The growth of venture capital and private equity in the Middle East and North Africa region. Feedback is highly appreciated! tweet at @Ramzyis

1. Venture Capital in the Middle East
Observations and growth of the UAE
Ramzy Ismail
ramzy.j.ismail@gmail.com

2. Outline
1. Venture capital asset class
2. The shift to technology investments
3. First $100M+ exit and catalyst
4. Startup exits - rare but it happens
5. Geographic shift to the UAE
6. UAE quickly maturing and leading the way
7. Power law in action
8. Ecosystem maturity and support
9. Opportunities and bottlenecks
1

3. Regional funds mirrored the global resurgence of private equity and buyouts in the early
2000’s but appetite waned with the credit crisis and funds shifted to growth and venture
capital
Source: MENA Private Equity and Venture Capital Report 2010, 2015 2
MENA Funds Raised by Type
2005 - 2014
The years starting in 2010 saw an increased amount of
venture capital flow into emerging markets led by
China and India, which along with regional exits,
brought attention to VC in MENA

4. Before 2009 there was limited internet, software and technology
investments…since 2010 tech, ecommerce, and media have quickly become
a high priority with over 60% of all venture capital
Source: MENA Private Equity and Venture Capital Report 2009, 2010, 2015 3
No distinguishable IT/Tech sector
MENA investment volume by sector
2009 - 2010
MENA investment volume by sector
2014 - 2015

5. Maktoob’s acquisition by Yahoo changed the landscape and perception of
startup investing. 2010 saw the beginning of a rapid increase of venture
capital funds in the region…
VC funds raised and investments completed Number of VC Investors By Year
Regional inflection points after Maktoob acquisition
Source: MENA Private Equity and Venture Capital Report 2015, Arabnet/DIC 2015 Digital Investment Report, GigaOM 4
52% CAGR
34% CAGR

6. yet the biggest concern in regional VC is liquidity….only a handful of exits
are often mentioned but there have been 30+ exits/buyouts across various
tech sectors in the last 7 years
Sample Exits
Company Acquirer Amount Year Notes
$40M 2012
Thomson Reuters acquired Zawya from the management and
Saffar Capital, who acquired 60% stake in 2001
Undisclosed
(~$20-40M)
2013
Tiger’s strategy in 2013 was to invest in group-buying sites
across the globe and acquired Cobone in majority buyout;
previous investors included Jabbar group and Oliver Jung (FB,
AirBnB, Houzz)
$13.5M 2014
Investment was led by Middle East Venture Partners (MEVP)
an; CookPad is a Japanese public company with a user base of
over 50M
Undisclosed
(acquihire)
2015
White Payments aimed to build a Stripe-like platform until
Payfort acquired them to build out their SME strategy, START
by Payfort
Source: MENAScapes.com 5

7. The pace of acquisition has increased as the value of technology growth and
diversification is being materialized regionally
Source: Middle East Venture Partners 6
Examples such as Souq, Beam, and Fawry indicate a majority acquisition by investors and not
complete management buyouts

8. Initially Jordan, Egypt, and Lebanon led the majority of investments but focus
quickly shifted to the UAE…driving factors include ecosystem maturity, access to
markets, and socioeconomic drivers unique to the UAE
Source: MENA Private Equity and Venture Capital Report 2013,2015; Arabnet/DIC 2015 Digital Investment Report 7
Number of Investors by Ticket Size and Country
VC investment volume by country
2011-2015

9. UAE continues to standout, leading the region in investment deals and value
since 2013
Value of Investments In The Top 5 Countries (excluding Growth Stage)Markets Ranked By Number of Investments
Lebanon’s recent growth has been
augmented by the Banque du
Liban’s Circular 331 initiative,
underwriting 75% of SME
investments - allowing banks to act
as LPs to venture funds
Source: DIC 2015 Digital Investment Report 8

10. The attractiveness of the UAE market along with compounding effect of
talent and capital are driving deal inflow from regional hubs
A third of entrepreneurs regionally want to expand into UAE markets but have yet to
effectively due so. Alongside Saudi, UAE is the top destination for startups with 42% of
founders looking to expand to the UAE
Source: Wamda Research Lab’s Country Insight 2015, Wamda Research Lab’s Enhancing Access Report 2014 9

11. Power law dynamics are considerable with over $800M invested in 480 deals
since 2013 = ~80% of value accountable to 7 companies
$150M Series C
$211M Total*
$53M Series B
$54M Total
$60M Series C
$72M Total
$275M Series D
$390M Total
$20M Series B
$20M Total
$11M Series A
$11M Total
HQ in Nigeria with major operations in Egypt*
Jordan Egypt/Africa UAE UAEEgyptUAE
$67M Series A
$67M Total
Source: Crunchbase, Wamda, Arabian Business, Al Tayyer PR 10
UAE

12. ~3% of all investments are driving the majority of value in venture capital….early stage
investments are growing due to a proliferation of incubators, accelerators and angel
investors creating downstream deal flow for institutional funds
NUMBER OF INVESTMENTS BY TICKET SIZE VALUE OF INVESTMENTS BY TICKET SIZE
Source: Arabnet/DIC 2015 Digital Investment Report 11

13. VC deal flow continues to grow through early-stage funding, mentorship, and
startup services that have dramatically increased from Morocco to Kuwait
Source: MENAScapes.com 12

14. Early
stage
Concept Seed Product
development
Go to Market Growth
Inspiring
Starting
Up
Late
stageGrowthCompanyIdea
Broadening
Ecosystem
ABU DHABI
The UAE ecosystem has quickly matured and outpaced other countries to create
value-added support across every stage of startups
13Source: Flat6Labs
An addition to regional organizations, the last two years has seen a spike in European and
U.S. based accelerators and funds seeking to tap the UAE market’s growth potential

15. There is still plenty of room for growth with private equity in Saudi and the UAE
accounting for ~0.02% of GDP, a fraction of other emerging and developed countries
Source: MENA Private Equity and Venture Capital Report 2015, Arabnet/DIC 2015 Digital Investment Report , Financial Times
726
1,950
3,007
3,879
4,614
5,843
2 28
135
256 285
490
0.3%
1.4%
4.5%
6.6%
6.2%
8.4%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
0
1500
3000
4500
6000
2009 2010 2011 2012 2013 2014
Cumula2ve Funds Raised in MENA (USDm)
PE
VC
VC % of PE
14
Within private equity, VC has continued to attract dollars due to various factors including
favorable youth demographics, growing online adoption, and government-backed initiatives
VC Investments as a % of GDPCumulative Funds Raised in MENA (USDm)

16. Source: MENA Private Equity and Venture Capital Report 2015; MENAScapes.com
Family offices are increasingly interested to invest directly into startups where
traditionally they were focused on being limited partners to local and international funds
The last two years has seen an increase number of international funds actively fundraising and
deal sourcing in the region specifically in the UAE and Egypt
International VCs Investing Locally
15
Survey of GPs on Next Year’s Most Active Investors

17. Source: PRNewswire, SEC.gov, Crunchbase, Arabian Business, India Times, investcorp.com, aramcoventures.com , NYtimes.com
Along with family offices, the GCC is seeing an increasing rate of non-traditional investors
and sovereign wealth funds investing into the technology sector directly or through VC
16
• Investcorp Technology
Partners III LP.
• Investcorp/(212) Ventures
Technology Fund I
Qatar Saudi Arabia Kuwait Bahrain
United Arab Emirates

18. Adding to the regional VC stack are corporate venture funds as a strategic way for large
organizations to diversify product offerings and technological depth
Source: MENAScapes.com
Corporate venture arms are increasing in nature but are susceptible to macroeconomic slowdowns as
many corporate VCs invest from their balance sheets and not in traditional GP-LP funds
17

19. The regional opportunity in digital has yet to fully be realized; high ceiling for digital
ad spend, young demographics, and continued distribution will drive growth
Source: Andreessen Horowitz/Benedict Evans “Mobile Is Eating The World” Report, www.mideastmedia.org, *PwC’s Global Entertainment and Media Outlook 2016-2020 report 18
The MENA region lags in overall ad
spend and in particular digital/internet
ad dollars, a major driver of online
business models
Print media’s share of the total ad market is
higher in MENA than any other part of the
world but the market is quickly giving way to
mobile and video advertising, which is
growing at a CAGR of 28.8%*

20. There are still a few hurdles to creating a flourishing venture capital
ecosystem..
Transparency and disclosure
• According to the MENA Private Equity Association a large part of the attributed jump in VC was due
to deal disclosure which increased from 33 in 2014 to 120+ in 2015
Uniform legal framework
• Beyond the often-discussed bankruptcy and liquidation, there are large gaps of clarity and uniformity
in founder earn-out agreements, foreign ownership, and tax implication for regional and international
LPs amongst other things
Venture capital dynamics and education
• An on-going dialogue has been taking place the past few years between traditional brick-n-mortar
investors and the venture community with respect to time expectancy of investments, minority
ownership, portfolio diversification and industry-specific knowledge within software-based companies
Sourcing quality deal flow
• A consistent hurdle for VCs but has slowly been less of an issue with the increased adoption of a
‘startup culture’ including the support systems of incubators, accelerators, ecosystem programs and
repeat entrepreneurs.
19Source: MENA Private Equity and Venture Capital Report 2015

21. Appendix - UAE ecosystem maturity and growth
Source: Wamda Research Lab’s Country Insight 2015 20