Last April, Algebra Ventures, a leading Egyptian and MENA-focused venture capital firm, announced the launch of its $90 million second fund. This was the sequel to its first fund, which invested in 21 startups across Egypt and the Middle East. While Algebra Ventures predicted it would reach its first close in Q3 2021, the firm had to wait an entire year to achieve that. However, this delay provided Algebra Ventures with sufficient time to exceed what it initially earmarked for the fund.
Exceeding Initial Projections
The firm disclosed in a statement that it has finalized a $100 million first close and expects to reach its final close by the end of Q1 2023. This is a significant milestone, as Algebra Ventures has demonstrated its ability to attract large institutional investors, including DFIs such as FMO, BII, and IFC.
Investment Focus
Since its inception in 2016, Algebra Ventures has backed Egypt’s top startups in various industries. These include names such as Halan, Brimore, Trella, elmenus, Khazna, Yodawy, Mozare3, and Shift EV. In a past interview, managing partners Tarek Assaad and Karim Hussein told TechCrunch that the firm hopes to back 31 startups from the second fund, which focuses on seed to Series B startups building in fintech, logistics, health tech, edtech, and agritech sectors.
Investment Range
The firm will also cut checks ranging from $500,000 to $2 million from this second fund. The partners say Algebra plans to invest $15 million by the end of this year; that is, within its first year of operation. So far, it has backed four startups, including Sylndr, the online used-car retailer which raised the largest pre-seed investment in Africa this May at $12.6 million.
Regional Focus
While Algebra’s second fund will explore investment opportunities in other regions, its primary focus remains on Egypt and the MENA region. As Hussein noted, "We’re four partners, all Egyptians, all living in Cairo; we’ve been investing for a long time, and we understand the local environment."
Importance of Local Funds
Hussein also highlighted the importance of local funds, working closely with entrepreneurs on the ground. "Local funds like ours are crucial in navigating the complex regulatory landscape and understanding the nuances of each market," he said.
Global Venture Capital Market Slowdown
As the global venture capital market slows, Africa is charting its own course. Africa’s startup ecosystem has been growing rapidly, with a number of successful exits and unicorns emerging from the continent.
Algebra Ventures’ Role in the African Startup Ecosystem
As one of the leading venture capital firms in Egypt and the MENA region, Algebra Ventures plays a vital role in supporting the growth of startups on the continent. With its second fund exceeding initial projections, the firm is well-positioned to continue its support for innovative entrepreneurs.
Conclusion
Algebra Ventures’ success in raising $100 million for its second fund is a testament to the strength of the African startup ecosystem. As the global venture capital market slows, Africa’s emergence as a hub for innovation and entrepreneurship continues to gain momentum. With local funds like Algebra Ventures at the forefront, the continent is poised to continue its growth trajectory.
