TLDR:
- The VC market in the GCC, particularly in Saudi Arabia and the UAE, has rapidly grown in recent years.
- To take advantage of the growing and diversifying economy in the region, all types of investors need an investment strategy that aligns with their ambitions and capabilities.
The article discusses the rapid growth of the venture capital (VC) market in the GCC, with a focus on Saudi Arabia and the UAE as the two largest markets. Investors, such as high net worth individuals (HNWIs), family offices, corporations, and sovereign wealth funds (SWFs), are increasingly viewing VC as an attractive asset class. However, many first-time investors lack a clear entry strategy, which can lead to unnecessary portfolio risk.
The growth in regional VC can be attributed to various factors, including government initiatives to support innovation and entrepreneurship. For example, Saudi Arabia is upgrading its digital infrastructure to foster tech companies and encourage innovation, with ambitious targets in fintech. Similarly, the UAE is promoting the digital economy through initiatives like “We the UAE 2031,” positioning itself as a financial services and digital payments hub.
While SWFs and government affiliates have been investing in the VC market, family offices and HNWIs have not fully engaged with VC due to a lack of a proper strategy. The article recommends that family offices and HNWIs start by investing in a carefully selected VC fund as a limited partner, diversifying across industries to reduce risk.
Large corporations engaging in corporate venture capital (CVC) should focus on building strategic value, such as driving innovation and new business models. They can start by investing in specialized VC funds as limited partners, eventually creating dedicated units for direct investments into startups and growth-stage companies.
The article emphasizes the importance of having an investment strategy that aligns with an investor’s goals and capabilities to tap into the growing opportunities presented by venture capital in the GCC.
