Egyptian venture capital firm Algebra Ventures reaches first close of second fund at $100 million • TechCrunch

Last April, Egypt and MENA-focused venture capital firm Algebra Ventures announced the launch of its second $90 million fund. It was the sequel to the first: a $54 million fund invested in 21 startups in Egypt and the Middle East.

While Algebra Ventures predicted that it would reach its first closing in the third quarter of 2021, the company had to wait a full year to achieve it. However, the delay gave Algebra Ventures enough time to exceed what it initially put into the fund. The firm revealed in a statement that it has finalized a first closing of $100 million and expects to reach its final closing by the end of the first quarter of 2023.

Since its inception in 2016, Algebra Ventures has supported Egypt’s leading startups in various industries. They include names like Halan, Brimore, Trella, elmenus, Khazna, Yodawy, Mozare3, and Shift EV.

In a previous interview, the managing partners tarek assaad Y Karim Hussein told TechCrunch that the firm expects to back 31 startups from the second fund, which focuses on building Series B startups in the fintech, logistics, healthtech, edtech, and agtech sectors. The firm, whose general partners include Laila Hassan and Omar Khashaba, will also write checks ranging from $500,000 to $2 million from this second fund.

The partners say that Algebra plans to invest $15 million by the end of this year; that is, within its first year of operation. So far, it has backed four startups, including Sylndr, the online used car retailer that raised the largest pre-seed investment in Africa this May with $12.6 million. Also, wWhile Algebra’s second fund will explore investment opportunities in East and West Africa, its main focus remains Egypt.

“Our second fund will look for opportunities across various sectors by partnering with high-potential founders to address specific market gaps in these 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 neighboring markets.

Algebra Ventures is one of the few firms to have recently achieved the first or last closing of large funds targeting the Middle East, including ADQ-backed Further Ventures and Endure Capital. It is also arguably the largest indigenous fund in Africa and is listed alongside Partech Africa, TLcom Capital, Norrsken22 and Novastar Ventures as well-established funds investing in growth-stage African companies. These funds were instrumental in the surge of venture capital that flowed into Africa’s tech ecosystem, totaling over $5 billion and soon minting unicorns and unicorns in the process. However, its funding activities have taken a slightly different shape this year due to macroeconomic trends affecting global venture capital. Like others globally, portfolio companies in Africa-focused funds have shown signs of struggle this year. In the case of Algebra, one example is Brimore, the social commerce startup that announced a $25 million Series A, laid off hundreds of employees, saw its valuation drop significantly (up to 40%, according to some sources), and is currently is in the process of restructuring.

“We have seen ups and downs before and have been working closely with our portfolio companies to ensure they are in a strong financial position in this new environment,” said Hussein, on how Algebra Ventures is helping portfolio companies get through this period of crisis. of cash and valuation. . “We continue to support our companies with strategic advice, financing, operational issues and other matters as the need arises.”

Algebra Ventures reaching the first closing at a size larger than its anticipated second fund is a tremendous feat. It highlights a decisive vote of confidence from the company’s first fund investors, who have invested larger inflows in the second fund, and commitments from new investors who share their vision of the potential of VCs in Egypt and the region.

Large institutional investors, including DFIs such as FMO, BII, and IFC, are backing Algebra’s second fund: IFC and FMO committed $15 million and $10 million to the fund, respectively. Other limited partners include existing participants EBRD and EAEF, new investors MSMEDA, DGGF and some regional family offices.

“This is a testament to the potential of tech entrepreneurship in Egypt. Even in these uncertain times, there will be funding to support founders who are building transformational businesses. The advantage remains very significant and successful, well-funded companies will be in a position to become market leaders, even in difficult 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.”

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