In a strategic move to bolster the tech startup ecosystem in the Middle East, a Chinese venture capital firm supported by a unit of Saudi Arabia’s Public Investment Fund (PIF) is in the process of raising a substantial $1 billion fund.
MSA Capital, the VC firm in question, is currently engaged in discussions with regional investors to solidify plans for the fund’s launch within the upcoming year, as revealed by Managing Partner Ben Harburg in an exclusive interview.
“Our primary objective is to actively participate in later-stage investments and deploy significant capital in pre-IPO rounds, subsequently facilitating the potential for these startups to go public,” highlighted Harburg, emphasizing MSA Capital’s strategic approach in the market.
Saudi Technology Ventures would trail closely as the second-largest player in the region
With assets under management totaling $2.5 billion, MSA Capital stands as a prominent player in the VC landscape, supported by the Saudi PIF unit Jada Fund of Funds. Should the firm successfully raise the targeted $1 billion, it would emerge as the largest VC entity with a focus on the Middle East, as indicated by venture capital data firm Magnitt. Notably, Saudi Technology Ventures would trail closely as the second-largest player in the region.
This ambitious fundraising endeavor underscores Saudi Arabia’s recent ascendancy in the venture capital domain. The Kingdom witnessed a notable surge in VC funding in 2023, with startups securing a staggering $1.4 billion, outpacing its main competitor, the UAE, for the first time. Much of this growth can be attributed to the concerted efforts of government-backed funds that have been actively bolstering investment activities in the region.
It is noteworthy that PIF’s Jada and Saudi Venture Capital Investment are key stakeholders in at least one of the three existing funds managed by MSA Capital, collectively amassing a substantial $555 million, according to insights shared by Harburg. Notably, MSA Capital has made early investments in high-profile entities like Saudi-based Tabby, a leading buy-now-pay-later platform that stands among the region’s pioneering fintech unicorns. The firm has also backed global tech giants such as Airbnb Inc. and Uber Technologies, showcasing its strategic investment acumen.
On the other hand, the PIF has been actively channeling investments into tech firms and startups, signaling its commitment to nurturing a vibrant VC industry and fostering a conducive environment for young entrepreneurs to thrive and innovate. In pursuit of economic diversification and job creation, the $700 billion entity has established a $1 billion fund of funds earmarked for investments across various sectors, including venture capital, alongside direct investments through its subsidiary, Sanabil.
As the collaboration between a Saudi-backed entity and a Chinese VC firm takes center stage in the region’s tech investment landscape, industry observers anticipate a significant boost to the entrepreneurial ecosystem. The infusion of substantial capital and strategic expertise from MSA Capital, coupled with the backing of Saudi Arabia’s influential PIF, is poised to catalyze the growth and success of tech startups across the Middle East, further solidifying the
Kingdom’s position as a key player in the global innovation ecosystem.
In conclusion, the partnership between MSA Capital and Saudi Arabia’s PIF signifies a pivotal moment in the region’s venture capital scene, heralding a new era of opportunities and growth for tech startups in the Middle East. With a targeted $1 billion fund on the horizon, the stage is set for transformative investments that could reshape the entrepreneurial landscape and drive innovation to new heights.
