Fares Ghandour
Blog

Wamda Capital invests between $1m-$5m in MENA region

This interview was held by Burak Buyukdemir and the article is written by Jeremiah Uke, a contributor author at Startup Turkey.

Fares Ghandour is a Partner at Wamda Capital where he leads investments in companies at the seed and growth stages. He is particularly interested in companies working on financial inclusion solving the remittance and credit gap problems in frontier markets and is bullish on the future of cryptocurrencies as disruptors of the world’s existing economic and social contracts. Fares worked previously as Investment Manager at MENA Venture Investments and has executed over a dozen transactions over the past 5 years of his career. He also ran the region’s flagship mentorship event, Mix N’ Mentor, while working at the Wamda Platform in 2012 and organized the first MIT Media Lab workshop in the region at twofour54 in Abu Dhabi.

Wamda Capital is a venture fund focused on the MENA region. He has been working with tech startups in the region for the past 5 years of his career.  The first fund was a $70m fund in 2015 focusing on Series A tickets in tech businesses in the MENA Region and Turkey. There was probably no more than $300m-$400m in tech financing in the region, now there’s likely closer to $2bn.

There’s a fundamental shift in demographics in the MENA region that has left legacy businesses struggling to relate to a new generation of customers that’s ever more connected and mobile. The fund is here to back businesses that have scalable business models addressing market failures in the region, be it in retail, media, on-demand services, enterprise, and SaaS solutions, or Fintech.

Wamda Capital focuses on a belt of markets that are increasingly urban, young, and connected, that stretches all through the MENA region from East Africa to Pakistan, with a primary focus on the GCC and Egypt as well as Turkey.

The fund mostly invests at the Series A stage, businesses that usually have upwards of $1m in annual revenues. But also do seed checks for smaller businesses if a business stands out at that stage.  The team looks for a financial model that can paint a mathematical picture of the opportunity and map out its potential scale drivers.

Wamda Capital typical invests between $1m-$5m.  For seed, they do $250k-$1m. The team has an open-door policy, happy to meet with anyone at any time.  They usually look at 3 things including the opportunity. Asking “Is this a big enough market?” “Is there a serious problem that needs to be disrupted in it?” “How big can this get?”

Secondly, they look at team. Asking “Is this the right team that are able to drive disruption in this industry?” Finally, they look at price. Asking “Is the valuation reasonable for us to be able to make returns?”

Wamda Capital rarely invests in any idea stage startups at the moment, however, the team just launched a fellowship program, Wamda X, that offers grants to idea-stage fellows. If it’s successful, the team scale the program across the region. You can learn more about it by visiting Wamdax.com .

The team has passed on several opportunities which they later came back and invested in. Fundraising is relationship building, and sometime when they pass on investment it may not indicate anything other than a timing issue. It might not be the right time for the team, or they might not see an opportunity for what it’s really worth at that particular point in time.  That sometimes changes and the team is happy to always re-invest in companies we’ve passed on before.

A good startup is defined by its team. How effective they are at managing to deliver solutions to customers, and how aligned that team is on that vision. A good management team is the backbone of any business, and that is especially true with scale-ups and startups. We back management teams and not companies, that’s what the team lives by, and all good experiences can be characterized by healthy relationships with and among management teams. All the sour relationships are usually a result of internal disputes between team members that spill over onto other shareholders.

Fares advised startups to focus on what makes you and your team unique and different. Do you complement each other? Are you aligned on the mission? Are you focused and aligned on your objectives and targets? Worry less about dilution and more about delivering on your mission no matter what it takes. Dilution can be solved, if you have a good relationship with your shareholders and you’re delivering on your targets, you can get more equity. What you don’t want to happen is to get too stuck on a certain valuation number in mind and not be able to raise from the right investor because of that.

 

─ March 19, 2019