Algebra Ventures, Egyptian Venture Capital Firm Announces its First Close of Second Fund at $100M
Algebra Ventures, an Egyptian venture capital firm with a MENA emphasis, announced the opening of its $90 million second fund in April of last year.
A $54 million fund was invested in 21 firms around Egypt and the Middle East as a follow-up to its first round.
Algebra Ventures anticipated reaching its first close in Q3 2021, but the company had to wait until that time to do so. However, the delay gave Algebra Ventures ample time to raise more money than it had originally planned to. The company stated in a statement that it has completed a first close of $100 million and anticipates reaching its ultimate close by the end of Q1 2023.
Algebra Ventures has supported Egypt’s leading companies across a range of industries since its founding in 2016. Names like Halan, Brimore, Trella, elmenus, Khazna, Yodawy, Mozare3 and Shift EV are among them.
The company plans to support 31 firms from the second fund, which focuses on seed to Series B startups expanding in the fintech, logistics, health tech, edtech, and agritech sectors, according to managing partners Tarek Assaad and Karim Hussein in a previous interview with TechCrunch. The company, whose general partners include Laila Hassan and Omar Khashaba, will also write cheques from this second fund ranging from $500,000 to $2 million.
Algebra will reportedly invest $15 million by the end of this year, or during its first full year of business, according to the partners.
It has so far supported four firms, including Sylndr, an online dealer of secondhand cars, which in May this year secured the largest pre-seed investment in Africa at $12.6 million. Additionally, although Algebra’s second fund will look into investment opportunities in East and West Africa, Egypt will continue to be its main priority.
“Our second fund will look for possibilities across other industries by collaborating with high-potential founders to fill certain market gaps in these industries. Regarding the company’s potential investments in adjacent areas, Hussein noted via email: “We haven’t made any investments in sub-Saharan Africa yet, but we continue to cultivate relationships in these markets.
One of the few companies, alongside Further Ventures and Endure Capital, which are funded by ADQ, to have recently attained the first or final close of sizable funds aimed at the Middle East is Algebra Ventures. Along with Partech Africa, TLcom Capital, Norrsken22, and Novastar Ventures, it is perhaps the biggest domestic fund in Africa and invests in African growth-stage enterprises. These funds played a crucial role in the surge of venture capital that poured into Africa’s tech industry, amounting to more than $5 billion and creating soonicorns and unicorns along the way. However, because of macroeconomic dynamics affecting global venture capital, their funding activities have taken on a slightly different structure this year. Portfolio businesses in Africa-focused funds have exhibited signals of difficulty this year, similar to others throughout the world.
One example in Algebra’s situation is Brimore, a social commerce firm that announced a $25 million Series A round, let go of hundreds of people, had its valuation considerably reduced (up to 40%, according to some accounts), and is currently going through a reorganization.
Hussein explained how Algebra Ventures is helping portfolio companies weather this cash and valuation constraint moment, saying, “We have seen ups and downs previously and have been working closely with our portfolio companies to ensure that they have a stable financial position in this current environment. “We continue to support our companies with funding, operational challenges, strategic counsel, and other matters as required.”
Algebra Ventures accomplished a remarkable feat by achieving the first close at a size larger than its second fund. It draws attention to a resounding vote of confidence from the company’s first fund investors, who made larger investments in the second fund, as well as commitments from new investors who share its outlook on the potential of VC in Egypt and the region.
Algebra’s second fund is supported by substantial institutional investors, including DFIs like FMO, BII, and IFC, which contributed $15 million and $10 million, respectively, to the fund. Existing participants EBRD and EAEF, new investors MSMEDA and DGGF, as well as a few local family offices, are examples of additional limited partners.
The potential of tech entrepreneurship in Egypt is demonstrated by this. Funding will be available to support founders who are creating revolutionary businesses even in these unsure times. Hussein commented on the firm’s efforts to raise its second fund, “The upside is still extremely large and successful, well-funded enterprises will be in a position to become industry leaders, especially in difficult economic circumstances. It also emphasizes the value of regional funds that collaborate closely with local business owners. We are four partners who are all Egyptian and residents of Cairo. We have been investing for a while and are familiar with the area. Since we’ve witnessed both successes and failures in the startup world, many regional and international investors view us as their local partner in Egypt.
