Driven By Impact: Transform VC Wants To Help Create 1,000 Middle Eastern Billionaires In America By 2040
Together with his two partners, Muna AbuSulayman and Rama Chakaki, Raed Masri hopes that the work Transform VC that does will become a pillar of support for enterprising individuals with Middle Eastern roots looking to build businesses in the US.
When creating Transform VC, a Silicon Valley-based venture capital (VC) investment and advisory firm, its co-founder Raed Masri utilized a goal-setting system developed by investor John Doerr called OKR, which stands for an objective, and a key result that is measurable and time-bound. "Our O is to be impactful and influential where it matters the most, in Silicon Valley," Masri says, during our meeting at the Grand Plaza Mövenpick Media City in Dubai. "Our KR is to help create 1,000 Middle Eastern billionaires in America by 2040."
Together with his two partners, Muna AbuSulayman and Rama Chakaki, Masri hopes that the work Transform VC that does will become a pillar of support for enterprising individuals with Middle Eastern roots looking to build businesses in the US. "We have always said that the maximum one can achieve is their ambition, so we had to put an ambition that is crazy enough that we might get laughed at, but then back it with a plan that we can actually execute on," Masri says. "One thing that is true about Silicon Valley is that it's a high velocity environment, so minorities by age, gender, race, pedigree, or anything else usually get filtered out very quickly. So, we have a special affinity towards those people who are generally overlooked and dismissed by others, especially the Middle Easterns in America."
Besides Middle Eastern founders who are starting up in the US for the first time ever, the Transform VC team also aims to support entrepreneurs who have already passed what Masri describes as "the Silicon Valley test." "We call it the Silicon Valley test, because it means that they already have an Ivy League PhD or a multi-million dollar exit [in the US], and they gravitate towards us for different reasons, that whole sense of camaraderie, because most MENA entrepreneurs in America want to give back, and we are providing that platform," Masri explains.
With this, Masri also aims to change a cultural narrative around entrepre- neurship in Middle Eastern communities. "In our society, it's very well accepted to go to the US or Canada, spend 5-15 years studying engineering or medicine, and come back, but it's not accepted if you go there to build a business for the same amount of time," he says. "That's considered brain drain. I want to push back on that, and say that our entrepreneurs will go there and spend time with the best, which is better than going to school. The second thing is that our people can become really impactful, not only in the US, but also here. We all come back, because we all have that sense of camaraderie and we all want to help."
Raed Masri, co-founder, Transform VC. Image courtesy Transform VC.
But this is not to say that Transform VC doesn't have commercial objectives to fulfill as well. "All things being equal, we need to add value as much, if not more, as any other VC, but we don't just invest in others, we also create ventures of our own, meaning that we found and co-found companies with smart people," he explains. As such, entrepreneurs who are able to combine talk with action -with action being the most important element- are the kind of founders that Transform VC looks for, AbuSulayman says. "We look for opportunities that exhibit deep technology, network effects, and a 10x advantage over the next best product, and entrepreneurs who are willing and able to move to the USA without any guarantees of success or receiving funding," she says. Masri adds, "We believe that if you have a theme, you are already too late. You should not have preconceived notion, because if you have it, guess what, others do too. We want to be vowed and mesmerized, and the three things that hold true are network effects, 10x advantage, and technology. We need to see at least two of the three."
In an effort to support female entrepreneurs, Chakaki notes that Transform VC is, by its very design, structured to engage, evaluate, and invest in women-led ventures that are challenging biases in the tech sector. "There's a lot to unpack, as women face challenges at large in the workplace, add to that the tech sector's VC landscape that has been biased to male-led ventures and leadership styles," Chakaki says. "We have senior female partners who lead the evaluation and selection of startups, and they are attuned to the unique insights in the problem-solv- ing and value that female-led tech ventures may bring. Once selected, we are able to support them through training, networking, and mentorship with women in leadership positions they can learn from."
Masri's entrepreneurial journey is an interesting story in its own right- he is a Canadian of Palestinian and Jordanian descent, and he's an electrical engineer and entrepreneur who's founded five startups so far. "My first startup was basically a spin-out of my fourth year engineering project called The Nortel Case Competition, and I created a booking website for appointments for different service providers, from doctors to dentists to lawyers, but because I was self-funded, I decided to focus on what appeared to be the simplest industry- the hair salon industry," Masri recalls. "But I learned very quickly that, in 2000, hair salons were very techphobic. That is a very important business lesson- no matter how good your product is, if you can't distribute it, it'll be hard. Despite all of this, we managed to sell a few hundred of these softwares, and I learned the second important business lesson, which is the importance of the recurring revenue. We had none of that. I would sell a software, and that was it."
Rama Chakaki, Partner,Transform VC. Source: Transform VC
But it was through this experience that Masri honed his sales skills, which served him well some years later when he approached a senior executive at Bell Canada, the country's largest telecommunications operator, to offer a new service that eventually led him to conclude a multi-million dollar contract with the company. "For the first time in my life, my bank account started going up, and I realized that telecoms were the way to go," Masri says. "I also learned that it's actually easier to sell a multi-million dollar contract, which took me a few hours, than to sell US$5,000 software, which took me days and months. That was a lesson- an owner of a hair salon is giving you money out of his own pocket, whereas an executive is giving you a number out of a spreadsheet somewhere. He doesn't really feel it."
In 2005, Masri went to Florida in the United States, and, within the first three days, he discovered sim card options with no long-term contract obligations, and decided to bring that concept back to Canada. "Soon enough, I started lobbying with the Government of Canada, and in 2007, they issued a new public policy to put 90MHz of spectrum on auction for new internet providers. For that, my goal was to raise $800 million, and that is when I learned the lesson that if you have a good idea, everybody is reachable. There's a billionaire out there who wants to hear it. Also, when you're trying to raise $800 million, millionaires can't help you, you need to talk to billionaires. I learned a lesson that it's equally easy and equally hard to raise $1 million, as much as it is to raise $800 million. You just have to convince someone." However, Masri's bid at the action ended up not being high enough, which he today describes as "his most spectacular failure," but that changed the following year. "I bid for inflight internet successfully, and that's how I became an exclusive provider of inflight internet in Canada, so any airline flying over Canada had to get its connectivity from me- by law," Masri says.
After successfully exiting the company that offered inflight internet across Canada, Masri then became a part of the founding team of Mubadala Capital Ventures in Silicon Valley. "The intent initially was to launch Transform VC, with Mubadala being our anchor investor, but that turned into something else, and became Mubadala Capital Ventures. I learned though that experience, and a few years later, I left to start Transform VC." Masri notes here that the entrepreneurial ventures that Transform VC is looking to support should be the tech equivalent of well-accomplished Middle Eastern individuals, such as Oscar-winning Egyptian American actor Rami Malek, Egyptian professional footballer Mohamed Salah, or the first Arab American woman to win Miss USA, Rima Fakih Slaiby.
Muna AbuSulayman, Partner, Transform VC. Source: Transform VC
Keeping this in mind, Masri says that Transform VC is building a system that is expected to create entrepreneurial success stories in a more predictable fashion. He proudly lists the Middle Eastern entrepreneurs who are already part of his portfolio, such as Noor Agha, founder of social commerce startup Flip, Aly Orady, founder of the artificial intelligence (AI)-powered smart home gym Tonal, and Hassan Sawaf, founder of Aixplain, a company that delivers AI solutions to businesses 2x faster and cheaper. To date, Transform VC has deployed $104 million through 44 investments, including in six unicorn companies. "We have done quite well," Masri says, explaining that the fund's big 2040 vision is chunked into shorter-term plans. "If we can help create 10 billionaires in seven years, and instill in them our values to pay it forward, help others, and strive for excellence, and then those 10 create new 10 in another seven years, and so on, that will be our thousand."
Investors in the Transform VC fund, Masri explains, want exposure to cutting-edge technology, but they are patient enough to allow enough time for ventures to be built. "These things are not overnight," he says. "If you are looking for a quick exit, this is not for you, but if you want to be a part of shaping the future and making a lot of money, patiently, then this is for you." AbuSulayman adds that Transform VC investors look for extraordinary financial returns, but they also wish to economically empower Middle Eastern founders in Silicon Valley, "or those we can help bring to Silicon Valley, so they can crack the code in weeks instead of years on their own."
As such, the three co-founders of Transform VC say they will work to build up the confidence of the founders of its portfolio companies. "Be ready to risk it all- you need to push forward without guarantees of success or funding, so be creative to convince people (customers first) you are the next underdog that will create wonders," says AbuSulayman. Chakaki adds that searching for the right product-market fit is crucial. "Obsess over finding the customer need, and focus on perfecting your communication skills by listening first, then speaking with the right messages to the right audience," she notes.
Image courtesy Transform VC.
In conclusion, Masri adds that hearing no's is an inevitable part of any entrepreneurial journey. As such, the two main facets entrepreneurs must have to ensure the success of their startups are determination and ambition. "I want people to know that anything is possible if you apply yourself," he says. "If you are sufficiently determined, and you have a big enough ambition, you can accomplish anything you want. There's no reason why we [MENA entrepreneurs] can't have a global impact." And Masri is betting on this to be a reality- as he put it: "I truly believe that the next Elon Musk will be one of us [MENA entrepreneurs], and our goal is to create one thousand of those by 2040."