This interview was conducted by Burak Buyukdemir, the Founder and CEO of Etohum, a Turkish Accelerator program. This article is written by Nardine B. M’barek, a Contributor Author at Startup Turkey.
Mohammad Alhajeri is an entrepreneur and businessman from Kuwait. He has been in the Venture industry for over ten years. He graduated from the United States with a degree in Computer Engineering and also has a Masters Degree in Business Administration with an emphasis in Islamic Finances. He currently occupies the position of Chief Private Equity and Direct Investment Officer at KFH Capital, the investment arm of Kuwait Finance House, as well as a Director in KISP Ventures.
As part of his position within the Kuwait Finance House Group, Mohammad manages multi-billion of assets in Private Equity and Venture Capital. Mohammad talked to us concerning the passion he has when it comes to Venture capital, and how it is something that he really likes to do and enjoys a lot. He also showed interest in Turkey and Istanbul particularly by saying that he would really love to invest in a startup in Turkey, Istanbul, especially if it is a FinTech startup.
KISP Ventures represents the vehicle through which they invest in the region. They first started it 2 years ago. They have a unique value proposition; he has been investing in the US and Europe for over ten years, especially in Silicon Valley. Added to that, the local team’s experience and knowledge of the region where they are based is also special, since they could be considered as one of the few Ventures from the region who do invest in the region itself who are from this region. They invest in local businesses and add value since day one.
Before they invest in a startup, KISP Ventures ask themselves how they could possibly integrate this startup that is worth from $1 million to $10 million into their network of banks and can be an added value for both sides. They also try to know how much value that startup would add to them and vice versa.
To give us an example, Mohamed mentioned a queuing system company located in Bahrain called SKIPLINO, which is one of the companies that KISP Ventures are proud of. With the help of KISP, this company was integrated in many branches all over Kuwait. This allowed them to boost their receipt and value.
The fact that they are very known in the ecosystem of their region makes it easier for KISP to get quality dealflow. They also stumble upon many startups through LinkedIn. Previously, KISP had invested in a company called Magnitt, which is the Data Source for startups in the region, they also represent a huge deals’ provider for KISP thanks to their network of startups. When it comes to their ticket size, the amount of money that KISP invests varies according to the startup. Usually, they invest around $500 K. However, the amount of investment is between $250K and $1 million.
KISP Ventures currently has eight companies in their portfolio, added to one accelerator. The accelerator is Bahrain-based and will hosts somewhere between 35 and 40 plus startups who will have acceleration programs that are either based in the region as well, or in Silicon Valley. They have a partner who has been doing this with a Telecom company in Kuwait for the past five years. It all started with an idea, according to Mohammad, but now after taking these courses and getting into the startup life, they know that they can achieve something glorious. This made KISP decide that they could give these startups support in order to add value to both KISP and to the region’s ecosystem. They offer them full mentorship and seed funding, as well as support throughout their beginnings as a startup.
The selection decision when it comes to whom to invest in is almost 90% based on the founders of the startup, Mohammad mentioned. It usually depends on the founder(s) and his/her personality. As a funding source, KISP is always looking for a long-term relationship with the startups they invest in, that is why it is very important that the founder(s) is trustworthy and has a personality that would allow him/her to build a good relationship with the team.
The reasons for rejecting a startup could depend on many things. Each country has different reasons for rejection. For instance, for Kuwait, 99% of the reasons for rejections are related to a different evaluation. The founders expect their startup to be worth $10 million, while KISP states that it would be worth half a million which paves the way for a huge gap when it comes to evaluation. They have also rejected many good companies just because they believed that they would not bring any additional value to that startup. As a Shariaa-compliant Venture, they are very founders friendly, and usually, share te risks with them. They would also give a lot in order to build a strong relationship with the founders.
Founders usually make mistakes when they meet up with investors. But, according to Mohammad, since we all make mistakes, he does not blame them for that. The main issue is that founders usually go for the fastest to write the check, which is a huge mistake in itself. But, if they happen to choose that road, then they would have to learn and know how to protect themselves later on. When you are in a better and more comfortable position, you will need to be careful not to accept conditions that would prevent you from reaching your goals, and which would possibly draw limits in front of you.
Mohammad talked to us about the ecosystem of the region. He mentioned that it is mostly an investor-friendly one. There’s more competition nowadays, but compared to the US and China, for instance, the competition is low. He also expects that, during the next five years, the tech industry will grow in the region and will show extraordinary results compared to now. The sector of technology is a very unique one, but it, unfortunately, suffers a lot from different things; notably the lack of funding, in the Series B and beyond.
As a closing up, Mohammad took some of his time to give pieces of advice to startups who are looking for investment. He mentioned that they should not be greedy. They also should not make money their priority, as they will be selecting a partner who will probably be with them for a long time, that is why they need to carefully choose their investors depending on many things. Awareness and good thinking are very necessary since the minute they make a false evaluation, then they will be choosing the wrong partner.