Beco Capital keeps faith in tech start-up investments

Technology venture capitalist Beco say it has doubled its spending on start-ups even as economy begins to cool.

Beco Capital, a Middle East venture capital firm, is investing heavily in technology start-ups even as economies in the region are starting to show signs of strain.

While many oil-reliant industries have been hit by lower crude prices, e-commerce and services businesses tend to hold their own as consumers and vendors find ways to improve efficiency and reduce costs, said Dany Farha, Beco’s chief executive.

“One of the best things that happened to us in the techie ecosystem is a slowing economy,” said Mr Farha, a former banker.

“Technology makes things so much more efficient,” he said. “People that are not using technology start using technology because the economy is soft. So businesses and people are looking for more efficient ways of doing things, like finding property and finding a place to rent instead of the old world of print media.”

Mr Farha would not give a figure for the value of investments made, citing shareholder confidentiality, but said that it was in the millions of dollars.

Beco has made investments in technology companies, including propertyfinder.ae and the medical insurance start-up Bayzat.

Statistics on the size of venture capital investments made in the region are hard to come by, but Mr Farha estimates that in the Middle East it is between $50 million and $100m. That is still a sliver compared to the US, where venture capital investments total about $52 billion, according to the business executive.

Omar Kassim, founder of the online market place Jadopado, said that so far he has not felt the impact of the slowing economy and that his sales have held up.

The UAE is the world’s eighth- biggest producer of oil, a commodity that has shed more than half of its value in the past year. Economists have downgraded forecasts, with the IMF expecting the economy to grow 3 per cent this year from about 4 per cent last year.

“I wouldn’t say that tech companies are recession-proof, but there’s better protection in the sense that technology brings in efficiencies,” Mr Kassim said.

The e-commerce market in the Middle East was forecast to be worth $15bn this year, according to a 2013 report released by the electronic payment platform PayPal in conjunction with the research company Ipsos.

The Middle East’s e-commerce market grew nearly 30 per cent to $9bn in 2012 from $7bn in 2011, according to the report.

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