The Qatar Investment Authority (QIA) has announced that it will be launching a brand new venture capital (VC) fund of funds worth $1 billion. This initiative aims to attract both international and regional VC funds and startups to the state of Qatar and the wider Gulf Cooperation Council (GCC) region. The program will have a particular focus on key industries such as fintech, edtech, and healthcare, according to a statement released by QIA on Monday.
Sources reveal that the QIA’s latest endeavor will follow the traditional fund-of-funds structure, where investments are made indirectly through other VC funds. However, the sovereign wealth fund will also engage in targeted co-investments with participating funds. This strategy is in line with Qatar’s efforts to strengthen its startup ecosystem and bridge the gap with more established ecosystems in neighboring countries like Saudi Arabia and the United Arab Emirates (UAE).
Global SWF, an online tracker, reports that Gulf sovereign wealth funds, including the Abu Dhabi Investment Authority, ADQ, Mubadala, Saudi Arabia’s Public Investment Fund, and Qatar’s QIA, collectively invested over $73 billion in various asset classes in 2022. These funds are seeking to diversify their portfolios and reduce reliance on oil, which has led to a significant increase in investments in tech startups in the region with the hope of nurturing a thriving VC industry.
This approach has already yielded promising results, with Saudi Arabian startups raising a total of $1.3 billion in 2023. Moreover, data from Magnitt reveals that 45% of investors in the MENA region originate from outside the region, signifying a growing maturity in the local venture capital ecosystem. In 2020, the startup scene in the MENA region received a total of $2.6 billion in funding.
Until now, the PIF was the only sovereign wealth fund in the region to have established dedicated funds for tech companies. However, unlike Jada, the PIF’s $1 billion fund of funds, which targets both venture capital and private equity funds, and Saudi Venture Capital (SVC), QIA’s fund of funds will focus solely on venture capital funds, making it the first of its kind in the region.
“There is currently no dedicated pool of capital in Qatar for companies that are past seed funding and are ready for Series A to Series C funding rounds. Building a well-connected startup ecosystem network in Qatar is fundamental to diversifying the country’s economic base in the long term,” explained QIA CEO Mansoor Ebrahim Al-Mahmoud in a statement.
The QIA’s program requires fund managers seeking funds to demonstrate a strong track record and active participation in the Gulf’s VC and startup ecosystem. This entails setting up operations, having a senior-level presence in Qatar, and outlining expansion plans across the GCC.
It will be interesting to see how this new initiative aligns with the QIA’s previous investments before the official launch of the fund of funds program. Historically, these wealth funds have primarily backed foreign startups in the U.S. and Asia, with limited involvement in the Gulf region. For example, QIA’s portfolio includes investments in Builder.ai, Mukesh Ambani’s Reliance Retail, Singapore AI marketing platform Insider, Africa’s telecom operator Airtel Africa, as well as Indian startups Swiggy and Flipkart.
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