Egyptian venture capital firm Algebra Ventures hits first close of second fund at $100M • TechCrunch

Last April, Egypt and MENA-focused venture capital firm Algebra Ventures announced the launch of its second $90 million fund. It was the follow-up to his first: a $54 million fund invested in 21 startups in Egypt and the Middle East.

While Algebra Ventures predicted it would achieve its first closing in Q3 2021, the company had to wait a full year to achieve that. However, the delay gave Algebra Ventures ample time to surpass what was initially envisaged for the fund. The company said in a statement that it has closed an initial deal of $100 million and expects to reach its final close by the end of the first quarter of 2023.

Since its inception in 2016, Algebra Ventures has backed Egypt’s top startups across multiple industries. This includes names like Halan, Brimore, Trella, elmenus, Khazna, Yodawy, Mozare3 and Shift EV.

In a past interview, Managing Partners Tarek Assad and Karim Hussein told TechCrunch that the company hopes to support 31 startups from the second fund, which focuses on Series B startup startups in fintech, logistics, health tech, edtech and agritech. The firm, whose general partners include Laila Hassan and Omar Khashaba, will also cut checks ranging from $500,000 to $2 million from this second fund.

Also Read :  Fast Forward Venture Studio to build African startups from idea to scale • TechCrunch

The partners say Algebra plans to invest $15 million by the end of this year; that is, within its first year of operation. So far, it has backed four startups, including Sylndr, the online used car retailer that raised Africa’s largest pre-seed investment of $12.6 million this May. also wWhile Algebra’s second fund will explore investment opportunities in East and West Africa, its primary focus remains Egypt.

“Our second fund will pursue opportunities across sectors by partnering with high potential founders to fill specific gaps in the market in those sectors. We have not yet made any investments in sub-Saharan Africa but continue to build relationships in those markets,” Hussein added via email of the company’s prospective investments in neighboring markets.

Algebra Ventures is one of the few firms to have recently secured initial or final closings of major funds targeting the Middle East, including ADQ-backed Further Ventures and Endure Capital. It is also arguably the largest indigenous fund in Africa and is listed alongside Partech Africa, TLcom Capital, Norrsken22 and Novastar Ventures as well-established funds investing in growth-stage African companies. These funds have been instrumental in increasing the venture capital flowing into Africa’s tech ecosystem, totaling more than $5 billion, and coining soonicorns and unicorns in the process. However, their funding activities have taken a slightly different shape this year due to macroeconomic trends affecting global venture capital. Like others around the world, portfolio companies in Africa-focused funds have shown signs of trouble this year. In the case of Algebra, an example is Brimore, the social commerce startup, which announced a $25 million Series A, laid off hundreds of employees, cut its valuation significantly (by as much as 40% according to some sources) and is currently undergoing restructuring.

Also Read :  Legendary investor Ray Dalio says the stock market has further to fall before a recession hits

“We’ve seen ups and downs before and have worked closely with our portfolio companies to ensure they have a solid financial position in this new environment,” Hussein commented on how Algebra Ventures is helping portfolio companies weather this liquidity and valuation crisis. “We continue to support our companies with strategic advice, financing, operational issues and other matters when required.”

Algebra Ventures reaching the first close of a size larger than the intended second fund is a tremendous achievement. It underscores a crucial vote of confidence from the company’s first fund investors, who have invested larger tickets in the second fund, and commitments from new investors who share his vision for the potential of VC in Egypt and the region.

Also Read :  Indian tech firm Mphasis to create 1,000 jobs in northern England

Major institutional investors including DFIs such as FMO, BII and IFC are backing Algebra’s second fund – IFC and FMO have invested $15 million and $10 million respectively in the fund. Other limited partners are the existing participants EBRD and EAEF, new investors MSMEDA, DGGF and some regional family offices.

“This is a testament to the potential of tech entrepreneurship in Egypt. Even in these uncertain times, there will be funds to support founders building transformative businesses. The upside is still very large, and successful, well-financed companies will be able to become market leaders even in tough economic times,” Hussein said of the company’s efforts to raise its second fund. “It also highlights the importance of local funds working closely with local entrepreneurs. We are four partners, all Egyptians, all live in Cairo; We have been investing for a long time and know the local environment. We have seen startups succeed and others fail, and many regional and global investors consider us their local partner in Egypt.”

Leave a Reply

Your email address will not be published.