africa is esmated at around 36 per cent of the nominal GDP, with Algeria recording

the highest spend in terms of percentage of GDP and actual value.


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NoRth AfRiCA iNVEstMENt sECtoRs

Interesng sectors to consider targeng in North Africa are Construcon & Materials, Real Estate and the Food and

Drugs Retailers for their high growth and relavely high protability

Focusing on Egypts construcon sector just prior to the latest polical reforms, it is worth nong that by 2015, sec-

tor spending was expected to increase to USD7.3 billion and the countrys residenal construcon segment was ex-

pected to increase to USD606 million. Meanwhile, the countrys non-residenal construcon segment was expected

to increase to USD6.7 billion in 2015


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MACRo-ECoNoMiC ANd dEMoGRAphiC ENViRoNMENt iN othER REGioNAl CouNtRiEs



Key Input for

enabling

Economic Acvity



Business

Enabling

Infrastructure

Instuonal

Framweork

Availability of


Forecasted

Populaon


Index of Economic

Freedom (IEF)(5)


ia. s / gdp A ., iefus

= 81

o 43% 1183.8 181.9 1.3% 54

Yemen 12.10% 37.6 24.9 2.6% 54

Iran 81% 408.6 76 1.0% 43

Palesne - 5.58 4.36 2.6% -

There is a huge disparity in the Loan to Nominal GDP rao within the remaining regional countries, ranging from 12

per cent in Yemen to 81 per cent in Iran. The low rao of Yemen is parally due to the fact that, unl recently, 45 per

cent of all loans in Yemen were supplied by Islamic banks, which abide by stringent nancing principles. The unusu-

ally high rate in Iran is mainly due to the governments iniave to smulate business and investments, aiming at aneconomic independence from a sanconing West.

Iran, with nominal 409 billion and a populaon of around 76 million, is expected to grow at a CAGR of 1.0 per cent in

the coming ten years. Palesne and Yemen have a combined GDP of only USD43 billion and have a small combined

populaon of 29 million, expected to grow at a CAGR of 2.6 per cent over the next 10 years and represenng the

highest forecasted populaon growth of the whole Middle East.

Yemen was planning to invest USD5 billion in developing its power generaon and infrastructure and willing to put

forward 20 per cent of the needed funding.


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MENA pRiVAtE Equity AssoCiAtioN19

THE ASSOCIATION LOGOdegne Nck G, Ne zeaan t Cmean

Like any new enterprise, the MENA Private Equity Associaon started small an idea on a blank page, and to get to the next step we

had to beg and plead for help.

In the spirit of entrepreneurship, Nick Gibb, at the me a graphic designer and aspiring comedian, stepped in semi-voluntarily and

helped to create our branding and logo. With a lile bit of cash in hand from the work, Nick le his day job to pursue a goal of making

it on his own. Aer a year of scrapping together freelance jobs, and the odd comedy gig, Nick was recently awarded New Zealands

top comedy prize - and is now ready to take on the world.

Our logo now serves as a daily reminder that it takes hard work and perseverance to achieve great things, and more importantly, to

have fun and not take too seriously all the lile things that dont go quite right along the way.

RANdoM fACt

The MENA Private Equity Associaon is a non-prot enty commied to supporng and developing the private

equity and venture capital industry in the Middle East and North Africa.

The Associaon aims to foster greater communicaon within the regions private equity and venture capital net -

work and facilitate knowledge sharing in order to encourage overall economic growth, and will acvely promote

the industrys successes to local stakeholders and build trust with investors, regulators and the public regionally

and internaonally.

.menaea.cm


45/5045


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booz & coMpAny

Booz & Company is a l

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