Bahrain Development Bank Launches US$100 Million VC Fund
In a move to further spur the region's startup ecosystem, Bahrain Development Bank (BDB) has launched a US$100 million venture capital "fund of funds" to support startups in Bahrain and across the Middle East. Announced at the Gateway Gulf Forum, the Al Waha fund of funds will invest in venture capital organizations that have a presence in Bahrain, offering access to additional capital to support startups in Bahrain and the Middle East, while also helping attract other VCs to the Kingdom.
With funding being a continuing constraint for startups, H.E. Khalid Al Rumaihi, Chairman of BDB said the fund would support businesses in Bahrain and Middle East, strengthening the Kingdom’s objective as a regional financial center. “Venture capital investment in the MENA region is a fraction of the level in markets like the USA and China– this means there are entrepreneurs with great ideas that are not realizing their potential because they cannot access the funding required," Al Rumaihi said, in a statement.
Arejie Al Shakar, Senior VP - Head of Development Services Division of BDB also noted the initiative’s impact for the ecosystem. “With public funds being deployed into VCs who are the experts in funding startups, [it] will only lead to reap positive benefits for the overall ecosystem and help startups expand regionally and internationally. It will also build up the VC capabilities in Bahrain, also bridging between markets and having portfolio companies expand into new markets and vice versa.”
Hasan Haider, Partner at 500 Startups, is keen on what the initiative signifies for the startup space: “One of the key weaknesses in the MENA ecosystem is the lack of LPs (Limited Partners) for VC funds focused on the MENA region. Not a lot of investors have paid attention to the asset class, let alone invest in funds. The fund will attract several VCs to set up operations in Bahrain and pay attention to the local ecosystem but could [also] play a bigger role in building the critical mass needed for any geography to really have a full funding ecosystem. The structure of the fund is also quite great for the region- unlike other projects it’s not focused just on local founders, local startups or local funds, it’s really working to play a role in supporting for [the] whole region’s development. As they say, a rising tide lifts all boats. I hope to see more initiatives emerge like this, aiming for a benefit for the region rather than single silos and geographies.”
Al Shakar also pointed out the new fund is an excellent opportunity waiting to be leveraged by entrepreneurs. “Entrepreneurs will be able to have access to funding and VCs that will set-up presence in Bahrain to help them with their fundraising, be able to access expertise through mentorship, and also be able to better equip themselves to become regionally and globally competitive.” Haider asserts the advantage for investors too: “Regional and global investors should pay attention and perhaps aim to support directly or participate in funds that the fund of funds will be investing in. For VCs in the region and globally, this is a great opportunity to have an institutional LP on board that believes in the asset class and the regional ecosystem.”
Along with its initiatives to enable crowdfunding in Bahrain and the launch of its regulatory fintech sandbox to test and prototype fintech concepts and solutions, the Kingdom is certainly boosting up its efforts to become an SME-friendly ecosystem.