Last April, the venture capital firm focused on Egypt and MENA Algebra Ventures announced its launch Second fund $90 million. This is a sequel to the first: a $54 million fund that invests in 21 startups across Egypt and the Middle East.
While Algebra Ventures predicted it would hit its first close in Q3 2021, the company had to wait a full year to get there. However, the delay gave Algebra Ventures enough time to go beyond what it originally intended for the fund. The company revealed in a statement that it has completed an initial close of $100 million and expects to reach final close by the end of Q1 2023.
In a previous interview, the management partner Tarek Assaad and Karim Hussein told TechCrunch that the company hopes to back 31 startups from its second fund, focusing on seeding Series B startups building in the areas of fintech, logistics, health tech, edtech and agriculture. Company, whose general partners include Laila Hassan and Omar Khashabawill also cut checks from $500,000 to $2 million from this second fund.
Partners said Algebra plans to invest $15 million by the end of the year; that is, during the first year of operation. So far, it has supported four startups, including Sylndr, the online used car retailer raised the largest pre-seed investment in Africa this May with $12.6 million. In addition, while Algebra’s second fund will explore investment opportunities in East and West Africa, its main focus remaining on Egypt.
“Our second fund will pursue opportunities in various sectors by partnering with high potential founders to address specific market gaps in these areas. We have not made any investments in sub-Saharan Africa, but continue to build relationships in these markets,” Hussein added via email about the company’s potential investments in other markets. neighboring market.
Algebra Ventures is one of the few companies that has recently achieved the first or last close of large funds targeting the Middle East, including Further ventures supported by ADQ and Long-term capital. It is also said to be the largest native fund in Africa and is listed alongside Partech Africa, TLcom Capital, Norrsken22 and Novastar Ventures as well as established funds that invest in African growth stage companies. These funds play an important role in increasing the venture capital that flows into Africa’s tech ecosystem, total value of more than 5 billion dollars and cast soonicorns and unicorns in the process. However, their sponsorship activities took place slightly different shape this year due to macroeconomic trends affecting global venture capital. Like others globally, portfolio companies in Africa-focused funds have shown signs of struggling this year. In the case of Algebra, one example is Brimore, the social commerce startup that announced a $25 million Series A, which has laid off hundreds of employees, seeing its value drop significantly (up) up to 40%, according to some sources) and present restructuring.
Hussein commented: “We have seen ups and downs before and have worked closely with our portfolio companies to ensure that they are in a strong financial position in the new environment. this,” commented Hussein on how Algebra Ventures is assisting portfolio companies through this period of cash and valuation crunch. . “We continue to support our companies with strategic advice, funding, operational issues and other matters as needed.”
Algebra Ventures achieving its first close at a larger size than its expected second fund is a huge feat. It highlights a decisive vote of confidence from the company’s first fund investors, who have invested larger amounts in the second fund, and commitment from new investors who share the vision. on the potential of VC in Egypt and the region.
Large institutional investors, including DFIs such as FMO, BII and IFC, are backing Algebra’s second fund – IFC and FMO did 15 million dollars and 10 million dollars commitments to the fund, respectively. Other limited partners include existing EBRD and EAEF participants, new investors MSMEDA, DGGF, and several regional family offices.
“This is a testament to the potential of tech startups in Egypt. Even in these uncertain times, there will be funding available to founders who are building transforming companies. Hussein said the company’s second fundraising effort is still very important and successful. “It also highlights the importance of local funds, working closely with entrepreneurs in the field. We are four partners, all Egyptians, all living in Cairo; We have been investing for a long time and we understand the local environment well. We have seen startups succeed and others fail, and many regional and global investors see us as their local partner in Egypt.” .