Dubai-based early-stage venture capital firm COTU Ventures announces that it has raised $54 million for its inaugural fund to support startups in the Middle East from pre-seed stages.
With a final close achieved last year, COTU Ventures, which identifies and supports founders from inception to subsequent product launch, is investing between $500,000 and $1.5 million as an initial check.
Over the past two and a half years, COTU Ventures has actively deployed capital into startups across the GCC, primarily focusing on the UAE, Saudi Arabia and Egypt, with additional investments in Pakistan. The company has already backed more than 20 early-stage startups across various sectors, as outlined in its statement.
Founder and General Partner Amir Farha revealed in an interview with TechCrunch that COTU Ventures leans slightly toward fintech and B2B software. However, the company is open to opportunities in other sectors. COTU Ventures’ notable investments include Huspy, a UAE mortgage platform backed by Peak XV and Founders Fund, and Egyptian fintech startup MoneyHash.
“The wave of consumption happened with Careem and some other apps. Today, businesses are a bit behind, so there is a huge opportunity to create software that helps solve many of their problems. We are also interested in high-margin industries where technology can play a huge role and capitalize on margin efficiencies,” Farha said of the opportunities COTU is interested in.
Careem, the poster child for the startup scene in the MENA and GCC region, was one of the first investments Farha made as venture capital in his previous company, Beco Capital.
Several years after personally investing in startups in Europe and then running an angel network upon his return to the Middle East from the UK, Farha launched Beco Capital in 2012, where he was involved in the company’s fundraising efforts for its first fund ($50 million) and second fund ($100 million+) before leaving in 2021 to launch COTU Ventures.
While at Beco Capital, Farha and his partner returned the first fund following Uber’s acquisition of Careem. She also noted that Beco Capital’s second fund, which includes well-capitalized startups such as General Atlantic-backed PropertyFinder, Kitopi, MaxAB and Fresha, “is doing very well.”
Reflecting on the evolving investment landscape, Farha explained how Beco Capital actively participated in seed rounds ranging from a few hundred thousand dollars to Series B rounds of around $5 million before the ecosystem evolved to accommodate larger funds. important and greater investments. investments in later stages. In this time, venture capital investments in the GCC region have seen significant growth, rising from $20 million in 2012 to over $2 billion in 2020.
As Beco Capital shifted its focus toward later-stage investments with larger funds, Farha decided to leave in 2021 and launch COTU Ventures, doubling down on an early-stage investment. This decision, he explained, was driven by the recognition of a gap in the market. Despite the significant maturation of the GCC tech ecosystem in terms of capital and talent, there remained a crucial need for support beyond funding in the early stages of a startup’s development.
Farha says a founder’s early education and experiences can offer valuable insights into their potential for success. At COTU Ventures, she emphasizes the importance of candid conversations that delve into a founder’s personal and professional journey, exploring important life events and decisions. By fostering this open dialogue, COTU Ventures aims to establish trust and strong connections with founders, enabling informed investment decisions. Additionally, Farha highlights that this strategy allows the company to provide strategic guidance on fundraising, organizational development, and marketing strategy. He added that the venture capital firm also facilitates introductions to key stakeholders such as clients, hires and potential downstream investors, offering comprehensive support to its portfolio companies as they navigate Series A rounds and beyond.
“I love the chaos of the early stages where you discover, experiment and test. Things look great, but one day, things seem difficult and then you’re trying to help solve the problems along the way. So that environment suits me as an investor,” commented Farha. “Also, there is a gap. The region is still at an early stage and no one feels convinced that it is an early stage. Larger companies spend smaller checks in the pre-seed stages, but don’t spend enough time helping them until they reach product-market fit. So, I think there is that space to be the company that founders want to have on their capitalization table.”
COTU Ventures’ limited partners include Lunate, Mubadala, Dubai Future District Fund, Arab Bank, Bupa KSA and venture capital GPs including Foundry Group, Tribe Capital, Stride and several family offices.
“We are proud to have backed a fund that is distinguished not only by its impressive portfolio but also by the exceptional leadership and track record of its founding partner, Amir,” Sharif Elbadawi, CEO of Dubai Future District Fund, said in a statement. “Our trust in Amir stems from his deep passion for supporting founders and his proven ability to find notable investment opportunities before anyone else.”
