COTU Ventures launches $54 million fund for MENA pre-seed and seed startups

Image credits: COTU Ventures

Dubai-based early-stage venture capital firm COTU Ventures has announced that it has raised $54 million for its first fund to support startups in the Middle East from pre-seed to seed stage.

With the final deal closed last year, COTU Ventures, which identifies and supports founders from inception to post-product launch, is investing $500,000 to $1.5 million in initial checks.

Over the past two and a half years, COTU Ventures has been actively funding startups across the GCC, primarily focusing on the UAE and Saudi Arabia, with additional investments in Egypt and Pakistan. As outlined in the statement, the company has already backed more than 20 early-stage startups in various sectors.

In an interview with TechCrunch, founder and general partner Amir Farha revealed that COTU Ventures has a slight leaning towards fintech and B2B software. However, Farha emphasized that the company is open to opportunities across a variety of sectors. Notable investments by COTU Ventures include Huspy, a UAE mortgage platform backed by Peak XV and Founders Fund, and Egyptian fintech startup MoneyHash.

“The consumer wave happened with Careem and some other applications. Today, businesses are a little behind the curve, so there’s a huge opportunity to build software that helps solve a lot of problems. Also, technology We are also interested in high-margin industries where COTU can play a major role and maximize profit efficiency,” Farha said of the opportunities COTU is eyeing.

Careem, a leading figure in the MENA and GCC region’s startup scene, was one of Farha’s earliest investments as a VC at his previous company, Beco Capital. After years of personally investing in startups in Europe and then returning to the Middle East from the UK to run his network of angels, Farha launched his Beco Capital in 2012 and launched his first fund ( Participated in fundraising activities for $50 million. Established his second fund (over $100 million) before departing in 2021 to launch COTU Ventures.

During his time at Beco Capital, Farha and his partners returned the initial funding after Uber’s acquisition of Careem. He noted that Beco Capital’s second fund, which includes well-capitalized startups such as PropertyFinder, Kitopi, MaxAB and Fresha, backed by General Atlantic, is “doing very well.”

Reflecting on the evolving investment landscape, Farha noted that total venture capital investment in the GCC region has increased significantly, jumping from $20 million in 2012 to more than $2 billion by 2020. Beco Capital actively participated in a seed round starting in the hundreds of thousands of dollars.Up to a Series B round of approximately $5 million before the ecosystem evolved to accept larger and larger funds. Late-stage investments.

As Beco Capital shifts its focus to later-stage investments with larger funds, Farha decided to leave the company in 2021 and double down on one early-stage investment to launch COTU Ventures. He explained that this decision was driven by the recognition of a market gap. Although the GCC technology ecosystem has matured significantly in terms of capital and talent, there was still a critical need for support beyond funding during the early stages of startup development.

Farha argues that a founder’s upbringing and childhood experiences provide valuable insight into their chances of success. At COTU Ventures, we emphasize the importance of candid conversations that dig deep into the personal and professional journeys of our founders and explore important life events and decisions. By fostering this open dialogue, COTU Ventures aims to establish trust and strong connections with founders, enabling them to make informed investment decisions. Additionally, Farha highlighted that this strategy will allow the company to provide strategic guidance on financing, organizational development, and go-to-market strategies. He said the venture capital firm also facilitates introductions to key stakeholders such as customers, employers and potential follow-on investors, providing comprehensive support for portfolio companies as they navigate Series A rounds and beyond. It added that it is providing support.

“I love the early chaos of discovering, experimenting, and testing. Things seem to be going well, but then one day when things look difficult, you try to solve problems along the way. So that environment is a good fit for me as an investor,” Farha said. “And there’s a gap. This region is still in its infancy, and no one owns the early stages with conviction. While the big players are investing small checks in the pre-seed stage, , they don’t spend enough time helping the product until it’s market fit. So I think there’s room to be the go-to company that founders want to have on the cap table.”

COTU Ventures’ limited partners include Lunate, Mubadala, Dubai Future District Fund, Arab Bank, Bupa KSA, and VC GPs including Foundry Group, Tribe Capital, Stride, and several family offices.

Sharif Elbadawi, chief executive officer of Dubai Future District Fund, said in a statement: “We are proud to be recognized not only for its impressive portfolio, but also for the exceptional leadership and track record of our founding partner Amir. We are proud to support such an outstanding fund.” “Our confidence in Amir stems from his deep passion for supporting founders and his proven ability to find great investment opportunities before anyone else.”