Birth of Venture Capital in the Arabian Gulf

On February 20-22nd, 2006, a historic gathering of the nascent Venture Capital and Private Equity industry of the MENA region was organized in Manama, Bahrain under the auspices of the newly formed Gulf Venture Capital Association (GVCA).  What's the big deal?  Afterall there are so many events happening in the region that are just talk with little substance.  Well this event apparently turned out to be something special.

According to Jerry Borrell of Private Equity Week, who attended the event, at least 21 new funds were announced, ranging in size from $28 million to over $10 billion.  Interestingly the focus was on investing in regionally-founded, regionally-run and regionally-operated funds.  Little interest was shown on raising funds for American or European venture funds.  PE Week also projects that funds from the Gulf region will raise at least $17 billion by the end of 2006 which could pass the total of all new PE funds being raised in Asia (inclusive of China and India)!

So will the GVCA live up to its purpose?  Only time will tell.  We certainly pray and hope that the GVCA will not just wither away, but play a sustained critical role in developing the financial engine of an entrepreneurial, innovative regional economy.

Comments

[Mohamed Ali Vaid]

While this is encouraging, one has to wonder where the funds will be invested. Do we believe the opportunities for venture backed entities is larger in the MENA region as compared to India and China combined? In which sectors and entities will the estimated $17 Billion be invested? With such gaudy numbers thrown about, it would be prudent to guard against exuberance which could lead to investments in dubious projects.

[Rafi-uddin]

On guarding against exuberance, certainly the fundamentals of viable opportunities is key. Our hope is that the growth and proliferation of a VC culture would drive entrepreneurs to expand opportunities.

The question is, will entrepreneurs build upon this financial engine to develop regional and global solutions? Will this trend drive a Silicon Valley style innovation culture? Will the entrepreneurs of the region begin to think big in solving the needs of a global audience base?

[Mumby]

I think most of the capital should be invest to east region.It is part of the world on good growing in the future.There is big number of consumer and countries ongoing in development ...it is amazing the center of economy will move from west to east.