In an enlightening conversation at Web Summit Qatar, Abdul Qavi spoke with Khaled Talhouni, Managing Partner, and Stephanie Nour Prince, Partner – Network & Operations, two of the three co-founders of Nuwa Capital. They delved into the inception of Nuwa Capital and its significant influence on the MENA startup ecosystem, drawing from their rich experience in venture capital and emerging markets.
Founded on the premise of addressing the unique needs of founders and investors in the region, Nuwa Capital embodies a vision to foster innovation and drive value creation. Khaled articulated the firm’s commitment to supporting founders throughout their journey, from early-stage ideation to regional expansion, leveraging Nuwa’s dedicated value creation team and strategic partnerships.
Stephanie shed light on the evolving dynamics within the MENA startup ecosystem, highlighting the emergence of multiple startup hubs and the shifting focus towards solving regional challenges through technology-driven solutions. They discussed Nuwa Capital’s investment philosophy, emphasizing the importance of proactive relationship-building and the firm’s role in supporting startups as they overcome challenges, including scaling across borders and talent acquisition.
The conversation culminated in reflections on the significance of tech events like Web Summit Qatar in shaping the regional tech landscape and fostering collaboration within the ecosystem. Khaled and Stephanie shared their vision for the future of Nuwa Capital and offered advice to startup entrepreneurs and investors, underlining the immense potential and opportunities in the MENA startup ecosystem.
Q&A
Founding Nuwa Capital: A Vision for the MENA Ecosystem
1. What inspired Nuwa Capital, and how does your vision address the specific needs of MENA startups?
Khaled Talhouni: Nuwa Capital was founded with a clear vision, drawing upon the extensive expertise of its team members, all possessing deep backgrounds in venture capital and early-stage investing, particularly within often overlooked emerging markets. Our goal is to harness this collective knowledge to create a platform with multiple product offerings that not only serves founders’ needs but also provides a seamless avenue for LPs and investors to participate in the region’s start-up growth story.
Central to our mission is the relentless pursuit of value creation for founders, empowering them to build robust businesses, with a focus on tapping into the vast potential of the Saudi consumer market, supported by a key Saudi partner as the cornerstone investor. We’ve also invested extensively in Egypt and the UAE, and are making in-roads into Turkey.
We have assembled a dedicated value creation team to provide targeted support across various verticals, equipping founders with operational guidance and tailored solutions. While our initial fund concentrates on early-stage investments, we envision expanding to meet founders’ evolving capital requirements as they progress through different growth stages.
Fundamental to our investment thesis is facilitating regional expansion for portfolio companies across borders, fostering scalable and impactful businesses across the Middle East. Recent trends show a shift towards capital efficiency, region-specific solutions, and the rise of “second-order effect” businesses. As the region gains global prominence, we anticipate more businesses addressing global issues, driven by diverse talent drawn to the Middle East.
Stephanie Nour Prince: I also believe, in addition to that point, that there has been a geographical shift in dynamics. Around ten years ago, most startup activity was heavily concentrated in the Levant. There, we witnessed a higher concentration of businesses emerging and then expanding into the GCC. Over time, the UAE began to serve as a crucial stepping stone for ventures branching out into the wider GCC. As a whole, the region offers very interesting avenues for arbitrage in terms of talent, supply, costs, and more.
However, in the past five to seven years, this landscape has significantly transformed. Dubai has emerged as a prominent hub, and now Riyadh is establishing itself as a hub in its own right. I anticipate the emergence of multiple hubs in the region which is actually good for all stakeholders in the ecosystem. The UAE will continue to thrive as a hub, while Saudi Arabia will evolve into a distinct hub of its own.
Qatar also presents itself as a strong contender, offering unique opportunities within this evolving ecosystem. Importantly, this shift isn’t taken lightly. Founders, as key stakeholders, stand poised to reap significant benefits from these developments, with larger markets to solve for, and more investors to tap into
2. What inspired your transition from Wamda to Nuwa Capital, and how do you navigate engagement, networking, and thought leadership in your current roles?
Stephanie Nour Prince: I believe, as Khaled aptly pointed out, we find ourselves in a position of privilege, having embarked on our careers at a time when the entrepreneurial landscape was just beginning to take shape. We literally had a front row seat watching the changes in the startup sector here. To illustrate the point, consider this anecdote: we used to manage startup data on a simple Google Spreadsheet. Such was the infancy of the ecosystem back then.
Fast forward to today, and the idea of relying solely on a spreadsheet seems almost quaint and the amount of data is too vast to rely just on a document. Nonetheless, it’s heartening to witness the continuity of entrepreneurial spirit among today’s serial innovators, many of whom have emerged from the broad-stage companies that owe their existence to this evolving ecosystem. Careem and other success stories, for example, have contributed to nurturing a new generation of founders, each forging their own path in the entrepreneurial landscape.
Furthermore, I believe there’s a deeper significance to our work within the region. Operating within our local context allows us to imbue our endeavors with a sense of purpose. Entrepreneurship, in this sense, becomes a catalyst for positive change within our societies and economies. It’s a humbling realization, knowing that we can play a part in empowering individuals to drive meaningful transformations in their communities.
Khaled Talhouni: I find it incredibly gratifying to witness the growth and development of companies in which we have invested. Initially, as an investor, you’re somewhat distant from the day-to-day operations of the company. You’re more like a passenger, simply riding along on their journey. Some investors, like Nuwa, are more hands-on, due to our value-creation program. But, when you see these companies flourish and achieve success, it’s truly remarkable.
Being a part of something from its inception, and watching it evolve and thrive, gives me a great sense of purpose. It’s incredibly inspirational for us as investors to contribute to the building of something meaningful from the ground up.
The Nuwa Philosophy: Investing in Innovation
3. When evaluating startups for investment, what specific criteria do you consider, and could you share some key insights or lessons learned from your successful investments like Careem and Mumzworld, as well as from your experience with over 150 other investments?
Khaled Talhouni: For early stage $100 million fund, our primary focus revolves around the founders and the founding team. We assess whether these individuals possess a singular vision, demonstrating a clear sense of direction while remaining open to adapting their strategy as the business landscape evolves. It’s crucial for founders to navigate this journey while staying true to their overall objectives, which can be a challenging balance to achieve.
Our evaluation begins by scrutinizing the founders’ ability to navigate uncertainties while maintaining focus on their goals. Additionally, we assess their understanding of the market they operate in and their ability to articulate the problem they aim to solve, along with their proposed solution. We prioritize founders tackling significant challenges that will solve for substantial issues faced across the MENAT, versus products that may be a bit more niche.
In essence, our early-stage investments are directed towards founders who exhibit adaptability, market insight, and a commitment to addressing substantial problems.
Building Relationships with Founders
4. How do you approach building relationships with entrepreneurs and startup founders? Given that you identify teams or individuals who are developing something remarkable, what is your approach to cultivating these relationships?
Khaled Talhouni: Our approach revolves around proactively identifying market problems and seeking out founders who are addressing these challenges. While this proactive strategy is our preference, we also receive numerous inbound inquiries. Our primary goal is to add value without expecting anything in return – we believe this is a net positive for the ecosystem and aim to help where we can. We strive to assist founders from the outset, aiming to establish a relationship built on trust and mutual benefit.
Initially, we focus on understanding the founders’ needs and offering support without any strings attached. This often serves as the first step in alleviating any potential tensions in the relationship. Subsequently, we showcase the ways in which we can contribute to their journey. This includes facilitating introductions to relevant contacts, aiding in market expansion efforts, and leveraging our past experiences to unlock value for their ventures.
In essence, our approach is centered on demonstrating what we can offer to support founders in achieving their goals, thereby laying the foundation for a collaborative and fruitful partnership.
Stephanie Nour Prince: Certainly, and I believe much of that value-add is eventually demonstrated as the region’s founders advance. Since we are deeply ingrained in the ecosystem, all team members are well-connected, thus we naturally find ourselves providing support and partnering in various ways or engaging in discussions with these founders long before fundraising becomes a topic.
This partnership philosophy has underlined our approach and willingness to support startups. But more often than not, this leads to larger opportunities.
In fact, there are instances within our portfolio where founders have approached members of our team to brainstorm ideas collaboratively before even establishing a business. Then, after working together to refine their concept, they approach us for initial funding. They’ve essentially laid the groundwork by learning how to collaborate effectively. For us, this gives us an inside view into how these founders operate even before we get into the due diligence process
Khaled Talhouni: And we are particularly drawn to second-time founders who have experienced the entrepreneurial journey before. Even if their initial endeavor didn’t yield the desired outcome, we admire their resilience and determination to give it another shot. This type of interaction is something we highly value and aim to foster within our network as we strive to support and empower entrepreneurs on their path to success.
5. Stephanie, how has your background in computer science from The American University in Beirut contributed to your understanding of the tech startup landscape?
Stephanie Nour Prince: That’s a really good question. When I made the decision to pursue a major in computer science, I envisioned myself contributing to a different aspect of the tech industry. However, early on, I realized that wasn’t the direction I wanted to pursue at all. Fortunately, I had the opportunity to work at a startup while still in college. During my time there, we navigated through the challenges typical of a startup, learning from every mistake along the way.
I wore multiple hats, contributing to various aspects of the business. This included community building, building B2B and B2C client relationships, and product development. It provided me with a comprehensive understanding of the workings of a tech startup from different angles.
Following this experience, I joined Wamda, where our focus was on fostering the growth of a very nascent regional ecosystem. This involved creating platforms for collaboration among investors, founders, developers, product specialists, corporations, and government entities. It was a privilege to gain insights from diverse perspectives, which I believe has contributed to a more well-rounded approach to my work.
6. In what ways do you envision Nuwa Capital contributing to the rapid growth of the digital economy in the Middle East?
Khaled Talhouni: The emergence of the digital economy signifies a profound shift in how technology permeates every facet of life and industry. It’s no longer confined to a separate digital sector, rather, technology is seamlessly integrated across all sectors. This integration blurs the lines between traditional tech and non-tech industries, creating opportunities for companies that facilitate digital revolutions within their respective fields.
The focus now lies in identifying and supporting companies that actively break down these barriers and drive digital transformations within their industries. That is why we are largely sector-agnostic. Such enterprises are at the forefront of innovation and hold immense promise for shaping the future landscape of the economy.
7. Could you share a specific startup experience in which you invested, and discuss how it ultimately unfolded?
Khaled Talhouni: Yes, back at Wamda we were investors in Careem and that was indeed a remarkable experience for us. One aspect that stood out was the sheer scale of their operation and the incredible speed at which they were able to achieve it. Another notable investment we made while there was in Mumzworld, a successful e-commerce venture led by the visionary founders Mona Ataya and Leena Khalil.
Mumzworld focused on catering to the needs of mothers and babies through vertical e-commerce, carving out a unique niche in the market. Despite starting their journey a while back, they managed to effectively target the Saudi and UAE markets, establishing a remarkable business that ultimately led to a successful exit.
8. What are some of the main challenges that startups encounter in the MENA region, and in what ways do you believe venture capital firms like Nuwa Capital can assist in tackling these challenges?
Khaled Talhouni: Scaling across multiple countries poses significant challenges, particularly due to the diverse regulatory landscapes in each region. This complexity is even more pronounced in sectors like FinTech, where stringent regulations vary from country to country. Another hurdle is the relative lack of seasoned founders in the region, with many being first or second-time entrepreneurs. Consequently, there’s a scarcity of deep industry experience among founders, necessitating support from seasoned operators or founders from other regions who have navigated similar cycles before.
Moreover, talent acquisition and retention remain persistent challenges. While talent availability fluctuates across different areas, maintaining a skilled workforce in our market is consistently demanding. Overcoming these obstacles requires concerted efforts and innovative strategies to attract and retain talent, ensuring sustained growth and success in the dynamic business landscape of our region.
9. Stephanie, your involvement in various programs and workshops, such as the MIT Media Lab workshop and the hackathon you organized in Beirut, is notable. How do you believe these initiatives have contributed to the overall growth of the startup ecosystem, and what is your perspective on their impact?
Stephanie Nour Prince: Earlier in our careers, we ran numerous programs that focused on the development of the ecosystem, especially for aspiring and early-stage founders. The primary objective of such programs was to foster connections across different segments of the ecosystem and help build an infrastructure for exchange where there was none.
For instance, the Beirut hackathon was focused primarily on engaging students. Our aim was to showcase the various pathways available and demonstrate how they could leverage their skills to address real-world challenges through entrepreneurship.
By helping bring together individuals from both the tech and business spheres, we aimed to cultivate a collaborative environment where innovative ideas could flourish. Such platforms help the industry as a whole, connecting individuals, bringing talent together, encouraging idea solving and possibly discovering financial backing. I still think it’s quite relevant today but as the ecosystem matures, so do its needs.
You continue that focus on development with Nuwa’s VC-in-training program. How does that reflect the region’s current needs?
Today at Nuwa, we run a VC-in-training program geared for the new generation of investors joining the industry, whether on the family business side or to upskill talented individuals where their mandate can be very strategic.
Khaled Talhouni: These programs are catalytic. They initiate a process, much like sparking a flame. However, it’s not an immediate, linear progression where one action yields a direct result. Rather, it sets off a chain reaction, gradually leading to subsequent developments and outcomes.
Stephanie Nour Prince: I believe the secondary effect is that these programs have inadvertently created a platform for many of the entrepreneurs we engage with regularly as they also became a means for founders to identify talent, whether through direct internships or by recruiting fresh graduates for their tech teams and other roles.
Tech Evolution: Insights from Web Summit Qatar
10. How do you think tech events like the Web Summit in the MENA region are shaping the evolving tech landscape? Furthermore, do you see these events influencing the perspectives of individuals outside the MENA region, particularly in Western countries and other parts of the world?
Khaled Talhouni: Events hold significant importance, not only for their content but also for their ability to foster connections among people, serving as central meeting places. Among the numerous events in the region, Web Summit Qatar stands out as particularly significant. It effectively integrates Qatar into the global ecosystem, leveraging the esteemed reputation of the Web Summit brand. While Qatar has been moderately active in this space previously, this event serves as a grand showcase of its aspirations and capabilities. The recent announcement from the Qatar Investment Authority to invest US$ 1 bn in VC funds is a signal to the ecosystem of how serious the government is to nurture entrepreneurship. In essence, Web Summit Qatar represents a pivotal moment, signaling Qatar’s intentions and ambitions in the global arena.
Stephanie Nour Prince: Tech events in the MENA region, notably the Web Summit in Qatar which brings a global brand to the region, Gitex, North Star, the STEP Conference, and Leap, are pivotal in shaping the tech ecosystem’s evolution. Each of these have carved out a unique niche, thereby serving a broader purpose that collectively encourages the exchange of ideas and fosters global partnerships.
These conferences demonstrate the technological aspirations and achievements of the wider region, facilitating a cross-pollination of ideas that transcend geographical boundaries but also across various industries and between the disruptors and incumbents.
These events effectively underscore the MENA region’s burgeoning role in the global innovation, attracting international investors and founders, which is a clear indicator of the region’s significance and impact on the worldwide tech landscape.
Key Takeaways: Messages for Entrepreneurs and Investors
11. What advice would you give to both entrepreneurs and investors in the startup space, drawing from your extensive experience?
Khaled Talhouni: I believe this moment presents a remarkable opportunity to establish a company. It’s truly an exciting time within the region’s entrepreneurial landscape. Despite the perception of potentially limited capital availability, it’s crucial to recognize that the market now boasts a considerable influx of capital compared to just a few years ago. In light of this, I wholeheartedly encourage founders to persevere and pursue their visions.
As for investors, there exists a significant gap in capital that needs to be addressed, especially beyond Series A Therefore, it’s imperative for them to adopt an assertive approach in deploying funds, actively seeking out promising ventures and offering robust support to founders. However, it’s equally important for investors, particularly angel investors and family offices, to refrain from adopting predatory practices. Instead, they should empower and trust founders to lead their ventures. Maintaining this balance fosters a healthy ecosystem conducive to sustainable growth and success.
Stephanie Nour Prince: It can be easy for founders to feel a bit demotivated, especially when the markets aren’t performing as expected and news cycles further amplify that. Adding to that, the ecosystem being still nascent is still going through a teething phase. However, despite market fluctuations and the inevitable learning curves founders face, the prevailing sentiment on the ground is remarkably optimistic. Stakeholders are fully engaged, and
it’s worth noting that the region boasts several funds with substantial capital reserves. For instance, Nuwa is one such fund with ample dry powder yet to be deployed. We’re actively pursuing an aggressive deployment strategy this year.
Rasmal Reflections
Khaled Talhouni and Stephanie Nour Prince’s Web Summit takeaways reveal the MENA region as a rising force in global tech. Their commitment to fostering trust and addressing regional complexities highlights the power of entrepreneurship to shape the future and solve problems specific to this diverse market. Their insights encourage both entrepreneurs and investors to embrace the opportunities and unique strengths of the MENA startup ecosystem.
Last Updated on July 29, 2024 by Safiya K
