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 assist startups within the Center East from pre-seed to seed levels.

With a ultimate shut achieved final 12 months, COTU Ventures, which identifies and backs founders from the inception to post-product launch, invests between $500,000 to $2 million whereas reserving capital for follow-on investments.

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, Egypt and Pakistan. The agency has already backed over 20 early-stage startups throughout varied sectors, as outlined in its assertion.

Founder and normal companion Amir Farha revealed in an interview with TechCrunch that COTU Ventures is inclined barely in the direction of fintech and B2B software program. Nonetheless, 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 functions. Immediately, companies are lagging a bit behind, so there’s an enormous alternative to construct software program to assist resolve a lot of their issues. We’re additionally all for high-margin industries the place know-how can play a large function and capitalize on margin efficiencies,” stated Farha on the alternatives COTU is eager on.

Amir Farha (Founder and normal companion, COTU Ventures)

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 working at a company VC investing throughout the U.Ok. and Sweden and later working the primary seed fund and angel community within the area backed by the Dubai authorities, Farha launched BECO Capital in 2012, the place he took half in working the agency’s investments, technique and agency constructing efforts for its first fund ($50m) and second fund ($100m) earlier than departing to launch COTU Ventures. 

Whereas at BECO Capital, Farha and his companion returned the primary fund, whose portfolio contains Basic Atlantic-backed PropertyFinder and Fresha, following Uber’s acquisition of Careem. He additionally famous that BECO Capital’s second fund, which incorporates well-capitalized startups reminiscent of Kitopi and MaxAB, “is doing very 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 Sequence B rounds of round $5 million earlier than the ecosystem advanced to accommodate extra sizeable funds and greater later-stage investments. On this time, enterprise capital investments within the GCC area skilled vital 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 2020 and launch COTU Ventures, doubling down on early-stage investments. This resolution, 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 assist past simply funding on the earliest levels of startup improvement.

Farha asserts {that a} founder’s upbringing and adolescence experiences can provide worthwhile 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 vital life occasions and selections. By fostering such open dialogue, COTU Ventures goals to ascertain belief and robust connections with founders, enabling the agency to make extra knowledgeable funding selections.

Furthermore, Farha highlights this technique permits the agency to supply strategic steering on fundraising, organizational improvement, and go-to-market technique. He added that the enterprise capital agency additionally facilitates introductions to key stakeholders reminiscent of prospects, hires, and potential follow-on buyers, providing complete assist to its portfolio firms as they navigate Sequence A rounds and past.

“I really like the chaos of the sooner levels the place you’re discovering, experimenting and testing. Issues look nice, however in the future, issues look troublesome, after which you are attempting to assist resolve issues alongside the way in which. In order that atmosphere fits me as an investor properly,” remarked Farha. “Additionally, there’s a niche. The area continues to be early and no one’s proudly owning early-stage with conviction. You will have the larger companies investing smaller checks within the pre-seed levels 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 report of its founding companion, Amir,” stated Sharif Elbadawi, CEO of Dubai Future District Fund, in an announcement. “Our confidence in Amir stems from his deep ardour for supporting founders and his confirmed potential to seek out exceptional funding alternatives earlier than anybody else.”