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While overall investments in global markets have slowed, sovereign wealth funds from the GCC (Gulf Cooperation Council) region have been actively investing in global startups over the past two years.
In the year Between 2021 and 2022, the GCC-based sovereign wealth fund made more than 88 deals, with a maximum amount of $35.81 billion; Study your history Data.
Of these, US-based startups were the favorites, raising $3.8 billion in 14 deals by 2022. It was followed by startups in Saudi Arabia, which earned $2.78 billion from four deals. UK startups raised $1.96 billion in five deals, while Indian companies took in $995 million from three deals.
In the year By 2021, 17 US startups raised $7.64 billion, 11 Indian startups raised $7.08 billion, and four UK startups raised $2.9 billion.
The US and India continue to be investment strongholds for hedge funds.
India has emerged as a popular investment market for sovereign wealth funds and public pension funds, rising from #9 in 2014 to #2 globally by 2022, according to a study by asset manager Invesco.
Globally, sovereign wealth funds now manage more than $33 trillion in assets, the study says. In the year Allocations to private markets will see rapid growth in 2022, the study says.
Image credit: Chetan Singh
Investment in MENA
What is interesting is that wealth funds have also started investing in the MENA (Middle East and North Africa) region. For example, Saudi Arabia-based startups raised money directly from the sovereign wealth fund in 2022.
This is a small but significant change in how these hedge funds work. Historically, wealth funds have invested in startups globally. The main competitors were the US and China. If India were to replace China now, money would hardly move in the (MENA) region, says an investor.
But there seems to be a slow but steady faith in startups in the region, with investments in Foodix, Tamara, Almosphere and Kingdom Holding Company.
Apart from the Saudi initiative, UAE-based Okadox and Trucker have raised funding from ADQ, Mubadala and Riyadh Takiniya Fund, among others.
There is a strong push from MENA to grow the economy beyond oil wealth. Dubai, Abu Dhabi and Saudi Arabia are developing strong initiatives and improving ease of doing-business regulations to make it easier to buy businesses.
“With the sovereign wealth fund investing in startups, it shows that the region is taking the startup and tech landscape seriously.”
Sandeep Ganediwala, partner, RedSear, a consultancy, said investor interest in the region has increased over the past two years and has broken down across sectors. Foodtech, fintech and ecommerce are some of the sectors that have attracted investments.
According to reports, by 2022, startups in the GCC region will raise $3 billion in total funding. Companies in the food technology, fintech and ecommerce sectors have raised the most funding. The United Arab Emirates continued to dominate the GCC region, collecting $237 million in 13 deals.
In October, startups in the United Arab Emirates earned $460 million, Egypt $113 million and Saudi Arabia $70 million.
Shares in technology giants
In the year In the last few months of 2022, wealth funds in the region have been increasingly active in the global startup scene.
Saudi Arabia’s sovereign wealth fund’s public investment fund has increased its investments in Google parent company Alphabet and Facebook and Instagram parent company Meta.
According to a filing with the US Securities and Exchanges Commission (SEC), PIF increased its stake in Meta by 11 percent to 3.26 million shares, worth about $443 million. It increased its investment in Alphabet by more than 4.26 million shares during the three months ended September 2022. The value of the fund’s position is over $407 million. It held 2.13 million shares in Alphabet last quarter.
The sovereign wealth fund PIF manages more than $620 billion in assets.
According to the US SEC, the PIF’s total investment value in the third quarter of 2022 was over $36.8 billion, in a portfolio of 53 companies.
In December, the sovereign wealth fund acquired a majority stake in AR (augmented reality) developer Magic Leap. The purchase agreement was for $450 million. According to reports, Magic Leap has raised $150 million in venture funding and $300 million in debt by 2022.
In the year In 2021, oil conglomerate Saudi Aramco signed an agreement with Magic Leap to use the latter’s AR technology for remote sensing and 3D visualization. In the year In 2018, PIF was part of a $400-million Series D equity funding round in Magic Leap.
When Elon Musk takes over Twitter, Saudi Arabia’s Kingdom Holding Company and the private office of Prince Alwaleed bin Talal bin Abdulaziz Al Saud announced that they will hand over $1.89 billion in ownership rights to the new Twitter leadership. in musk.
In the year In 2021, PIF and Abu Dhabi Mubadala invested $60 billion in SoftBank’s Vision Fund 1, while the Qatar Investment Authority’s investment in tech businesses hit $8 billion in the same year.
The momentum to continue
Funding is expected to grow in the MENA region.
RedSeer reports that MENA is an estimated $3-trillion economy, and the GCC is the gateway to the region, with a large Indian diaspora.
The digital economy will play an important role in the coming years. According to the report, 150 billion dollars will be added to the MENA digital economy in five years.