Kholoud Hussein
Dubai and Riyadh-based venture capital firm Nuwa Capital is an investment platform aims to redefine the relationship between founders and capital by providing a progressive founder-centric approach to invest in emerging markets.
Sharikat Mubasher meets Khaled Talhouni, the Managing Partner of Nuwa Capital, to know more about Nuwa Capital’s main objectives in enhancing the entrepreneurship ecosystem in the MENA region, share insights on the targeted startups over the coming period, and discuss the company's future expansion plans in Saudi Arabia.
What are Nuwa Capital’s main objectives?
Nuwa Capital is an investment platform focused on investing in the innovation and entrepreneurship ecosystem MENA and Turkey. Primarily we invest in founders building companies that are reshaping their industries and solving for large and systemic problems in our economies.
Through our $100 million fund (Nuwa Venture Fund I), we support early-stage startups to build successful businesses in the markets they operate in, while also exploring growth opportunities in regional markets.
We are sector agnostic and have made investments across various sectors including foodtech, new age commerce, and fintech. 35% of our investments have been in Saudi headquartered companies.
How does Nuwa Capital help grow startups across the Middle East?
The concept of building bridges is fundamental to how we operate. As investors, we want to see startups from the region, not limit themselves to just their home markets, but expand across the region and beyond. The region’s startup ecosystem is at a stage where we need to scale beyond borders and we believe that we are on the cusp of seeing our founders go from the Middle East to the world.
We don’t focus only on investments, but on building thriving businesses that can reshape the economies they operate in. Beyond capital, our portfolio companies benefit from our Value Creation offering where we provider founders with subject matter expertise through dedicated subject matter experts in technology, product, recruitment, marketing etc to unlock growth potential and streamlined operations
Lastly, we explore ways to create value for our Limited Partners (LPs) and startups by enabling opportunities for them to benefit from each other.
How about the company’s business in Saudi Arabia?
We not only have our roots in Saudi Arabia, but the majority of our portfolio is based there. We are anchored by a number of Saudi based institutions, corporates and high net-worths/family offices
In 2024 we have plans to aggressively deploy capital from our $100 million fund and Saudi startups are on the top of our list. We will also explore opportunities for follow-on investments in our existing portfolio as they continue to scale both regionally and locally in KSA
Who are Nuwa Capital’s top startups in Saudi Arabia? And who are the targeted startups over the coming period?
We’ve invested in a number of companies in Saudi Arabia including such companies as Eyewa, Calo, Raqamyah, Edfa Pay, Speero and others. Besides that a number of our startups are leveraging our local expertise to make their entry into Saudi Arabia, the region’s largest economy.
Founders at all stages recognise the significant growth opportunity in the Kingdom, aligned with its economic diversification agenda and the leadership’s vision to shape a digital economy.
While we can’t disclose startups we plan to invest in over the coming period, we can tell you that we remain extremely bullish on the market. Beyond early stage investing, we have recognised significant gaps in capital availability for Series B and beyond companies. Growth stage funding remains a major challenge across the region and Saudi Arabia will attract bigger deals in 2024 as valuations moderate and investors seek new exit paths.
What are the company’s plans for 2024? And what are the expected investments?
Since our launch in 2020, we’ve deliberately focused on early-stage companies and did not rush into making investments. This was due to rising valuations and unsustainable business models in the market. Today we have approximately 60% of our fund to be deployed and in 2024, you’ll see us being much more active in the market.
We’ve also been analysing the gaps in the market with regards to capital flow. Across the region, data shows that the largest investments are made in early-stage companies. Growth stage businesses on the other hand have limited access to funding, given that there are few players who write bigger cheques. While we already make follow-on investments in existing portfolio companies, we will also explore later stage investment opportunities.
Lastly, 2024 for Nuwa Capital will be about building bridges. How can we as a firm, take regional startups, into new markets. This includes helping innovative companies enter Saudi Arabia, while taking Saudi entrepreneurs to the region and the rest of the world. True growth can be achieved only by scaling in new markets and we are well positioned to unlock this for our portfolio.
What are the challenges facing Nuwa Capital in the Saudi market? Is there a plan to have a branch in Saudi Arabia?
We do have a presence in KSA through our partners in Alfaisaliah Group and a team on the ground in the kingdom.
Does the Saudi startup ecosystem see a paradigm shift?
There’s never been a more exciting time to startup in Saudi Arabia. This is primarily because of the environment that the leadership has enabled. Today it’s much easier to set up a business, attract talent and build for large regional problems from Saudi Arabia. It’s no surprise that Saudi Arabia attracted the most startup capital in the last year.
In terms of a paradigm shift, we believe that more founders will start to move to the Kingdom. We are also seeing the emergence of Saudi national talent, including women, whether they are fantastic coders or world-class operators who can build thriving businesses.
Furthermore, thanks to partners such as SVC and Jada fund of funds, Saudi attracted the highest amount of venture capital in the MENA market for the first time since records have been created. This is a critical milestone in the development of both the Saudi and regional ecosystem
What are the Saudi sectors that might witness a growth in startups over the coming period?
Fintech is one sector where we expect to see a number of opportunities. The Central Bank has set up a world-class system to allow for fintech founders to build new products for the market. We are excited about the digitalisation of financial services in the Kingdom, whether it is for everyday transactions, investments or just regular savings.
As technology seeks to transform large traditional industries, real estate and property is another one where we’ll see change. The Kingdom has a significant gap in housing and hotel availability to manage the influx of new residents, business visitors and tourists. This is where startups like Silkhaus are working to build the short-term rentals sector.
We also expect to see growth in SaaS businesses as entrepreneurs build solutions for local challenges. Similarly next gen commerce businesses like Eyewa and Homzmart will thrive as consumer spending increases and the overall economy continues to grow.