By Noor Sweid
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.
Launched in January 2015, Leap Ventures is a Beirut and Dubai-based growth stage venture capital firm investing in MENA’s innovation and tech start-ups.
Targeting businesses with a market presence that have reached Series B and are seeking to dramatically accelerate their global market penetration and commercialisation, the firm focuses on second round investments, and Noor Sweid, one of the four partners, says this determines their focus in 2016.
“Our criteria and investment decisions are based on the entrepreneur’s ability to execute, the size of the market, and the ability to capture that market,” she explains.
Sweid says many young regional companies were funded in 2015.
“The traction that the space is gaining is fantastic, but can never happen quickly enough. It was inspiring to see entrepreneurs come with innovative ideas that are being funded out of the local ecosystem, particularly by angel investors.
“The angel investor community is also growing rapidly, particularly with organisations like WOMENA and VentureSouq playing an active role in facilitating investments in the space.”
She adds that with an increasing number of success stories and exits, the region will become more exciting to potential investors.
“There are a few venture capital firms in the early-stage funding space that invest in these young start-ups, enabling the monetisation model to prove itself and gain some traction – these firms are growing in size as more companies come their way as a result of earlier enablement by angel investors, and as more entrepreneurs enter the rapidly developing ecosystem.
“I expect that both sectors of the ecosystem will continue to flourish and develop. In the later rounds we are also seeing a growing number of companies maturing, as well as entrepreneurs seeking larger rounds of funding to more rapidly scale to global levels.
“Interestingly, we are beginning to see global investors participating in these rounds, providing an increase in the amount of capital available to entrepreneurs.”
Leap launched with a $71 million Lebanon fund, and plans for a future regional $80 million round. It invests between $5-10 million per start-up, with an investment horizon of five to seven years.
Sweid expects 2016 to be a difficult year for the region from an economic perspective.
“Given the current price of oil, and where we are in the economic cycle, it will be difficult to raise funds regionally,” she explains.
“The increase in geo-political instability will also make it difficult to raise funds for regionally-based companies outside the region.
“That said, in the GCC, the digital economy will be the fastest growing sector of the overall economy over the next five years, and according to Frost & Sullivan, the value of the internet economy is expected to double to $200 billion by 2020. There are investors that understand the importance of this, and finding them will be key to entrepreneurs finding investment.”
A board member at Endeavour UAE, Sweid advises entrepreneurs seeking funding “to stay lean, and focus on operational excellence”.
“This will set the winners apart. Many entrepreneurs have ideas and establish companies around them, but not many can execute and perform at a level of excellence.”