Qatar Investment Authority (QIA) launches a $1 billion venture capital fund for international and regional venture capital funds, the sovereign wealth fund was announced on Monday at the Web Summit.
The program, according to QIA, seeks to attract international VC capital and startups to Qatar and the wider Gulf Cooperation Council (GCC) region, with a particular focus on the fintech, edtech and healthcare sectors.
Similar to typical mutual fund structures, QIA’s initiative will invest indirectly through other VC funds, but will also make targeted co-investments with participating funds. The sovereign wealth fund wants to boost the number of startups and boost the availability of VC funding in Qatar as it seeks to close the gap with more established ecosystems in neighboring countries such as Saudi Arabia and the United Arab Emirates (UAE).
Gulf sovereign wealth funds (SWFs) such as Abu Dhabi Investment Authority, ADQ, Mubadala, Saudi Arabia’s Public Investment Fund and Qatar’s QIA collectively invested over $73 billion across asset classes in 2022, according to Global SWFan online tracker.
Recently, these funds, aiming to reduce dependence on oil, have increasingly poured money into tech startups in the GCC region, hoping to nurture thriving venture capital industries. The strategy met with some success. In 2023, Saudi startups alone raised $1.3 billion. Additionally, Magnitt’s data reveals that only 45% of investors came from outside the MENA region, indicating growing maturity in the local venture capital ecosystem, which received $2.6 billion in funding last year.
So far, Saudi Arabia has led the way in creating special funds for technology companies. Initiatives such as Jada, the Public Investment Fund’s (PIF) $1 billion fund and Saudi Venture Capital have actively invested in venture capital, including notable names such as China’s MSA Capital and Endeavor Catalyst. However, unlike these initiatives, which also target private equity, QIA’s fund of funds focuses exclusively on venture capital, being the first of its kind in the region.
“There is currently no dedicated pool of capital in Qatar for companies that have gone through seed funding and are ready for Series A to Series C funding rounds. Building a well-connected network of startup ecosystems in Qatar is fundamental to diversifying the country’s economic base in the long term,” QIA CEO Mansoor Ebrahim Al-Mahmoud said in a statement. “QIA is launching this program to ensure that innovative businesses can have immediate access to capital and support from VC funds, enabling them to scale operations and expand their market presence in Qatar, across the GCC and finally on the international stage”.
QIA requires fund managers seeking capital to demonstrate a strong track record and active participation in the Gulf VC and startup ecosystem. This entails establishing businesses, a top-level presence in Qatar and outlining expansion plans across the GCC.
The QIA directive reflects what has been expressed by fund managers and venture capitalists who, last year, tried to raise capital from limited partners in the Middle East, including sovereign wealth funds. Therefore, observing how these guidelines align with their individual investments will be of particular interest. These investment funds have historically backed foreign startups, particularly in the US and Asia, with few connections to the Gulf region. QIA, for example, has invested in various ventures such as Builder.ai, Mukesh Ambani’s Reliance Retail, Singaporean AI marketing platform Insider, African telco Airtel Africa and notable Indian startups such as Swiggy and Flipkart.
