Dubai's Cotu Ventures to invest $54m in early stage Mena start-ups

Cotu Ventures, a Dubai-based venture capital fund, has launched its first funding platform that will invest in early stage start-ups in the Middle East and North Africa, as it aims to boost one of the region's key economic drivers.

The $54 million venture capital fund will be sector-agnostic, allowing the diversification of its investments, and will focus on start-ups that aim to raise between $500,000 and $2 million in their pre-seed or seed stages, it said on Tuesday.

The fund's limited partners include Abu Dhabi sovereign investor Mubadala Investment Company, the Dubai Future District Fund, Arab Bank and Saudi Arabia's Bupa, while general partners include venture capitalists Foundry Group, Tribe Capital Stride and several family offices, it said.

Cotu has invested in more than 20 start-ups, including UAE mortgage platform Huspy, restaurant technology provider Supy, Egyptian FinTech MoneyHash and Saudi warehouse management solutions provider Sirdab.

Cotu's general partner Amir Farha co-founded Beco Capital in 2012 and led investments in 25 Mena start-ups, including Property Finder and unicorns Careem and Kitopi, all of which are based in the UAE.

Unicorns are start-ups valued at more than $1 billion.

Cotu believes that the Mena region's digital economy will continue to grow as government initiatives cater to users' growing demands, Mr Farha said.

“Governments have been driving policies and investment to activate the technology sectors of their local economies. We have a young and growing population of tech-savvy, digitally connected consumers with substantial spending power,” said Mr Farha, specifically noting that Saudi Arabia was opening up to international investors.

“When you combine all of this with remarkably low customer acquisition costs and some of the highest revenues per user, there has never been a better and more profitable time to invest in the region than today.”

The role of start-ups as drivers of digital adoption and growth has expanded continuously over the past few years, enabling consumers to enjoy access to services with convenience.

Countries in the Mena region, most notably the UAE and Saudi Arabia, are aggressively promoting and developing their technology systems, which are key pillars of their digital-focused agendas to prepare for the economy of the future.

The two Gulf countries have put in place a number of initiatives to push forward with this agenda, seeking to support the growth of the start-up network.

These include mentoring, providing access to the market and global investors, and allowing them to tap into the robust technology infrastructure provided by government and private companies.

The Mena region witnessed significant shifts in venture investment dynamics, Philip Bahoshy, chief executive of start-up data platform Magnitt, said in a report last month.

“Despite a challenging macro environment, Mena's share of funding across emerging venture markets grew by 8 percentage points to 22 per cent [in 2023],” he said.

Cotu has an “impressive portfolio” and has established itself as a “true advocate for entrepreneurs”, said Sharif Elbadawi, chief executive of the DFDF.