2016 Investor predictions: Khaled Talhouni, Wamda Capital

With the region’s start-up scene going from strength to strength, investors have never been more prominent nor more vital. With more and more new businesses looking for funding, and investors looking to put more money into the GCC.
By Khaled Talhouni
Tue 12 Jan 2016 10:51 AM

In June 2015 Wamda Capital, a venture capital firm investing in high growth tech start-ups, launched what is believed to be the largest growth stage venture fund in the region.

Wamda MENA Ventures I, a $75 million regional investment fund, aims to address an emerging equity funding gap for growth stage start-ups in the region.

Khaled Talhouni, partner at the firm, explains that during last year the regional start-up ecosystem was developing rapidly.

“We have had a much larger than anticipated pipeline,” he says.

“For example, by year end we would have done ten transactions that would be ten investments in ten months since the fund’s first close in February.

“We see a lot of companies developing rapidly and at a pace that is very positive.”

Wamda MENA Ventures I is the second fund launched by Wamda Capital’s four partners - Aramex founder Fadi Ghandour, Khaled Talhouni, Walid Faza and Lana Alamat.

In 2010, they established Mena Venture Investments, an early stage angel investment network, which has been targeting investments in high growth tech start-ups.

With the launch of their new growth-stage fund, Wamda Capital is now managing two funds to support start-ups in both phases of their development – early stage and growth stage investing.

Talhouni expects the interest of international investors in the region to increase this year, and says: “We already have a small track record of global players investing in regional companies that have reached a significant size.

“I do think there is still room at the Series A level (investments between $1 million to $5 million) for more funds and investors to fill the demand for capital from high growth start-ups, especially as we see success stories emerge from the relatively large number of seed companies that are being funded across the region.

“Regional funds will continue raising additional capital as our track records solidify at the growth stage. The more we can point to clear regional successes, the more we can unlock in regional and international LP capital.”

This year, he says, maintaining growth rates in the short term might prove a challenge to some entrepreneurs.

“2016 might be a tough year given the fiscal environment. A challenge will be to maintain growth rates in the short term.

“Demonstrating sustained growth is crucial to securing further capital.”

However, Talhouni explains that there will be no shortage of promising start-ups to focus on.

“Primarily we remain opportunistic. We are particularly interested in marketplaces and e-commerce – specifically high-margin, capital-efficient, niche-focused commerce ventures,” he says.

“Fintech is another key area for us, particularly in addressing the very significant credit cap in the market both from the B2B and B2C side.

“We are big believers in content and will invest heavily in the disruption of the incumbent content value chain from creation/production through to distribution and monetisation.”

Explaining that this is a great time to be an entrepreneur, he expects entrepreneurs to have an easier time raising capital during 2016 because “the dynamics are such that that there is more leverage against capital than with capital.”

“Demonstrating growth and positive unit economics are key to securing financing,” Talhouni advises entrepreneurs.

“Focus on ensuring that [you] can maintain positive growth that is sustainable and commercially viable.”

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