This Silicon Valley fund wants pitches from the Middle East
Transform VC has backed Dubai serial entrepreneur Noor Agha, among others who make up the Arab diaspora
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.
Updated: March 3, 2021 08:22 AM