UAE's VentureSouq unveils $50m venture fund to support Mena's FinTech sector

Backed by Abu Dhabi's Mubadala and ADQ, it will focus on payments infrastructure, alternative credit, digital banking and other subsectors

VentureSouq partners Tammer Qaddumi, Suneel Gokhale, Sonia Gokhale, Sonia Weymuller and Maan Eshqi. Photo: VentureSouq

VentureSouq, the UAE-based investment firm focused on early stage technology businesses, unveiled a $50 million venture fund that will target the FinTech sector.

The company's Mena FinTech Fund I will support FinTech and software-as-a-service companies. The fund is backed by major regional investment houses, including Abu Dhabi's Mubadala Investment Company, DisruptAD, the venture capital platform of Abu Dhabi's holding company ADQ, Saudi Arabia's Jada Fund of Funds and Saudi Venture Capital Company, Bahrain’s Al Waha Fund of Funds and OFC, the Middle East investment arm of The Olayan Group.

It will focus on key subsectors such as payments infrastructure, alternative credit, digital banking, property technology, insurance technology and personal financial management, and will work closely with regional entrepreneurs who are at the forefront of leading financial disruption.

The evolution of the Mena's FinTech ecosystem is still in its "very early days" but the sector's foundational layers of are beginning to face disruption, Suneel Gokhale, a general partner at VentureSouq, said.

"Our view is that now is a great time to be investing in what we think will be the next batch of FinTech unicorns [start-ups with a valuation of $1 billion or more]," Mr Gokhale told The National on Sunday.

"We think it was a matter of time; you have FinTechs challenging incumbents across the globe through better user experiences and less friction, and in the end better products that hack distribution more times than not will win.

"Consumers and businesses here in Mena want to benefit from that as well and now we are at a point in time where talent, access to capital and government/regulatory support is very strong, resulting in the rapid emergence of FinTech challengers, which is especially true here in the UAE, which is now universally regarded as a great place to build a business and a life."

The region's FinTech sector continues to gain traction as more consumers turn to digital payments services, accelerated by the Covid-19 pandemic, presenting an opportunity for companies, particularly start-ups, to provide new and additional services to cater to the growing demand.

In the Middle East, one out of every four investment deals in 2021 was in FinTech, which accounted for roughly a third of all the funding raised – $2.1 billion in 220 deals – according to a report by consultancy firm RedSeer.

Online sales − a key vertical for FinTech – in the Mena region are expected to triple to $28.5bn by 2022 from $8.3bn in 2017, recent research from Bain & Company showed.

VentureSouq's fund has been deploying capital into start-ups across Mena and Pakistan. Its investments include UAE FinTech platforms Baraka, FlexxPay, NymCard and Verity, Pakistan's Creditbook, PostEx and Abhi Finance.

The fund also invested in Egypt's transport platform Trella, gig economy financial platform Dayra and Algeria-based ride-hailing app Yassir, along with other companies that will be announced in the coming months.

"As the first vertical venture fund in Mena, it was critical to assemble the right LP [limited partner] base. We needed partners that would both understand where the region currently sits on the evolutionary curve, but also that could help our portfolio companies navigate the challenging regulatory and funding terrain in Mena," Maan Eshgi, a general partner at VentureSouq, said.

"For us to get the outcomes we need, our portfolio companies need to access not just a single market, but the entire Mena region. We believe we have the right stakeholders to help make access to that broader market a reality.”

Founded in 2016, VentureSouq has operations in the UAE, Egypt and Saudi Arabia, and has invested in more than 200 companies worldwide.