Last April, Egyptian and MENA-focused venture capital firm Algebra Ventures announced the launch of its second $90 million fund. It was a follow-up to his first: a $54 million fund invested in 21 startups across Egypt and the Middle East.
While Algebra Ventures predicted it would reach its first close in Q3 2021, the company had to wait an entire year to do so. However, the lag gave Algebra Ventures enough time to outperform what it originally planned for the fund. The company disclosed in a statement that it has completed an initial close 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 supported top Egyptian startups in various sectors. They include names like Halan, Brimore, Trella, elmenus, Khazna, Yodawy, Mozare3, and Shift EV.
In a past interview, the managing partners Tarek Assad and Karim Hussein told TechCrunch that the company hopes to support 31 startups from the second fund, which focuses on seeding Series B startups in fintech, logistics, healthtech, edtech, and of agritech. The firm, of which Laila Hassan and Omar Khashaba are general partners, will also draw checks ranging from $500,000 to $2 million from this second fund.
The partners say Algebra plans to invest $15 million by the end of this year; that is, during its first year of operation. So far, it has backed four startups, including Sylndr, the online used-car retailer that raised Africa’s biggest pre-seed investment in May at $12.6 million. Also, wAlgebra’s second fund will explore investment opportunities in East and West Africa, with its primary focus remaining in Egypt.
“Our second fund will pursue opportunities in various sectors by partnering with high-potential founders to fill specific market gaps in those sectors. We have not yet made any investments in Sub-Saharan Africa, but we continue to build relationships in these markets,” Hussein added via email about the company’s potential investments in nearby markets.
Algebra Ventures is one of the few companies to have recently completed the first or last closing of major funds targeting the Middle East, including ADQ-backed Further Ventures and Endure Capital. It is also arguably Africa’s largest indigenous fund 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 critical to the rise in venture capital that has flowed into the African tech ecosystem, totaling over $5 billion and producing unicorns and unicorns in the process. However, their funding activities took a slightly different shape this year due to macroeconomic trends affecting global venture capital. Like others around the world, portfolio companies of Africa-focused funds have shown signs of struggling this year. In the case of Algebra, an example is Brimore, the social commerce startup that announced a $25 million Series A, laid off hundreds of employees, saw its valuation drastically reduced (up to 40%, some say). sources) and is currently being restructured.
“We have already seen some ups and downs and have worked closely with our portfolio companies to ensure they are in a strong financial position in this new environment,” commented Hussein, on how Algebra Ventures is helping holding companies through this period of cash and valuation shortages. . “We continue to support our businesses with strategic advice, funding, operational issues and other matters as needed.”
Algebra Ventures hitting the first close at a size larger than its planned second fund is a tremendous achievement. It highlights a decisive vote of confidence from the company’s first fund investors, who invested larger notes in the second fund, and commitments from new investors who share his vision of the potential of venture capital in Egypt and the region.
Major institutional investors including DFIs such as FMO, BII and IFC are backing Algebra’s second fund – IFC and FMO have committed $15 million and $10 million respectively to the fund. Other sponsors include existing participants EBRD and EAEF, new investors MSMEDA, DGGF and some regional family offices.
“This speaks to the potential of tech entrepreneurship in Egypt. Even in these uncertain times, there will be funding to support founders building transformative businesses. The upside is still very significant and successful, well-funded 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 entrepreneurs on the ground. We are four partners, all Egyptians, all living in Cairo; we have been investing for a long time and we understand the local environment. We have seen startups succeed and others fail, and many regional and global investors consider us their local partner in Egypt.