Funding is a crucial part of any company’s development and growth. There are various options a startup can consider for financing, one of the most important and common options are venture capitalists.
What are venture capitalists?
Simply put, venture capitalists are private investors, acting as a firm, which gives funding to startups that usually have a higher potential for growth. Venture capitalists are more likely to find companies that are ready to launch but don’t have the money to do so.
These venture capitalists make their decisions as a voting board most of the time.
Startups usually target venture capitalists at a stage where they’re just getting started and need a little push, especially if they’re considered a risky funding choice that most banks wouldn’t give a loan to. More importantly, it’s not a loan, it’s funding and entrepreneurs don’t have to pay them back if all doesn’t go so well.
What is the difference between angel investors and venture capitalists?
Upon understanding who venture capitalists are, you might feel slightly confused. While both angel investors and venture capitalists have a lot in common, the main difference between both is that venture capitals are usually a group of people, hence, a firm. They make decisions as a board and manage the investment as one as well.
In addition, investment cash is usually their money as partners in addition to other investors who invest in the firm itself.
Angel investors, on the other hand, are individuals that are willing to put their own personal money into a startup and support its growth.
Other than that simple detail, both are pretty much the same.
How do venture capitalists work?
Briefly, venture capitalists finance the entrepreneur’s idea with the expectation of a high ROI (by high ROI, we mean over 25% over the course of 5 years).
Because of how high of a risk such investments carry, they’re usually made up in groups: lead investor with a group of follower investors that make that decision and invest altogether.
It does happen that one venture capitalist makes the investment on their own, but that’s not the norm.
Why you should consider getting your funding from a venture capitalist firms: pros and cons
Funding is not the only perk of venture capital: there are many more reasons why you would consider it:
- Access to expert advice: VCs are usually experienced individuals in several different disciples.
- Extra resources: VC firms have more access to resources than you do, especially in legal matters.
- Connection: VCs are well-known in the business ecosystem, and they can connect you with whoever you may need, whenever you may need it.
Not to mention that no need to pay back your funding if things go south.
The only thing worth mentioning that is considered a disadvantage with VCs is that you lose full control and management of your firm as a result of equity. If you’re willing to give that away, you really don’t have that much to lose.
If you’ve started considering a venture capital firm now, you’re in luck: we’re about to tell you the top venture capital firms to choose from in the MENA region.
The Top 5 Venture Capitals in the MENA Region
500 Startups is generally a global firm but the MENA region is one of the areas they’re most interested in, which seems to be going really well since they are the most active capital venture firm in 2019.
Generally speaking, 500 Startups were founded in 2010 by Dave McClure, and 500 Startups MENA was co-founded in 2014 by Hasan Haider.
500 Startups is a venture capital firm with interest in several regions as well as several industries. They provide seed funding and help startups through an accelerator program after they receive their fund.
2. Middle East Venture Partners
Founded in 2010 by Walid Hanna, MEVP is a venture capital firm based in Dubai that is focused on early and growth stages in the Middle East region. MEVP shows interest in technology companies.
Being one of the largest venture capitalists in the region, they have offices in 6 countries so far.
3. Wamda Capital
Wamda Capital was founded in 2014 by Fadi Ghandour with current base offices in Amman and Dubai. Wamda Capital is interested in growth-stage technology companies that show potential for high growth.
4. IM Capital
IM Capital was founded in 2016 and is currently based in Beirut. Not only do they provide venture capital, but they also provide equity guarantees and technical assistance in addition to investment tools and support.
IM Capital works as incubators, accelerators, and angel investors and shows interest in early-stage businesses.
5. Modus Venture Capital
Modus was founded in 2015 by Kareem Elsirafy and is based in all three of New York, Cairo, and Dubai with even more offices in Los Angeles.
Modus is a venture capital and operating firm that both invests in and partners with companies as they provide them with unique opportunities that support their growth.
It is fairly easy to apply for a venture capital firm’s fund, and now that you know your firms, what are you waiting for? Go grow your business!