The Qatar Investment Authority (QIA) has unveiled a new strategic move in the investment landscape: the creation of a venture capital ‘fund of funds’ with a financial commitment of $1 billion. This capital infusion was announced at a major tech event, with the purpose of inviting international and regional venture capital funds to partake in the economic growth of Qatar and the broader Gulf Cooperation Council (GCC) region.
The initiative by QIA prioritizes sectors poised for expansion, including fintech, edtech, and healthcare. By adopting the fund-of-funds approach, QIA will channel investments into various VC funds and concurrently engage in direct co-investments alongside these funds. The overarching aim is to amplify the startup scene in Qatar and to enhance the accessibility of venture capital, thereby closing the developmental chasm with neighboring tech hubs like Saudi Arabia and the UAE.
In a year marked by vigorous investment activities, the collective force of Gulf sovereign wealth funds, including the likes of the Abu Dhabi Investment Authority, ADQ, Mubadala, and Saudi Arabia’s Public Investment Fund, has deployed over $73 billion across a spectrum of asset classes, as reported by a noted online investment tracking platform.
With an eye on diminishing oil-reliance, these sovereign wealth funds are channeling increasing capital into the tech startups of the GCC, with the intention of fostering robust venture capital sectors. Echoing this burgeoning trend, Saudi Arabian startups secured $1.3 billion in 2023, with a significant 45% of investors based within the MENA region, suggesting a maturing local venture capital market that attracted $2.6 billion over the past year.
Leading the way, Saudi Arabia has been instrumental in setting up dedicated funds for technology firms. With initiatives like Jada and the Public Investment Fund’s own billion-dollar fund of funds, the kingdom has made strategic investments in VC funds globally. However, QIA’s new initiative stands out as it is singularly dedicated to venture capital funds, a first in the GCC region.
“Our goal is to construct a robust network within the startup ecosystem of Qatar, which is vital for diversifying the nation’s economy,” stated Mansoor Ebrahim Al-Mahmoud, CEO of QIA. “By launching this program, we are ensuring that innovative companies have the necessary capital and support from VC funds to grow and make an impact not just in Qatar and the GCC, but also globally.”
QIA has set prerequisites for fund managers aspiring to receive investments, such as demonstrating a solid investment history and a commitment to the Gulf’s VC and startup scene. This includes setting up a base of operations in Qatar, maintaining a senior management presence, and planning for regional expansion within the GCC.
These efforts coincide with the interests of fund managers and venture capitalists who have been seeking capital from Middle Eastern limited partners, including sovereign wealth funds. The QIA itself has a history of investing in ventures across various regions, including Builder.ai, Reliance Retail, Insider, Airtel Africa, and leading Indian startups like Swiggy and Flipkart.