International and regional venture capital funds will be able to get $1 billion from the Qatar Investment Authority (QIA). This was stated by the sovereign wealth fund at the Web Summit on Monday.
The goal of the program, according to QIA, is to bring foreign venture capital funds and new businesses to Qatar and the wider Gulf Cooperation Council (GCC) area, mainly in the healthcare, education, and fintech fields.
Like most fund-of-funds structures, QIA’s plan will invest indirectly through other VC funds and also make targeted co-investments with funds that are taking part. The sovereign wealth fund wants to increase the number of startups and the amount of venture capital (VC) funding available in Qatar. This is part of an effort to catch up with nearby countries like Saudi Arabia and the United Arab Emirates (UAE), which have more developed startup ecosystems.
An online tracker called Global SWF says that in 2022, Gulf sovereign wealth funds (SWFs) such as the Abu Dhabi Investment Authority, ADQ, Mubadala, Saudi Arabia’s Public Investment Fund, and Qatar’s QIA spent more than $73 billion in a wide range of assets.
In order to become less dependent on oil, these funds have been putting more and more money into tech startups in the GCC region. They want to grow successful venture capital companies. The plan has worked in some cases. Among startups in 2023, those in Saudi Arabia raised $1.3 billion. Magnitt data also shows that only 45% of investors were from outside the MENA region. This shows that the local venture capital ecosystem is becoming more mature, as it got $2.6 billion in funding last year.
So far, Saudi Arabia has been the leader in setting up funds just for tech companies. Venture capital funds, such as China’s MSA Capital and Endeavor Catalyst, have been heavily invested in by groups such as Jada, the Public Investment Fund’s (PIF) $1 billion fund of funds, and Saudi Venture Capital. But these other programs also go after private equity funds. QIA’s fund of funds, on the other hand, only goes after venture capital funds. It is the first program of its kind in the area.
“There isn’t a place in Qatar where companies that have raised seed money and are now ready for Series A to Series C funding rounds can go to get money.” “Creating a strong network of startups in Qatar is important for broadening the country’s economic base over the long term,” said QIA CEO Mansoor Ebrahim Al-Mahmoud in a statement. “QIA is starting this program to make sure that innovative businesses can easily get money and help from venture capital funds. This will help them grow their businesses and reach more customers in Qatar, the GCC, and eventually around the world.”
The QIA says that fund managers who want to raise money must show that they have a good track record and be involved in the Gulf’s venture capital and startup environment. Setting up businesses and a senior-level presence in Qatar is part of this. Plans for growth across the GCC are also laid out.
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The QIA’s order is similar to what fund managers and venture capitalists said when they tried to get money from limited partners in the Middle East, such as sovereign wealth funds, last year. Because of this, it will be very interesting to see how these directions fit with their own investments. In the past, these wealth funds have mostly backed foreign startups, mostly in the U.S. and Asia, with few ties to the Gulf area. The QIA has put money into many businesses, including Builder.ai, Mukesh Ambani’s Reliance Retail, Singapore’s Insider AI marketing platform, Africa’s Airtel Africa, and well-known Indian startups like Swiggy and Flipkart.
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