Emerging Markets VC & Startups: How Middle Eastern Startups May See a Boost in Funding

This summer, Israel and UAE announced a historic peace deal aimed at ending tense relations between them. There are certainly political and cultural ramifications from the agreement, of which I am no expert in and have no intention of exploring here. More important to me is the economic benefits of the new situation and what this could mean for venture capital and startups in the two countries and the broader region.

Israel’s technology hub is one of the fastest-growing globally, home to top talent and resources, particularly in the AI field. Known as “Silicon Wadi” after, well…you know, many top startups in the region have seen breakout success, such as Fiverr, Waze (acquired by Google), and Moovit (acquired by Intel). Beyond the companies themselves, the country is a top performer for VC raising USD 5B in the first half of this year alone (and during a pandemic).

On the other side of the table, UAE is home to Dubai and Abu Dhabi, well-known financial centers and technology hubs in their own right. Abu Dhabi’s startup community focuses on many different sectors, such as FinTech, AI, aerospace, education, healthcare, and mobility. Government-backed Hub71 has also played a large part in the ecosystem’s growth and establishing Abu Dhabi as an innovation center. The initiative has partnerships with many global accelerators such as Techstars and financial partners such as Softbank’s Vision Fund and Mubadala Investment Company.

With these two countries being home to the top capital, talent, and startup ecosystems in the Middle Eastern region, many benefits can come from potential financial deals. Isreal’s top outside investors remain the US and China, so diversification and access to more funding will help the ecosystem grow faster than it already has. On the other hand, UAE will be looking to expand its role in technology investments, moving away from oil, and continuing to establish itself as a global startup hub. There may also be more incentive to increase funding as COVID-19 has decimated the tourism and real estate industry for UAE this year.

As is the case with so many of these negotiations, this was years in the making. As more information pours out, it seems like the beginning benefits were, in fact, economical in nature, providing a foundation for potential venture capital investment deals in the future. There are plenty of hurdles for this, however. Israel now has relations with three Arab nations (the other two being Jordan and Egypt). If venture capital firms in the UAE have LPs from other countries without specific agreements with Isreal, they may not receive the necessary permission to invest there. Also, just because a deal was signed doesn’t mean years of animosity between the two nations have just disappeared. There is much potential for startup funding from this agreement, but only time will tell if these remain positive trends.

For more news and details on this particular topic, please do some further reading here and here.

Regional News

Africa

• Ventures Platform, a Nigerian early-stage fund, is creating a startup relief program to provide emergency grants of up to USD 20K to early-stage startups that require cash lifelines. The goal of the grants is to ensure the survival of promising startups threatened by the pandemic and includes participation from Acumen and LoftyInc. Link
• Nigerian cryptocurrency startup Yellow Card has announced a USD 1.5M Seed Round with participation from Polychain, A16Z, and Celo. The company will use the funding to expand its operations as a cryptocurrency exchange. Link
• Healthlane, a Nigerian startup, has raised a USD 2.4M funding round led by London-based VC firm Digital Horizon. The startup allows clients to book and pay for doctor’s appointments at public clinics. Link

Asia-Pacific

• Sequoia Capital China has submitted filings for three new funds with the U.S. SEC. The funds’, dubbed Sequoia Capital China Venture VIII Principals Fund, Sequoia Capital China Principals Seed Fund II, and Sequoia Capital China Growth VI Principals Fund, did not disclose sizes in the filing. Link
• China technology giant Huawei has announced the launch of its Spark Accelerator in Singapore. The six-month program focuses on Deep Tech companies building 5G, AI/ML analytics, IoT, and mobile edge computing, as well as mobile and SaaS applications. Link
• 3one4 Capital, a venture capital firm in India, has announced a USD 100M fund. The firm invests in five categories: direct-to-consumer tech, media and content, fintech, deep technology, and SaaS and enterprise automation. Link

Europe

• Finland-based MedTech startup Monidor has announced a EUR 1M round with participation from Voima Ventures and Innovestor. The company creates small digital health monitoring devices and will use the funds to bring its Monidrop product to market. Link
• Storm2, a London-based HRTech startup, has announced EUR 2.5M funding from Puffin Point Investments. The startup focuses on HR solutions for FinTech companies. Link
• Paris-based health startup Cuure has landed funding of around EUR 1.8M from Kima Ventures and Newfund Capital. Launched in early 2019, Cuure provides personalized food supplements via a monthly subscription. Link

Latin America

• Mexico-based FinTech Fondeadora has raised a USD 14M round led by Gradient Ventures. The challenger bank is looking to democratize savings accounts in LATAM. Link
• Brazil-based Fuse Capital has announced plans to raise a new fund of up to USD 25M. The firm will use the capital to invest in Brazil’s startup ecosystem, with a particular focus on Rio de Janeiro. Link
• Colombian PropTech Habi, a Y Combinator graduate, has raised USD 10M Series A led by Inspired Capital. The funding round also had participation by 8VC, Clocktower Technology Ventures, and several others. Link

Middle East

• Egyptian startup DigiFi Network has raised a Pre-Seed round from Loyal VC. The startup allows users to provide profile information for advertising service in return for a stable WiFi connection. Link
• Israeli database software startup Redis Labs has raised USD 100 million in a new Series F funding round led by TCV and Bain Capital Ventures. The capital brings the cloud technology company’s valuation to over USD 1 billion, making it Israel’s latest unicorn. Link
• Dubai-based courier delivery company Fetchr has raised a USD 15M Series C funding with participation from BECO Capital, Tamer Group, and several others. The company expects to raise a further USD 10M by year-end. Link

Originally published at https://vagabondvc.substack.com.