Qatar plots a $1B pipeline to VCs
The Qatar Investment Authority (QIA) is launching a $1 billion venture capital fund of funds for international and regional venture capital funds, the sovereign wealth fund announced on Monday at the Web Summit.
The program, according to QIA, seeks to attract international VC funds and startups to Qatar and the wider Gulf Cooperation Council (GCC) region, with a particular focus on the fintech, edtech, and healthcare sectors.
Similar to typical fund-of-funds structures, QIA’s initiative will invest indirectly through other VC funds but also make targeted co-investments with participating funds. The sovereign wealth fund wants to bolster the number of startups and enhance the availability of VC funding within Qatar as it attempts to narrow the gap with more established ecosystems in neighboring countries such as Saudi Arabia and the United Arab Emirates (UAE).
Gulf sovereign wealth funds (SWFs) like the Abu Dhabi Investment Authority, ADQ, Mubadala, Saudi Arabia’s Public Investment Fund, and Qatar’s QIA collectively invested over $73 billion across various asset classes in 2022, according to Global SWF, an online tracker.
Recently, these funds, aiming to reduce reliance on oil, have increasingly poured money into tech startups in the GCC region, hoping to nurture thriving venture capital industries. The strategy has seen some success. In 2023, Saudi Arabian startups alone raised $1.3 billion. Additionally, data from Magnitt reveals that only 45% of investors came from outside the MENA region, indicating growing maturity in the local venture capital ecosystem, which received $2.6 billion in funding last year.
So far, Saudi Arabia has led the charge in establishing dedicated funds for tech firms. Initiatives like Jada, the Public Investment Fund’s (PIF) $1 billion fund of funds, and Saudi Venture Capital have actively invested in venture capital funds, including notable names like China’s MSA Capital and Endeavor Catalyst. However, unlike these initiatives, which also target private equity funds, QIA’s fund of funds is exclusively focused on venture capital funds (similar to Dubai’s $200 million Future District Fund), marking the first of its kind in the region for a country.
“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,” said QIA CEO Mansoor Ebrahim Al-Mahmoud in a statement. “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.”
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The QIA requires fund managers seeking funds to demonstrate a strong track record and actively participate in the Gulf’s VC and startup ecosystem. This entails establishing operations, a senior-level presence in Qatar, and outlining expansion plans across the GCC.
The QIA’s directive mirrors what was expressed by fund managers and venture capitalists who, last year, sought to raise capital from limited partners in the Middle East, including sovereign wealth funds. Thus, observing how these directives align with their individual investments will be of particular interest. These wealth funds have historically backed foreign startups, particularly in the U.S. and Asia, with minimal connections to the Gulf region. The QIA, for instance, has made investments in various ventures such as Builder.ai, Mukesh Ambani’s Reliance Retail, Singapore’s AI marketing platform Insider, Africa’s telecom operator Airtel Africa, and notable Indian startups like Swiggy and Flipkart.
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