VENTURE BUILDING GEOGRAPHIES – FOCUS ON THE MENA REGION

We pledged to diversity in the Startup Studio worldwide Network and now we are exploring diverse locations with a potential for expanding Innovation. In our recent webinar series held in September 2022, our speakers Ritesh Tilani, founder of Enhance Ventures, and Wim Torfs, founding partner of Glowfish Ventures gave valuable insights on venture building in the MENA region. 

Make sure to follow us on LinkedIn and join our LinkedIn group not to miss the next webinar sessions. If you want to watch the full conversation, make sure to watch the recording of the webinar. The recordings of previous sessions are available within StudioHub premium membership packages. But now, let’s dive right in …

Enhance Ventures

Ritesh Tilani: «Enhance is one of the first studios in the region. We started about seven years ago and have offices in Dubai and Riyadh, the capital of Saudi Arabia, the biggest market in the MENA region. We have other regional offices: Amman, Jordan, Cairo (where much of our back office is located), and Istanbul (where our tech team sits). We have two sides to the business. On the one hand, we build ventures for ourselves. On the other hand, we also advise large corporates and government organisations on what they could do in the world of studios and maybe help them build a venture or two or a studio as a whole.»

Glowfish Ventures

Wim Torfs: «I founded Glowfish Ventures about 7-8 years ago. We were probably the first homegrown venture studio in the UAE without realising it. We invested initially in a few startups, then looked at all the problems that the startups were facing. We thought it would make sense to build some common infrastructure to support these startups. Two years later, we had a proper fund and a venture builder. We created this infrastructure and funds out of necessity for our startups. 

Now seven years later, we launched about ten tech companies. We have gone through the whole cycle of launching ventures and exiting them. About two years ago, we also launched a line of corporate venture building. And while the work is more or less the same because we build ventures, the funding is different. We mostly build marketplaces that are now vertically integrating, so they need a lot of capital and corporates can invest larger amounts of money from day one.»

Entrepreneurship in the UAE

Ritesh Tilani: «The UAE invested in positioning itself as a hub for entrepreneurship. It has set a goal for itself to build at least 20 unicorns by the year 2031. The UAE economy has grown over the years, and that helped investors and entrepreneurs to build within the country. The UAE is not a massive market: it has a population of only 10 million. If you are making consumer services, you don’t have many people to sell to. So, most businesses have to look at the market regionally rather than country-based. 

The UAE is trying to move towards a more diversified economy. One might assume that the most significant contributor is oil and gas. In reality, it is not that big: it is only 30% of the economy, shrinking as we speak. The government made a conscious decision to invest in other industries and continue to grow them as their dependence on oil decreases. »

The markets of the MENA region

Ritesh Tilani: « There are about 20 countries in the Middle East and North Africa. Each has its borders, customs duties, currencies, language and dialect, and so on. It is difficult to sell at scale across the region. For example, if you look at the macroeconomic indicators across the region, Saudi’s economy is almost double the UAE’s economy, but the UAE’s GDP per capita is almost double Saudi’s. Saudi is a much bigger market in terms of population, but there is quite an income gap.»

Wim Torfs: «The UAE, Saudi Arabia, and Pakistan markets are the ones we are most interested in. Pakistan was overlooked until recently and has a lot of potential. Looking at North Africa, Egypt is a market we’re interested in because it’s closer to the UAE and is Arabic-speaking. Meanwhile, for example, we are not that interested in Morocco because is farther away and French-speaking. So those are the main markets in the MENA region for our Venture Studio.»

Investments in the MENA region

Wim Torfs: «While the MENA region is rich, it is not easy to get funding.  The main investment in a typical startup’s early stage is the founder’s own money. If you look at the founder profiles here, they come from professional services and have had successful careers that can put in the first few $100,000 and use their network with Angel investors. 

In the MENA region, VCs are mostly funded by: 

  • High net worth individuals. 
  • Family offices.
  • Funds of funds are the largest pool of money right now in the region. A lot of them are government funded because there’s an agenda to boost the tech industry. 

Who invests in venture builders? If I talk about our own experience, this is high net worth individuals that we brought together and that invested tickets between one and two million dollars. We built the fund on the back of that. When we started, Venture Studios were an asset class that no one understood and that no one had ever heard of. It also has a different structure than a typical VC fund. So, many people were very uncomfortable investing in it. It is changing now thanks to some of the region’s successes that people have seen internationally. The funds of funds are starting to look at it as an asset class because it gives better returns. It is something that people are beginning to understand globally: the returns of a venture builder are pretty attractive. »

About the Speakers

Ritesh Tilani is the founder of Enhance Ventures, a startup studio specializing in online vertical marketplaces that improve lifestyles in the Middle East, North MENA, Pakistan, and Turkey (MENAPT). Ritesh is an active player in the Middle East tech ecosystem as an investor, advisor, and mentor to multiple startups and at a number of accelerators, such as TechStars and Startupbootcamp.

Wim Torfs is a founding partner in Glowfish Ventures, headquartered in Dubai. He has 20+ years of international experience, mostly in the field of technology venture building, investments and management consulting. Within his role at Glowfish Ventures, he has actively co-founded several leading technology ventures within the Middle East as well as Glowfish Ventures’ technology labs and in-house incubator, creating a portfolio of ventures worth over USD 150m.

ABOUT THE AUTHOR

Chiara Casale

Currently – Finishing my Bachelor’s Degree in Polytechnic of Turin in Management and Engineering, while exploring the world and new opportunities. 

Not planned – Recently found out that I enjoy writing about innovation and the future of business and entrepreneurship.

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