New $25m Abu Dhabi venture fund to target early stage companies

Access Bridge Ventures is being backed by Mubadala Capital, Saudi Venture Capital Company and a number of family offices

Hambro Perks' $50m venture capital fund will be domiciled within Abu Dhabi Global Markets. Alamy

A new Abu-Dhabi-based venture capital company completed the first close of its $25 million debut fund.

Access Bridge Ventures’ fund is being backed by Mubadala Capital, Saudi Venture Capital Company (SVC) and a number of other investors, including "several prominent family offices", the company said. It will invest in early stage businesses across the Middle East, North Africa and Pakistan, according to co-founder and managing partner Issa Aghabi.

"We've developed a spectacular network of stakeholders over the years – be it investors, entrepreneurs we've supported and helped [or] government and sovereign stakeholders we've worked with in the past," Mr Aghabi told The National.

Mr Aghabi was previously head of the International Finance Corporation’s venture capital investments and funds in the region. Prior to that, he was head of investments at Abu Dhabi’s media zone authority TwoFour 54. He co-founded Access Bridge Ventures with Rakan Alrashed, who was previously part of a Saudi Arabian investment firm that focused on start-ups and SMEs. The pair have also teamed up with Dubai-based private equity firm CedarBridge Capital Partners.

The venture space in the Mena region is becoming increasingly active. Last year, there were 243 funding institutions in the Mena region, up from 235 a year earlier, according to the 2021 Emerging Venture Markets Report due to be published by Magnitt later this week. It defines funding institutions as venture capital firms, angel networks, corporate venture companies, accelerators and other entities that take equity stakes in start-ups.

Some of the funds established over the past 12 months include the Dh535 million ventures fund that is part of Abu Dhabi’s Ghadan 21 initiative and the Dh1.1 billion Alpha Wave Incubation Fund targeting businesses from India and South-East Asia.

“There is cash available [and] there are people investing in the value chain. Is there enough? It depends on what market you are looking at,” Mr Aghabi said.

Some countries are well-served, but others such as Egypt, Jordan, Lebanon and Pakistan are not, he argued. Even in the UAE, some parts of the market are paid more attention than others.

“We’ve identified a key gap in the market, which is early stage … pre-Series A,” Mr Aghabi said.

The greater availability of venture capital in the region means the most active funds are generally doing bigger deals, he said.

“They can’t afford to waste their time on seed [funding rounds], because when you are a large fund you need to spend that money in a finite period of time. Bigger cheques make more sense.”

He anticipates the average initial investment from his company's fund will be around $500,000, although “we can go lower”, he said. Those that thrive are also likely to receive follow-on funding. Access Bridge Ventures is targeting investments in a range of sectors including FinTech, health tech, educational technology, software as a service and others.

The first fund will reach final close within the next 12 months and could be larger than the initial $25m target, depending on investor appetite, Mr Aghabi said.

He expects the fund will be fully invested over a four-year period, although exits could take up to four more years to realise. Having CedarBridge as a partner will bring "a different proposition", he said, adding a stronger focus on achieving successful exits and on governance.

"I wanted that push from experienced investors in this space to bring that discipline to venture capital," he said.

The International Monetary Fund estimates that micro, small and medium-sized enterprises make up 96 per cent of all registered businesses in the Mena region and provide about half of the total jobs in the region. The International Finance Corporation estimates there is a total financing gap to MSMEs in the region of up to $240bn.

Access Bridge Ventures will be based at Abu Dhabi Global Market.