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

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

After final closing last year, COTU Ventures invested between $500,000 and $1.5 million as an initial check, and the company provides identification and support to founders from project inception to product launch.

COTU Ventures has been actively deploying capital to GCC startups over the past two and a half years, focusing primarily on the UAE, Saudi Arabia and Egypt, with additional investments in Pakistan. As stated in its statement, the company has supported more than 20 early-stage startups in various fields.

Founder and general partner Amir Farha revealed in an interview with TechCrunch that COTU Ventures is slightly leaning towards financial technology and B2B software. However, the company is open to opportunities in other areas. Notable investments from COTU Ventures include UAE mortgage platform Huspy, backed by Peak XV and Founders Fund, and Egyptian fintech startup MoneyHash.

“The consumer wave is happening with Careem and some other apps. Enterprises are a little bit behind these days, so there’s a huge opportunity to build software that helps solve a lot of their problems. We’re also interested in high-margin industries where , technology can play a huge role and leverage profit efficiencies,” Farha said of the opportunities COTU is keen on.

Careem is a poster child for startups in the MENA and GCC regions and was one of Farha’s first investments as a venture capitalist at his previous firm, Beco Capital.

Farha personally invested in European startups and ran an angel network after returning to the Middle East from the UK. A few years later, Farha founded Beco Capital in 2012, participated in the firm’s first fund ($50 million) and second fund ($100 million+), and then set out to launch COTU Ventures in 2021.

While at Beco Capital, Farha and his partners returned Uber’s first capital after acquiring Careem. He also noted that Beco Capital’s second fund, which includes well-capitalized startups such as General Atlantic-backed PropertyFinder, Kitopi, MaxAB and Fresha, is “performing very well.”

Looking back at the changing investment landscape, Farha explained how Beco Capital was actively involved in seed rounds, ranging from hundreds of thousands of dollars to Series B rounds of around $5 million, and then the ecosystem evolved to accommodate larger funds and larger funds. Late investment. During this period, venture capital investment in the GCC region has experienced significant growth, soaring from US$20 million in 2012 to over US$2 billion in 2020.

As Beco Capital shifted its focus to larger later-stage investments, Farha decided to leave and form COTU Ventures in 2021, doubling down on an early-stage investment. He explained that the decision was driven by a recognition of a gap in the market. While the GCC tech ecosystem has matured significantly in terms of capital and talent, there is still an urgent need for support beyond funding for new startups in their initial stages of development.

Farha claims that a founder’s upbringing and early life experiences can provide valuable insights into their potential for success. At COTU Ventures, he emphasizes the importance of candid conversations, diving deep into founders’ personal and professional journeys to explore significant life events and decisions. By facilitating this open dialogue, COTU Ventures aims to build trust and strong connections with founders to make informed investment decisions. Additionally, Farha emphasized that this strategy enables the company to provide strategic guidance for fundraising, organizational development and go-to-market strategies. He added that the venture capital firm also facilitates presentations to key stakeholders such as customers, employees and potential follow-on investors, providing comprehensive support to its portfolio companies as they raise Series A and follow-on funding rounds.

“I love the chaos of the early stages, where you’re discovering, experimenting, and testing. Things look great, and then one day, things look difficult, and then you try to help figure it out along the way. So as an investor , this environment suits me very well,” Farha said. “And, there’s a gap. The region is still in the early stages and no one has a strong belief in the early stages. Larger companies are investing smaller amounts in the pre-seed stage but not spending enough time helping them until They achieve product-market fit. So I think there’s enough room to become the go-to company that founders want to have on their equity structure.”

COTU Ventures’ limited partners include Lunate, Mubadala, Dubai Future District Fund, Arab Bank, Bupa KSA and general partners of venture capital firms such as Foundry Group, Tribe Capital, Stride and multiple family offices.

Sharif Elbadawi, CEO of Dubai Future District Fund, said in a statement: “We are proud to back a fund that is not only known for its impressive portfolio; Known for the exceptional leadership and track record of its founding partner Amir.” “Our confidence in Amir stems from his deep passion for supporting founders and his ability to identify extraordinary investment opportunities before others do.”

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