What do Gigi Hadid, Rami Malek and Ahmed Zewail have in common?
Apart from being at the top of their game - modeling, acting or as a Nobel laureate - they are Americans of Arab descent.
For Raed Masri, a venture capital investor in Silicon Valley, these rare phenoms are testament to a disturbing reality: "They're one-offs. They're not the product of a system," he told The National.
The founder of Transform VC, Mr Masri has built his fund to be a system that identifies and invests in technology entrepreneurs that may have been dismissed by early investors, with an “affinity” for putting its money toward founders with Middle Eastern roots.
Transform VC has made $82 million worth of investments into 40 start-ups and $117m into 11 other funds. The aggregate value of the companies in its portfolio is $4 billion, with an internal rate of return, an estimate of profitability, of 45 per cent.
Mr Masri has bet on some of the biggest success stories from a sliver of the US's 3.7 million Arab American population and he believes there is a rising generation from the Arab world who should also get a shot at Silicon Valley.
The fund has backed Dubai serial entrepreneur Noor Agha, who founded a social commerce network to improve online shopping called Flip Fit. It has also supported Khaled Hassounah, who went to university in Jordan, founded Ample, which uses robotics and new kinds of batteries to provide on-demand charging to electric vehicles. The company counts Shell as an investor and Uber as a customer.
Ultimately, Mr Masri is interested in founders willing to compete “where it matters most”: Silicon Valley. To him, it is still the best place to hone talent.
“I don't think Mohamed Salah was the best Middle Eastern soccer player ever,” he said, to illustrate his point. “I think there were much better players than him except they were stuck in the local or regional leagues. Had they gone where it matters most, they could have met or surpassed what Mohamed Salah has accomplished.”
Mr Masri, who was born in Jordan and raised in Saudi Arabia, went to college in Canada, where he got his start in technology companies.
In Canada, he founded SkySurf, an inflight communications company that exited to GoGo Inflight, the world’s largest inflight wi-fi provider.
He then moved to California.
In the US, he was a founding team member at Mubadala Ventures in San Francisco, and in 2015 he launched Transform VC.
The fund looks at “Middle Eastern descent or immigrants from the Middle East”, he said, “because that represents me.”
Another portfolio company of Transform is Subspace, founded by Iranian-American Bayan Towfiq, which touts itself as the world’s fastest internet network, and has multi-player games like Fortnite as customers.
Why are we trying to constrain people who are, by nature, innovative?
Mr Masri has an aim that sounds more like a catchphrase: he wants to impact a billion people and make a billion dollars through Transform VC.
This may rub some the wrong way, who view Transform VC’s strategy as contributing to the region’s brain drain - a migration of the highly-skilled and educated people from developing home countries to developed countries, even recognised by the United Nations as a threat to regional prosperity.
But he said this is a short sighted view.
“Why are we trying to constrain people who are, by nature, innovative? If they don't come back, that's fine. Maybe there'll be a landing spot for the next person to go to America.”
Rama Chakaki, an equity partner in Transform VC, who has a long track record of mentoring start-ups in the UAE and elsewhere in the Middle East, is more specific.
“I think that we've all recognised that Transform could be much stronger by having the pipeline of entrepreneurs that are beginning to shine in the region, and can have a landing place in Silicon Valley,” she said.
After spending significant time in the UAE and other places in the Middle East serving on the board for non-profit TechWadi and as a judge for the MIT Enterprise Forum, Ms Chakaki has witnessed firsthand the growth of entrepreneurship and access to capital. But it is still limited and too reliant on not-for-profit models, she said, which is why she sees a place for Transform VC.
She is also encouraging the fund to think outside of the typical founder profile, who is still likely to be male and educated in North America.
"We're thinking, how can we not just support a small pocket of people who have access to the current accelerators, but the refugees, the marginalised communities, the massive amounts of women who are otherwise left behind?"
To that end, Transform VC encourages cold pitches, and has a form on its website for founders to get in front of one of the fund's partners.
Of course, the form is also in Arabic.
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UAE currency: the story behind the money in your pockets
Company profile
Name: Back to Games and Boardgame Space
Started: Back to Games (2015); Boardgame Space (Mark Azzam became co-founder in 2017)
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Industry: Back to Games (retail); Boardgame Space (wholesale and distribution)
Funding: Back to Games: self-funded by Mr Azzam with Dh1.3 million; Mr Azzam invested Dh250,000 in Boardgame Space
Growth: Back to Games: from 300 products in 2015 to 7,000 in 2019; Boardgame Space: from 34 games in 2017 to 3,500 in 2019
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
TOURNAMENT INFO
Women’s World Twenty20 Qualifier
Jul 3- 14, in the Netherlands
The top two teams will qualify to play at the World T20 in the West Indies in November
UAE squad
Humaira Tasneem (captain), Chamani Seneviratne, Subha Srinivasan, Neha Sharma, Kavisha Kumari, Judit Cleetus, Chaya Mughal, Roopa Nagraj, Heena Hotchandani, Namita D’Souza, Ishani Senevirathne, Esha Oza, Nisha Ali, Udeni Kuruppuarachchi
Types of fraud
Phishing: Fraudsters send an unsolicited email that appears to be from a financial institution or online retailer. The hoax email requests that you provide sensitive information, often by clicking on to a link leading to a fake website.
Smishing: The SMS equivalent of phishing. Fraudsters falsify the telephone number through “text spoofing,” so that it appears to be a genuine text from the bank.
Vishing: The telephone equivalent of phishing and smishing. Fraudsters may pose as bank staff, police or government officials. They may persuade the consumer to transfer money or divulge personal information.
SIM swap: Fraudsters duplicate the SIM of your mobile number without your knowledge or authorisation, allowing them to conduct financial transactions with your bank.
Identity theft: Someone illegally obtains your confidential information, through various ways, such as theft of your wallet, bank and utility bill statements, computer intrusion and social networks.
Prize scams: Fraudsters claiming to be authorised representatives from well-known organisations (such as Etisalat, du, Dubai Shopping Festival, Expo2020, Lulu Hypermarket etc) contact victims to tell them they have won a cash prize and request them to share confidential banking details to transfer the prize money.
* Nada El Sawy
