The North African tech ecosystem will have a venture capital scene Absolutely Still buzzing with the announcement of two big VC funds in two days. Today, Algebra Ventures, an Egyptian VC firm, announced that it has launched its second fund of $ 90 million.
Four years ago, Algebra Ventures closed its first fund of $ 54 million, and with this announcement, the firm expects to raise a total of $ 144 million when the second fund closes (first pass by Q3 2021). Will go If achieved, Algebra is most likely the largest indigenous fund from North Africa and of course in Africa.
According to Managing Partners – Tarek Assad and Karim Hussain, the first fund was an Egyptian-focused fund. Nevertheless, the firm made a select few investments. In some companies outside the country. The second fund will be similar – Egypt first, Egypt focused, but allocation of investment in East and West Africa, North Africa and Middle East.
Assad and Hussain launched the firm as one of Egypt’s first independent venture capital funds in 2016. It was not easy to start one at the time, and it took two years to close the first fund.
“The creation of a venture capital fund in Egypt in 2016 was, in all honesty, a pain. Assad told ClearTips that there was no venture capital back then. “The high-flying startups were then raising between $ 1 million and $ 2 million. We decided to raise the bull by the horns and a very established LP.”
These LPs include Cisco, the European Commission, the Egyptian-American Enterprise Fund (EAEF), the European Bank for Reconstruction and Development (EBRD), the International Finance Corporation (IFC), and the Private Family Office.. From the first fund, Algebra supported 21 startups in Egypt and MENA, and according to the firm, six of its most established companies Are valuable Over $ 350 million and Overall Generate over $ 150 million in annual revenue. It is expected to return 31 startups from another fund.
Algebra states that it is sector-agnostic, but it focuses on fintech, logistics, health tech and agritech. Although the firm has invested in startups in seed and series B stages, algebra Is known Becoming an investor in Startups to increase Series A investment.
Another attractive proposition from Algebra lies in the fact that it owns a team focused on talent acquisition in-house – in operations, marketing, finance, engineering, etc. for portfolio companies..
The firm’s ticket size remains unchanged from the first fund and will continue to deduct checks ranging from $ 500,000 to $ 2 million. However, Some aspect In form of How the firm can change its operations operations according to the partner.
“One lesson learned in our first fund is that we see that there are more interesting opportunities and great entrepreneurs at the seed stage. And seeing that we are more on the ground in Egypt, sometimes we wait for them to mature for series A but going forward, Maybe we There is a need to build relationships with the people we find Extraordinary Expand our partnership at the seed level and also at the series B level, ”said Hussain, as to how the firm would work next.
Hussain said that the company will also double its talent acquisition network. In general, The algebra portfolio helps companies hire C-level executives, and while it plans to continue doing so, the firm may adopt a startup studio model – something to start a company Pairing professionals who eventually get the support and support of algebra..
For this reason stems from the next set of companies will be looking to invest in algebra. According to Hussein, Algebra’s partners have for some time studied successful businesses in other emerging markets and want to identify similarities in North Africa where firms can invest.
“In cases where the firm cannot find those opportunities, we can push some of the networks to start building those businesses and seizing those opportunities,” he commented.
Before Algebra, Hussein has got involved With the creation of some successful tech companies in the US Mainly An engineer after obtaining both undergraduate and doctoral degrees from Carnegie Mellon University and MIT, Respectively, He ventured into the world of startup investing and crazy valuations after working for a consulting company in the dot-com era.
He will launch RiskClick, a software company known for its business insurance applications.. The founders sold the company Prior to Oracle, Skywire acquired the company to be part of its suite of insurance services. After some time at WebMD, Hussein returned to Egypt and began referring to the startup as an angel investor. Along with other angel investors, he launched an angel investor network Cairo Angels in Egypt in 2013.
“There was a big difference in the market. We were investing a little angel money for these businesses but were not vice-chancellors to take them to the next level. So I met Tarek and the rest is algebra, ”he said.
Asad is also an engineer. He earned his bachelor’s degree in Egypt before changing career before going to Stanford Graduate School of Business. He continued to work on that route, working for some Bay Area companies before returning to Egypt. Upon his return, he became a managing partner at IdeaVelpers, a VC firm operating a $ 50 million fund since 2009. The firm has some good success stories, the most notable of which is fintech startup Favory. Fawry n isOwl is publicly traded The billion-dollar company and Assad were responsible for the investment that led to a $ 100 million exit for Ideavelopers in 2015.
Along with Algebra, both partners are leading local investment in the field. Some of its portfolio companies are the continent’s best-known companies – health tech startup Visetta; Social commerce platform Brimore; Logistic startup Trello; Ride-Healing and Super Ape Hallen; Food discovery and ordering platform Almanes; Fintech startup, Khazana; And others.
The firm’s latest growth and $ 144 million capital is one of the largest funds dedicated to African startups. Other large Africa-focused funds include a $ 71 million fund that was recently closed by Savari Ventures, another Egyptian firm; Parttech’s $ 143 million fund; Novastar Ventures’ $ 200 million fund; And the $ 71 million Tide Africa Fund by TLCOM Capital.
These funds are very important for the development of the African technological ecosystem According to Wealth. According to separate reports, last year, African startups raised nearly $ 1.5 billion from both local and international investors. This number was jUst Half a billion dollars six years ago.
However, Regardless of the period – 2015 or 2021 – African VC investments have always been To a large extent Supremacy of foreign investors. But VC firms such as Algebra Ventures suggest that local investors may try to make a nine-figure fund in total or try to do so. Obviously, this will provide more startups with more funds and pave the way for indigenous and local VCs to at least get their participation. About Same level as compared to international investors.