Posted on December 23, 2021
With the MENA ecosystem seeing more investment activity than ever before, with exits like those of Careem, Anghami, and swvl making headlines more frequently, a lot of eyes have been opened to the region, especially as one with great untapped potential.
For Ahmed Nasser Al Nowais, who has been an entrepreneur in the UAE since the age of 16, the potential has always been there. Investing in tech and non-tech companies and going on to be a chair member at many prominent boards, committees and associations, he has built a repertoire of expertise and knowledge that he consolidated into one, concentrated effort: Annex Investments.
As one of the few truly privately-owned investor entities in the UAE, Annex Investments has also set out to act as an agent to multinational companies to help ease their entry into the MENA market, to stimulate the local ecosystem and lead to the next generation of “conglomerates, and scaleups,” Kareem Anabtawi, Chief Investment Officer (CIO) at Annex Investments, tells the Abu Dhabi SME Hub.
“We want founders to dream big and think they can be the next Mark Zuckerberg or Elon Musk, rather than selling to them,” he continues. “That is our role as early players and heavy movers in this ecosystem: to help assist both investors and founders.”
Currently, Annex is funneling its efforts into two avenues:
- creating a venture builder for startups at the Pre-Seed stage, and going on to support them all the way to Series A;
- deploying funds across promising MENA startups in a sector-agnostic manner.
“We’ve now allocated funds that will go into the MENA region,” Anabtawi explains. “We work on a deal-by-deal basis, finding deals where we believe the startup is of high quality and innovative, and where we can act as a strategic investor, where we can add value by opening doors, making the connections necessary, and providing advisory and mentorship for the journey of the startup. That’s essentially the investment mandate we follow. We’re sector-agnostic. We look across all of MENA.”
A shifting investment landscape
Looking back a decade or so at the existing investment landscape in the UAE, Anabtawi traces back an interesting journey of expedited progress and development.
“When we first started, there wasn’t really an investor scene in the venture capital in the region whatsoever,” he notes. “We were early movers into this space, before a lot of other people were. Essentially, we noticed that once Careem and Souq had exited is when everyone started to see the legitimacy of the [UAE and MENA ecosystem].”
“We believe that back then, there was an extremely small amount of deal flow within tech in the region. Because of the surge that came following [the Careem exit], we are starting to see now that the market is maturing with a lot of new regional and international investors entering. We’re seeing more and more quality deal flow. It’s not fully mature, yet, but it’s definitely heading in the right direction.”
But the mere exit of Careem and other unicorns was just the culmination of the years-long efforts led by the UAE government to make doing business in the country easy and intuitive, Al Nowais explains. In his opinion, if government entities had not innovated and revamped elements like license registration, company laws, fee processes, and all the other aspects of setting up a business, the ecosystem “would never have matured” to this stage.
He explains that it was the combined effort of government regulatory support, in addition to improved self-education among investors in the region that helped produce the favourable environment that birthed success stories like those of Careem and others, and created the conductive investment environment we see today.
Fostering the culture of private investing
While the UAE startup ecosystem is no stranger to publicly-owned investment entities, as the UAE government is historically known to pump a lot of strategic capital into the market, the number of fully-private investor organizations has slowly been ramping up over the years.
As one of these entities, Anabtawi hopes that Annex Investments’ efforts will help bolster the culture of angel investing in the country and region, to encourage more private investors to take the leap.
“I think this is played on two fronts. One is with the startups and the founders. And the second is with the investors.
“As Annex Investments, it is our responsibility to help foster this tech ecosystem and to do so we need to first educate investors about what we are doing, how they can join in, how they can add value, how we can work to open doors to assist these startups and allow SMEs in the region to flourish.”
“Secondly, it comes up on the startup’s end. For example, how can we introduce X fintech company to the right banks, so that they can get the rates that allow them to assist the consumer, or have the access in the first place to these banks so that they can operate?”
“[Overall, it’s about] making sure we’re assisting SMEs as much as possible to no longer be considered an SME at the end of the day. We want to grow these startups to become large
conglomerates and maintain value for the region. We don’t want every startup in [MENA] to exit into an international [market, where] control and value become lost and the region [misses out on the value].”
Startups: It’s not all about the money
While the Annex Investments team is always on the lookout for exciting startups that are looking for support, it is important to remember that most investors are looking to build a relationship with their beneficiaries, rather than simply using them as an investment vehicle.
Anabtawi frames it this way:
“As an investor, would you prefer if a startup comes to you over-subscribed, yet still wants you to be a part of their round, because they know you can offer them certain strategic support and advice, or would you prefer a startup come your way simply asking for money and nothing else?”
[The startup in the first example,] those are the people we look for. The people that don’t need our money, but our value add, and that’s how we know that our money will be in safe hands.”
In terms of improving a founder’s chances at receiving funding, Anabtawi advises, “Be prepared, do your homework, know the investor, what they like, what they invest in, and where and how they can add value. Make sure this is already within your pitch.”
“We don’t believe in just bringing in a cheque and praying for returns. We like to come in, add value, be involved. [Founders should] encourage our involvement, mentorship, and know exactly what they want from us.”
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