The Qatar Investment Authority (QIA) has unveiled plans to roll out a new venture capital fund of funds, committing up to $1 billion to back international and regional venture capital entities. The announcement was made during the esteemed Web Summit.
Targeting to lure venture capital firms and burgeoning startups to both Qatar and the broader Gulf Cooperation Council (GCC) region, the fund will concentrate on key sectors including fintech, education technology, and healthcare.
The scheme, aligning with conventional fund-of-funds models, will engage in indirect investments across various VC funds. Additionally, it will partake in selective co-investments alongside these funds. This move is aimed at escalating the startup count and amplifying the venture capital available within Qatar, an effort to catch up with the more advanced startup hubs of its neighbors, such as Saudi Arabia and the UAE.
Gulf sovereign wealth funds, including Abu Dhabi’s investment powerhouses and Saudi Arabia’s Public Investment Fund, have collectively injected over $73 billion into diverse asset classes in 2022, the data from a financial tracking service reveals.
With an objective to diminish their oil-dependence, Gulf wealth funds have been steadily infusing capital into tech startups within the GCC. This has resulted in budding venture capital scenes. For instance, in 2023, Saudi startups accumulated $1.3 billion in funding. Insights from Magnitt show that less than half of the investors were from outside the MENA region, a testament to the maturing local venture capital landscape, which garnered $2.6 billion the previous year.
Saudi Arabia has been at the forefront with its dedicated tech firm funds. Notable initiatives include Jada, a $1 billion fund of funds, and Saudi Venture Capital, which have been active investors in various VC funds. In contrast, QIA’s venture is solely dedicated to venture capital funds, a first in the region.
Building a well-connected startup ecosystem network in Qatar is fundamental to diversifying the country’s economic base in the long term,
QIA CEO Mansoor Ebrahim Al-Mahmoud remarked. He emphasized the program’s role in ensuring that innovative companies have the necessary capital and VC support to scale and extend their market reach, not only in Qatar and the GCC but also internationally.
QIA has set criteria for fund managers to have a robust track record and a commitment to the Gulf’s VC and startup ecosystem, which includes establishing a presence in Qatar and crafting expansion strategies across the GCC.
As sovereign wealth funds in the Middle East, including QIA, have primarily funded overseas startups, their new focus on regional ties marks a strategic shift. QIA, for instance, has previously invested in ventures such as Builder.ai, Reliance Retail, marketing platform Insider, telecom giant Airtel Africa, and Indian startups like Swiggy and Flipkart.