COTU Ventures, a Dubai-based early stage venture capital firm, announced that it has raised $54 million in founding funding to support startups in the Middle East from pre-seed to seed stages.
COTU Ventures, which achieved final close last year, invests between $500,000 and $1.5 million in initial checks to identify and support founders from inception through product launch.
Over the past two and a half years, COTU Ventures has been actively deploying capital to startups across the GCC, primarily focusing on the UAE, Saudi Arabia and Egypt, with additional investments in Pakistan. As explained in the statement, the company has already supported more than 20 early-stage startups across a variety of sectors.
Founder and general partner Amir Farha told TechCrunch that COTU Ventures has a slight lean toward fintech and B2B software. However, the company is open to opportunities across other sectors. COTU Ventures' notable investments include Huspy, a UAE mortgage platform backed by Peak XV and Founders Fund, and MoneyHash, an Egyptian fintech startup.
“The consumer wave came from Careem and other applications. Enterprises today are a bit left behind, so there's a huge opportunity to build software that can help solve many of their problems. We are also interested in high-margin industries where technology plays a big role and margin efficiencies can be leveraged,” Farha said of the opportunities COTU is interested in.
Careem, a leading figure in the MENA and GCC region startup scene, was one of Farha's first investments as a VC at his previous firm, Beco Capital.
After personally investing in startups in Europe, Farha returned to the Middle East from the UK a few years later to run an angel network before launching Beco Capital in 2012, where he participated in fundraising for the company's first fund ($50 million). I did. After investing a second fund (over $100 million), we set out to launch COTU Ventures in 2021.
While at Beco Capital, Farha and his partners returned their first money after Uber acquired 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 “doing really well.”
Reflecting on the evolving investment landscape, Farha explains how Beco Capital was actively involved in seed rounds ranging from hundreds of thousands of dollars to Series B rounds of around $5 million before the ecosystem evolved to accommodate larger funds. I did. Late investment. At this time, venture capital investment in the GCC region has experienced significant growth, surging from $20 million in 2012 to more than $2 billion in 2020.
As Beco Capital shifts its focus to later-stage investments with larger funds, Farha decided to leave in 2021 and start COTU Ventures, doubling down on early-stage investments. He explained that this decision was driven by the perception of a gap in the market. Despite the significant maturity of the GCC technology ecosystem in terms of capital and talent, there still remains a critical need for support beyond mere funding during the early stages of startup development.
Farha argues that an entrepreneur's upbringing and childhood experiences can provide valuable insight into their potential for success. At COTU Ventures, he delves deep into the personal and professional journeys of founders and emphasizes the importance of honest conversations that explore important life events and decisions. By fostering this open dialogue, COTU Ventures aims to build trust and strong relationships with founders and enable them to make informed investment decisions. Farha also emphasizes that this strategy allows the company to provide strategic guidance on financing, organizational development and go-to-market strategies. He added that the venture capital firm also provides comprehensive support to portfolio companies as they navigate Series A rounds and beyond, facilitating introductions to key stakeholders such as customers, recruiters and potential follow-on investors.
“I love the chaos of the early stages of discovery, experimentation and testing. Things seem good, but one day things seem difficult, and you try to help solve the problem along the way. So that environment suits me well as an investor,” Farha said. “Plus, there are gaps. This area is still in its infancy and no one owns it with certainty. Bigger companies invest smaller checks in the pre-seed stage but do not invest enough time until product-market fit is reached. So I think there’s room for this to be a company that founders want to have in their cap tables.”
COTU Ventures' limited partners include GPs from Lunate, Mubadala, Dubai Future District Fund, Arab Bank, Bupa KSA and VCs including Foundry Group, Tribe Capital, Stride and several family offices.
Sharif Elbadawi, CEO of Dubai Future District Fund, said in a statement: “We are thrilled to support a fund that is distinguished not only by its impressive portfolio, but also by the outstanding leadership and track record of its founding partner, Amir. “I am proud,” he said. “Our confidence in Amir stems from his deep passion for supporting startups and his proven ability to find compelling investment opportunities before anyone else.”