COTU Ventures launches $54M fund for pre-seed and seed startups in MENA

Dubai-based early-stage enterprise capital agency COTU Ventures is asserting that it has raised $54 million for its inaugural fund to help startups within the Center East from pre-seed to seed phases.

With a remaining shut achieved final yr, COTU Ventures, which identifies and backs founders from the inception to post-product launch, invests between $500,000 to $1.5 million as an preliminary test.

Over the previous two and a half years, COTU Ventures has actively deployed capital into startups throughout the GCC, focusing totally on the UAE and Saudi Arabia and Egypt, with extra investments in Pakistan. The agency has already backed over 20 early-stage startups throughout varied sectors, as outlined in its assertion.

Founder and common associate Amir Farha revealed in an interview with TechCrunch that COTU Ventures is inclined barely in the direction of fintech and B2B software program. Nevertheless, the agency is open to alternatives throughout different sectors. Noteworthy investments by COTU Ventures embody Huspy, a UAE mortgage platform backed by Peak XV and Founders Fund, and Egyptian fintech startup MoneyHash.

“The buyer wave occurred with Careem and another purposes. At present, companies are lagging a bit behind, so there’s an enormous alternative to construct software program to assist remedy lots of their issues. We’re additionally all in favour of high-margin industries the place know-how can play an enormous function and capitalize on margin efficiencies,” stated Farha on the alternatives COTU is eager on.

Careem, the poster youngster of the startup scene within the MENA and GCC area, was one of many earliest investments Farha made as a VC at his earlier agency, Beco Capital.

A number of years after personally investing in startups in Europe and later working an angel community upon return to the Center East from the U.Okay., Farha launched Beco Capital in 2012, the place he took half within the agency’s fundraising efforts for its first fund ($50 million) and second fund ($100 million+) earlier than departing in 2021 to launch COTU Ventures. 

Whereas at Beco Capital, Farha and his associate returned the primary fund following Uber’s acquisition of Careem. He additionally famous that Beco Capital’s second fund, which incorporates well-capitalized startups reminiscent of Basic Atlantic-backed PropertyFinder, Kitopi, MaxAB, and Fresha, “is doing rather well.”. 

Reflecting on the evolving funding panorama, Farha defined how Beco Capital was actively concerned in seed rounds starting from a couple of hundred thousand {dollars} to Collection B rounds of round $5 million earlier than the ecosystem advanced to accommodate extra sizeable funds and larger later-stage investments. On this time, enterprise capital investments within the GCC area skilled important progress, hovering from $20 million in 2012 to over $2 billion by 2020.

As Beco Capital shifted its focus in the direction of later-stage investments with bigger funds, Farha determined to depart in 2021 and launch COTU Ventures, doubling down one early-stage investments. This choice, he defined, was pushed by the popularity of a market hole. Regardless of the numerous maturation of the GCC tech ecosystem by way of capital and expertise, there remained an important want for help past simply funding on the earliest phases of startup growth.

Farha asserts {that a} founder’s upbringing and formative years experiences can provide precious insights into their potential for fulfillment. At COTU Ventures, he emphasizes the significance of candid conversations that delve deep right into a founder’s private {and professional} journey, exploring important life occasions and choices. By fostering such open dialogue, COTU Ventures goals to ascertain belief and robust connections with founders, enabling knowledgeable funding choices. Furthermore, Farha highlights this technique permits the agency to supply strategic steerage on fundraising, organizational growth, and go-to-market technique. He added that the enterprise capital agency additionally facilitates introductions to key stakeholders reminiscent of clients, hires, and potential follow-on traders, providing complete help to its portfolio firms as they navigate Collection A rounds and past.

“I like the chaos of the sooner phases the place you’re discovering, experimenting and testing. Issues look nice, however sooner or later, issues look troublesome, after which you are attempting to assist remedy issues alongside the way in which. In order that atmosphere fits me as an investor effectively,” remarked Farha. “Additionally, there’s a spot. The area remains to be early and no person’s proudly owning early-stage with conviction. You’ve gotten the larger companies investing smaller checks within the pre-seed phases however don’t spend sufficient time serving to them till they attain product market match. So, I feel there’s that area to be the go-to firm that founders need to have on their cap desk.”

COTU Ventures’ restricted companions embody Lunate, Mubadala, Dubai Future District Fund, Arab Financial institution, Bupa KSA, and GPs from VCs, together with Foundry Group, Tribe Capital, Stride, and a number of other household workplaces. 

“We’re proud to have backed a fund that’s distinguished not solely by its spectacular portfolio however by the distinctive management and monitor file of its founding associate, Amir,” stated Sharif Elbadawi, CEO of Dubai Future District Fund, in a press release. “Our confidence in Amir stems from his deep ardour for supporting founders and his confirmed skill to search out exceptional funding alternatives earlier than anybody else.”