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Feb 21, 2024

Talhouni: 35% of Nuwa Capital portfolio is in Saudi Arabia

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. 

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Jan 31, 2024

Private Equity vs. Venture Capital: How they differ?

Kholoud Hussein 

 

Curious about the relationship between private equity and venture capital (VC)? The two industries are somewhat related but operate in distinctly different ways. Private equity involves making controlling investments in distressed companies, with the hopes of making them more profitable. VC, often considered a subset of private equity, refers to making early investments in promising companies (or even ideas) with significant growth potential.

What is private equity?

Private equity, as an industry, refers to buying and managing companies not publicly traded on a stock exchange. The hope is to acquire distressed companies that have suffered from lackluster management or lagging profitability and turn them around to deliver strong risk-adjusted returns for their investors.

Private equity firms employ several strategies to achieve these results:

  1. Leveraged buyouts (LBOs)
  2. VC
  3. Growth capital (GC) 

Private equity is considered a high-risk, high-reward investment strategy. Companies may not turn around -- or generate cash flow -- in the way that a private equity team may have hoped. In these cases, or when a portfolio company simply cannot repay its debt obligations, the private equity firm may lose money. Private equity companies also have the opportunity to earn enormous profits when companies flourish.

What is VC? 

VC can be thought of as a subset of private equity, although the VC space is a bit more targeted. As mentioned, VC is a type of financing provided to start-ups and/or emerging companies that are not yet profitable but are deemed to have a strong chance for high growth in the future.

VC firms invest money in early-stage companies in exchange for an equity stake. If the company goes on to become very successful, the VC firm will earn many times its initial investment. On the other hand, promising companies, unfortunately, fail regularly, making VC an especially risky business.

From the perspective of a target company, VC financing offers access to much-needed funding that can be used to facilitate growth. VC firms also provide a degree of expertise and guidance around start-up growth that may be inaccessible to most entrepreneurs.

Bottom Line: What is the Difference?

Private equity and VC are very similar areas of financial services, especially since venture capital is typically considered a type of private equity. However, private equity firms invest in mid-stage or mature companies, often taking a majority stake control of the company. On the other hand, VC firms specialize in helping early-stage companies get the money they need to start building their brand and gaining profits. 

Another key difference between the two is VC typically involves higher risk but offers the potential for substantial returns. In comparison, private equity usually involves lower risk compared to VC investments but may offer more modest returns.

قراءة المزيد
Jan 15, 2024

How to enter the world of VC & Startups?

Kholoud Hussein 

 

The world of VC and startups has a notorious diversity problem. While most of the attention around this issue rightly centers on the lack of gender and ethnic diversity among investors and founders, homogeneity exists across a range of other areas. This includes neurodiversity, disability, socio-economic backgrounds, and education.

The majority of VCs and VC-backed founders were educated at so-called ‘elite’ universities. Within those ranks, a large swathe has degrees in subjects such as engineering, computer science, economics and management, or maths. These factors are seen by VC firms as indicators of success, both when hiring for their teams and when making decisions on which founders to back. 

And whilst we want brilliant people from STEM backgrounds entering the VC and founder field, where does that leave people who chose an arts or humanities route for their further education, or who started their career outside of the traditional venture and tech ‘breeding grounds’ of consultancy, finance or graduate schemes?

Firstly, any preconceived notion that there’s a “perfect” CV for VC or startup roles is wrong. There is a lot of research that shows people hire in their likeness. This means subconscious prejudice is baked into hiring processes. This results in non-diverse teams staying non-diverse. 

That’s why people from certain backgrounds who went to certain universities and studied particular subjects continue to attract the bulk of VC funding and represent the bulk of VCs. It’s not because people from overlooked and underestimated backgrounds, those with non-linear career journeys, or people with arts or humanities education don’t belong in those worlds.

Far from it – some of the most talented, successful founders, investors, and entrepreneurs have come from less ‘traditional’ backgrounds. And many of these came from arts or humanities backgrounds. 

However, there’s no doubt that less progressive VC firms and startups don’t look as favorably on these educational or professional backgrounds, despite the wealth of transferable skills they bring. There’s still a huge amount of work to be done to level the playing field. In the meantime, here are top tips for those with an arts background who are looking to break into the world of tech or investing:

1. Realize it’s possible: Success in any sphere is partly determined by your faith in your own abilities and your willingness to follow your instincts. So before taking practical steps to embark on a career in VC, the first rung on the ladder is to believe firmly that you can and know that there’s a place for you in it. The ‘Old Boys Club’ that once pervaded the VC space is slowly fading away, but breaking into VC will still require you to be proactive and to have faith in your own skills and abilities, even if they are typically underrepresented in the sector. 

2. Explore training or access schemes: There are a range of schemes and initiatives designed to help people crack into the world of VC, particularly for those who come from overlooked and under-represented backgrounds, or who have had a more diverse or unusual route into the space. Our Newton Fundamentals Program is designed to give people the context and understanding they need to get their VC career started. And others such as Future VC and Included VC are also designed to help people get their foot in the door. Universities often have venture societies that have links to grad schemes or training programs. So, make sure you explore what schemes might be open to you, to help hone those transferable skills and build the industry understanding you’ll need to get started. 

3. Value the experience you already have: When we obsess over the qualifications we don’t have, we do a disservice to the experience we do have. Think about your career or education history to date and pull-out threads that complement what you want from your VC career. If you have an arts degree, your skills might include being well-trained in analyzing reams of information, reading around a subject quickly but thoroughly, understanding societal trends, or having an eye for a brilliant brand. All of these abilities are highly sought after in ventures, as well as in lots of startup roles. There’s value in all experiences; make sure you’re thinking creatively about the transferability of yours and not under-selling yourself. 

4. Connect with the VCs leading the way: Not all VCs are created equal – some are truly blazing a trail when it comes to diversifying their talent pool. Get to know the VC market in your region and research the initiatives firms are taking. Which ones have more diverse teams? Which are sponsoring or backing initiatives to diversify their organization and the sector at large? This will help you identify those to prioritize when it comes to career opportunities.

Once you have identified the trailblazers, do not be afraid to make first contact. Informally reaching out to firms via their talent acquisition teams can be the best (and sometimes only) way to put yourself forward as a prospective hire. Likewise, get in touch with individual VCs. While traditionally closed networks still exist in fields like VC, the rise of LinkedIn and other mediums has democratized direct access to relevant people. 

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