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REPORT 2015 vol. 6
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Tom Baruch
Formation 8
Brian Dovey, Chairman
Domain Associates
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Emergence Capital Partners
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Agile Equities, LLC
Audrey MacLean
Stanford University
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Aligned Partners
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Fidelity Biosciences
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1 Kauffman Fellows Report volume 6, 2015 www.kauffmanfellows.org © Kauffman Fellows Press
A Hybrid Venture Capital Model
for the Middle East
Tarek Sadi
Class 17
Youth unemployment in MENA,
according to the Skoll Foundation,
is around 26% and among certain
demographics it goes up to 65%.
1
Governments and large corporations are doing
everything they can to create jobs, but more is
needed. It is crucial that an efficient
and successful venture capital
industry be created to fuel further
economic growth, and therefore
employment. The frst venture capital funds
were launched in the Middle East and North
Africa (MENA) in 2010, a promising beginning. At
Endeavor, a global nongovernmental organization
committed to transforming world economies
by supporting the world’s most impactful
entrepreneurs, we believe more can be done to
build a successful venture capital industry in the
MENA region.
To understand the challenges for venture
capital and the best way to unlock its value in
the region, I conducted a series of interviews
with three distinct groups of stakeholders to
understand their perspectives:
1
Jamie McAuliffe, “Addressing the Youth Unemployment Crisis
in the Middle East,” Skoll World Forum, 9 April 2013, http://
skollworldforum.org/2013/04/09/addressing-the-youth-
unemployment-crisis-in-the-middle-east/.
1. Ten active family offces in the Middle East.
2. Five entrepreneurs who have raised capital in
the region and beyond.
3. Four venture capitalists who have been
actively looking for opportunities in the
region.
Having had the good fortune of being an
entrepreneur and an investor across three
continents before joining Endeavor, I have no
doubt of the power that entrepreneurs and
investors have when their interests are aligned.
In this article, I use the interview data to
explore how to accelerate the creation of new
venture capital funds in the Middle East, so that
entrepreneurship can achieve accelerated job
creation and economic growth.
The Situation on the Ground
Interviewees revealed three main
challenges to venture capital in
the Middle East and North Africa.
Lack of LPs
None of the potential LPs whom I interviewed
view venture capital as a viable asset class in
the region (even though four of the fve are
limited partners in U.S. funds, and understand
the asset class). Venture returns are unproven
in MENA, while returns from more
A Hybrid Venture Capital Model for the Middle East
2 Kauffman Fellows Report volume 6, 2015 www.kauffmanfellows.org © Kauffman Fellows Press
traditionally non-liquid assets in
the region, such as real estate, are
high—yielding in some cases 3x
in two years.
2
This investment environment
increases the opportunity cost for investors,
making local VC funds a less attractive asset.
All three family offces I interviewed also
raised the concern that there are few credible
VC investors in the region. According to the CEO
of one of the largest family-run industrial groups
in Saudi Arabia,
We see great fund managers when we invest as
LPs in the U.S. and Europe, but in the region I
have not come across fund managers that we
could back.…VC is not in the culture that we have
in the Middle East. Bring me someone who worked
for 10 years at Sequoia and I will back him.
3
Lack of Venture Capital Diversity
As of this writing, there are 15 venture capital
funds active in MENA. By country, these funds are
distributed as follows: Lebanon (3), Jordan (4),
Saudi Arabia (3), UAE (3), and Egypt (2). Only
three of these funds invest signifcantly on
a regional level (Wamda, MBC Ventures, and
STC Ventures). The relatively small
number of funds operating in
each country allows for active
cooperation among the funds, to
the detriment of entrepreneurs.
Entrepreneurs can face a barrier when
raising capital, as term sheets are often
standardized across the funds and therefore very
tough. According to Ghaith El Yaf of ScoopCity, a
daily deal website and online retailer targeting a
high-end demographic, the term sheet they got
while raising their Series A round was punitive.
When they tried to negotiate, it was made very
clear that there was no room to maneuver:
Either they accepted the provision to guarantee
the returns to the VCs through a put option, or
they would not get the investment. The second
fund they went to did exactly the same.
4
2
Interview with CEO of leading family-run business in Saudi Arabia,
22 April 2014.
3
Interview with CEO of leading family offce in the Middle East, 22
April 2014.
4
Ghaith El Yaf (founder of ScoopCity), interview, 15 May 2014.
Once the investment is made, entrepreneurs
usually fnd little value-add from their VCs.
According to Rabih Nassar of Element N, “I saw
my investors on the day we signed, and since
then I get a call every few months asking me
how things are going; beyond that, there is
no interaction.”
5
This was a recurrent theme
across the fve interviews I conducted with
entrepreneurs. This VC situation de-motivates
entrepreneurs and can act as a deterrent to
launching new businesses.
Limited Pipeline
Although there is increasing momentum in
entrepreneurship in the Middle East, quality
startups and scale-ups in the
market are few. Since 2007, there have
only been three major success stories—the
acquisition of Maktoob by Yahoo! in 2009 at
an estimated $164 million,
6
the acquisition of
Diwanee by Webedia for an estimated $30 million
(including $5 million in capital increase),
7
and
the acquisition of Talabat by Rocket Internet for
$170 million.
8
International investors have also
made two sizable Series C investments (Sooq.
com, Marka VIP).
Five years after Yahoo acquired Maktoob,
Webedia recognized that Diwanee was a well-
run business with a clear vision and strategy,
and that at the time, it was MENA’s only digital-
content business run at a global standard. The
core of Diwanee’s successful acquisition (i.e.,
the global standard) existed because of the
rich experience of the company’s founders and
team. Theirs is a rare case in the region, as
most entrepreneurs have only a
few years of experience before
launching their own businesses. In
another of these fve successes—Marka VIP—the
5
Rabih Nassar (CEO of Element N), interview, 9 May 2014.
6
CrunchBase, “Yahoo! / Maktoob,” 26 February 2010,https://www.
crunchbase.com/acquisition/0be25f0c9e835122ae9d68b3980fdf48.
7
Nina Curley, “Majority Stake in Diwanee Acquired by Paris-based
Digital Publishing Company Webedia,” Wamda, 19 March 2014, para.
2,http://www.wamda.com/2014/03/diwanee-acquired-by-paris-
based-digital-publishing-company-webedia.
8
Lucy Knight, “Rocket Internet Acquires Kuwait’s Talabat for $170M,
Largest MENA Tech Acquisition since Maktoob,” Wamda, 11 February
2015,para. 1,http://www.wamda.com/2015/02/rocket-internet-
acquires-kuwaits-talabat-for-170m-largest-mena-tech-acquisition-
since-maktoob.
Kauffman Fellows Report, vol. 6, 2015
3 Kauffman Fellows Report volume 6, 2015 www.kauffmanfellows.org © Kauffman Fellows Press
founder had seven years experience at Zazil in
the Bay Area before returning to the Middle East.
Local MENA funds I talked to argued that
without a stronger pipeline, it is hard for them
to give better terms and be more hands-on with
their portfolio companies. According to Antoine
Boustany of Saned Investments,
We want to support our investments more
actively, but investing in a large number of small
early-stage opportunities makes it very diffcult to
do so from the start. As we start seeing outliers,
we start honing our efforts on them.
9
Interviewees revealed that governance in
the funds I spoke to is often weak, and GPs
do not have to demonstrate to their LPs how
much effort they put in to supporting portfolio
companies. With more engaged LPs, however,
this relationship will change.
Leverage Points for Change
The interview data on barriers to
successful venture capital growth
in the region can be summarized as follows.
1. LPs do not see VC as a strong investment
compared to other opportunities.
2. LPs would prefer to back more experienced
VCs.
3. VCs do not fnd quality opportunities that they
can easily exit, so they protect their capital by
over-structuring.
4. Entrepreneurs are generally not experienced.
5. Entrepreneurs often get poor deals because
there is not enough VC diversity to create a
competitive funding marketplace for them.
To accelerate job creation and innovation
in the region, venture capital frms need better
access to both capital and opportunity. While
most potential LPs are reluctant to invest in
venture in the region, an added incentive to
compensate for the lack of current returns could
unlock this capital.
As most of these LPs are family offces
tied to businesses that specialize in specifc
sectors, VCs should build funds
that are relevant to these family
businesses in order to add a
strategic component that will
9
Antoine Boustany (Managing Director of Saned), interview in Beirut,
Lebanon, 14 May 2014.
compensate for the lower returns they are
currently perceived to yield. In other words,
GPs should position themselves as “outsourced”
corporate VCs to these family offces, with
transparent investment structures and
incentives for the VCs and the entrepreneurs.
Entrepreneurs will beneft because of the
support they can get from these groups and from
more specialized VC funds.
Of the 10 family offces that I spoke to,
7 mentioned that they already invest in and
acquire opportunities relevant to their core
businesses. On the other hand, all view startup
investment opportunities as too small and too
much work to make a difference to their core
business. When asked whether they would back
a fund that would help grow companies relevant
to their core industries, however, four of these
family offces said they would be interested.
It is important to note that some of these
groups have acquired companies in Europe to
gain their technologies, which they then use
in their core businesses. Investing in young
companies with specifc intellectual property
is therefore not a foreign concept to these
corporations, and blending this strategy with a
VC approach is worth exploring.
In the usual structure, LPs are mainly mutual
funds, pension funds, and insurance companies—
very different from the private equity funds
and strategic buyers that venture funds seek to
exit to. In the Middle East, however,
there is a challenging confict of interest. The
same groups that are potential
LPs are also the exit strategy for
investments in the region. Successful
venture capitalists must recognize and accept
this reality, and address the potential conficts of
interest.
A Hybrid Corporate VC Model
for the Middle East
At Endeavor, we believe successful
entrepreneurial ecosystems are created around
core competencies that are found locally,
leveraging local expertise and demand. Most
MENA startups to date have been clones of
successful U.S. and European models that focus
A Hybrid Venture Capital Model for the Middle East
4 Kauffman Fellows Report volume 6, 2015 www.kauffmanfellows.org © Kauffman Fellows Press
on consumers, with less attention given to local
market dynamics. While companies such as Marka
VIP and Souq.com (both in e-commerce) are
making around $100 million and $400 million in
revenue per year, respectively, no other digital
businesses in MENA have yet reached that level
of scale in terms of revenues or subscribers.
The VCs and entrepreneurs I interviewed
stated that this lack of momentum is due to
limited exit opportunities. As discussed above,
exit routes are unclear in the region, making
it diffcult to fnd additional funding beyond
Series A. According to Antoine Boustany of Saned
Ventures, a pan-regional seed stage investor, a
number of their portfolio companies are limited
in their follow-on investment options, straining
the resources of seed investors trying to fnance
their growth. This barrier to scale-up in turn
limits the creation of new companies, and thus
the momentum around entrepreneurship is less
than desired.
A model that aligns startups
with the needs of the region
would also align innovation with
the requirements of the large
corporations in MENA who
become the exit strategy for these
entrepreneurs. This model will help fuel existing
industries, increasing innovation in these
sectors and help to create sustainable, long-
term economic growth. Furthermore, as more
companies from MENA expand into Africa and
South Asia, this “outsourced” innovation will
become an important source of competitive
advantage in new markets.
Upon preliminary analysis, four sectors in
MENA have built considerable expertise and
compete both locally and globally. These sectors
would most beneft from such a hybrid VC model:
oil and gas, warehousing and logistics, food
manufacturing, and construction.
By partnering with VCs who tailor their
portfolio to local needs, MENA’s leading
corporations will beneft from new sources of
innovation and agility, while strengthening the
competitiveness of their business at a global
level. As Palo Alto is a global tech hub, Dubai can
become a global hub for innovation in logistics.
As Boston is today a global hub for life sciences,
Khobar in Saudi Arabia can become a hub for
innovation in oil and gas. Instead of importing
technology and innovation, these regions
can export it. This shift has the potential to
transform the MENA region and its economies.
Case Studies
Existing examples of local innovation helping
regional businesses grow indicate a real need for
innovation by acquisition. Two case studies of
recent successes illustrate the potential of this
hybrid VC model.
Aramex and InfoFort
InfoFort was launched in 1999 as a document and
data storage startup in Dubai. By 2001, it had
expanded into Egypt where it quickly became the
leading data-management company. Aramex, the
leading regional courier business, was developing
a strong offering in terms of warehousing and
logistics, and saw InfoFort as an opportunity
to leverage its infrastructure further while
developing a deeper relationship with its clients.
Aramex acquired InfoFort in 2005 and rolled it
out across MENA. Today, InfoFort is the leading
data management company in the Middle East
and Africa, and a core offering of Aramex.
10
If InfoFort had had VC support from launch,
however, it could have scaled up faster and
yielded a better return for its investors. This
difference would in turn have allowed Aramex
to expand its footprint and new service more
aggressively.
Abdul Latif Jameel (ALJ) and Marka VIP
ALJ, the leading car distributor in Saudi Arabia,
invested an estimated $40 million in Marka VIP,
a leading regional e-commerce business. This
investment was strategically important for Marka
VIP to leverage ALJ’s know-how of the Saudi
market. For ALJ, a company based on consumers
in the Middle East, access to the knowledge
developed at Marka VIP gives it a unique insight
on how to evolve its relationship with its
customers online as the region becomes more
connected.
11
This access would have been very diffcult
for ALJ to achieve on its own without acquiring a
10
Endeavor Lebanon sources; Riad Ghandour (investor), interview,
5 May 2014.
11
Endeavor Lebanon source; I am also a seed investor.
Kauffman Fellows Report, vol. 6, 2015
5 Kauffman Fellows Report volume 6, 2015 www.kauffmanfellows.org © Kauffman Fellows Press
share in a business that had built this expertise
over the previous years. By investing in Marka VIP
and gaining insight into the e-commerce world,
ALJ will be able to learn more about the sector,
gain expertise around e-commerce execution,
and potentially identify ways to beneft its core
business. With its investment, ALJ acquired
innovation while funding a leading regional
scale-up.
Real-Life Potential
Both of these examples, albeit very different,
show the importance of entrepreneurship
to corporations in the region and highlight
the symbiotic relationship that governs
innovation in the Middle East. In the hybrid
model proposed here, VCs focus on exploiting
that dependency, which allows them to
quickly demonstrate to investors the returns
that innovation can yield in a region where
the true power of entrepreneurship has
traditionally been underestimated. This access
to innovation on a local level will help to fuel
the creation of new funds and drive investors
to back them, as these same LPs
will not only benefit financially
from their investment but also in
kind as entrepreneurs help their
companies innovate. At Endeavor,
we are adamant that the key to reducing
unemployment in MENA is leveraging the fnancial
reach of large regional businesses.
Next Steps for MENA Entrepreneurship
This preliminary idea will beneft from further
analysis, such as an investigation into each of the
named sectors to understand their potential and
requirements. There are also clear conficts of
interest in this model that need to be addressed,
primarily, how to encourage LPs to pay to build
something they will most probably end up buying
themselves. Nonetheless, the potential
returns are inspiring, both for
individual stakeholders and for
the region as a whole.
As part of Endeavor, my goal is to encourage
companies in the region to play the crucial role
of funders and acquirers of innovation. Like
Aramex and ALJ, by having access to the right
entrepreneurs they can evolve their groups and
compete on a global level. We intend to help
grow MENA startups into successful companies,
and to align with—instead of against—the
business culture of the region, by offering
professionally managed VC funds that cater to
the region’s LPs in their roles as both investors
and acquirers.
Existing VC funds in the region have helped
created a fertile ecosystem where entrepreneurs
view building world-class companies as a viable
professional path. Today, a small number of
growth funds are being created by those same
GPs looking to fnance their best portfolio
companies through their next investment
rounds. Funds such as Wamda, Beco, iMena,
Sadara Ventures, and Leap are targeting bigger
tickets across the region, which will encourage
more traditional capital such as high-net-worth
individuals and family offces to engage in VC.
In my opinion, this growth will be a catalyst for
exits in the region, creating further confdence
in LPs who will continue fueling creativity and
innovation in a region that is trying to diversify
its resources and income. By waking these
“sleeping giants” with the promise of global
investment opportunities in their backyard, VCs
will help the Middle East and North Africa to curb
its unemployment time-bomb.
Tarek Sadi
Tarek is the Managing Director of
Endeavor Lebanon, an economic
development nonproft focused
on supporting outperforming
entrepreneurs to create jobs and transform
economies. He has extensive experience in venture
capital and corporate fnance in the Middle East,
Europe, and Latin America. Tarek also launched
and exited two startups in Mexico. He holds a BS in
political science and economics from Georgetown
University, and an MBA from London Business School.
Kauffman Fellow Class 17. [email protected]
Singularity and Growth in Latin America:
Nine Drivers of Category-Leading Companies
Ariel Arrieta • In describing these drivers, the author
demonstrates that Latin America is ripe for the development
of a new crop of category-leading, $1+ billion companies.
Three potential threats to that development exist, but can be
overcome by following some key strategies.
Kauffman Fellows on the Science of Capital
Formation
Phil Wickham • To describe the unique contribution of
Kauffman Fellows to the venture capital ecosystem, the
author introduces a Startup Capital Hierarchy of Needs.
While fnancial capital and intellectual capital are most often
discussed, three other “shadow” capital types are needed for
success.
The Kauffman Fellows Report is available for redistribution.
Contact us if you’d like to make this volume available to your community of practice. [email protected]
A Hybrid Venture Capital Model for the Middle
East
Tarek Sadi • Based on interviews with MENA family offces,
entrepreneurs, and VCs, the author identifes three unique
challenges to venture capital in the region. His hybrid VC
model aligns entrepreneurial efforts with the requirements of
the region’s large corporations that are both its LPs and exit
strategies.
The Evolving Landscape of the Life Sciences
Sector: New Approaches in Therapeutic R&D
Daniel Janiak • The core components of a rental economy
are infltrating the historically closed drug discovery and
development ecosystem. The author describes fve specifc
catalysts fundamentally altering how new therapautics are
discovered and developed, and by whom.
Benchmarking VC Investment Ecosystems:
A Data Model
Ajit Deshpande • VCs need a way to aggregate activity in
their surrounding ecosystem, as an ongoing benchmark to
measure their own performance. The author shares a simple
model to help a VC frm become increasingly agile over time—
and in the process, help the industry optimize investments.
Rebooting Basic Healthcare in Brazil:
Thinking Outside the System
Thomaz Srougi • This story of dr.consulta describes one
man’s incredible effort to create an agile, high-quality,
humane, and affordable solution to Brazil’s healthcare crisis.
dr.consulta clinics have served 150,000 uninsured families,
and they are scaling toward 300+ clinics and 30 million
medical visits per year.
Facilitating Pharmaceutical Licensing into
Russia
Kenneth Horne • Two Kauffman Fellows analyzed and
then ventured into the Russian pharmaceutical licensing
landscape. The author recounts how their efforts
resulted in the creation of a frm, Ruphena, to match and
facilitate license negotiations between Russian and U.S.
pharmaceutical companies.
Jumpstarting Medical Device Innovation:
New Incentives Create VC Opportunities
Anh Nguyen • Early-stage funding is a key element in the
translation of medical knowledge into successful therapies.
Recent federal regulation changes make non-dilutive funding
available for clinical trials, reducing uncertainty for investors
and offering a template to evaluate clinical value.
Outside the (Tech) Box: Successful Non-Tech
Venture
Trevor Thomas • A more sector-inclusive approach to
venture will be critical to capture value in the future, and
VCs are recognizing that innovation and scalability are not
necessarily linked to technology. The author describes the
shifts and factors that make non-tech venture both possible
and proftable.
Venturing into the Industry:
Lessons Learned from a VCpreneur
Ahmad Takatkah • What does it mean to disrupt the
venture capital industry using an entrepreneurial mindset?
The author shares his experience as a “VCpreneur” and the
founder of VenturePicks, and analyzes the potential effects
of crowdfunding on the venture ecosystem.
MENA’s Internet Industry: The Opportunity,
Challenges, and Success Stories
Khaldoon Tabaza • Internet business growth in emerging
markets follows a pattern—growth, infection point,
hypergrowth. The author gives specifc advice for successful
investment in the Middle East and North Africa, and assesses
the top three markets that are poised for hypergrowth —and
$1+ billion companies.
Table of Contents for Kauffman Fellows Report Volume 6
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.406 Ventures • 212 Ltd. • 3i • 3M New Ventures • 500 Startups • 5AM Ventures • Aberdare Ventures • Abraaj Capital • Accel Partners • Accelerator Corp. • Acumen
Fund • Advanced Technology Ventures • Advent International • AES Corporation • Africa Angels Network • Agency for the Promotion of Innovation (Italy) • Alliance
Technology Ventures • ALMI Invest • ALPHA Associates • Alsop-Louie Partners • Alta Partners • Amadeus Capital Partners • Amgen • Andes Capital • Andreessen
Horowitz • Angel Ventures Mexico • Angeleno Group • Angels Forum • Apax Partners (Patricof & Co.) • Applied Ventures • Aquilo Capital Partners • ARCH Venture
Partners • Archangel Informal Investment • Ascend Venture Group • Ascension Ventures • Asia United Capital • Astrec Invest • Atlantic Bridge • Atlas Venture • Austin
Ventures • Austral Capital • BADIR Program • Baroda Ventures • Battelle Ventures • Battery Ventures • Bay City Capital • BBC Worldwide • BDC Canada • Biotechnology
Value Fund • BioVentures Investors • Bloom Equity • Blue Chip Venture Company • Blueprint Ventures • Bridgescale Partners • Broad Institute • Brown Savano Direct
Capital Partners • Burrill & Company • CalCEF Clean Energy Angel Fund • Canaan Partners • Capital Indigo • Carbon War Room • Cardinal Partners • Carlyle Group,
Brazil • Centennial Ventures • Central Texas Angel Network • Chicago Ventures • CID Equity Partners • Cisco • CITIC Capital • Citrix Startup Accelerator • Clearstone
Venture Partners • Clovis Oncology • CMEA Ventures • Cocoon Ventures • Comcast • Core Innovation Capital • Correlation Ventures • Creandum • Credo Ventures •
Crescendo Ventures • Cromwell & Schmisseur • CSK Venture Capital • Databank Private Equity • DBL Investors • Dell • DFJ Network • Doll Capital Management •
Domain Associates • dPixel • Draper Fisher Jurvetson • Draper Nexus Ventures • Easton Capital • Eastpoint Ventures • EC1 Capital • Echo VC • EDF Ventures • EMBL
Ventures • Emergence Capital Partners • Endeavor Global • Endeavor Brazil • Endeavor Indonesia • Endeavor Jordan • Endeavor Lebanon • Endeavor Mexico •
Endeavor South Africa • Endeavor Turkey • Essex Woodlands Health Ventures • European Investment Fund • Evolution Equity Partners • Expansive Ventures • Fidelity
Biosciences • Finance Wales • Flagship Ventures • Flatiron Partners • Flywheel Ventures • Founders Fund • Fudan Univ. • Gabriel Venture Partners • Galicia
Investments • GE Ventures • Gemini Israel Funds • General Atlantic • Genesis Partners • Gerbera Capital • Global Environment Fund • Golden Gate Ventures • Good
Energies • Gotham Ventures • Granite Global Ventures • Gray Ghost Ventures • Greylock Partners • Groupon • Halo Fund • Hatteras Funds • Headwaters Capital
Partners • Highland Capital Partners • Houston Angel Network • HSBC Private Equity (Asia) • Hyde Park Venture Partners • IDG Ventures India • IDG Ventures Vietnam
• IE Business School/Vitamin K • IGNIA Partners • Imprint Capital • In-Q-Tel • INCJ • Indicator Capital • Innovationsbron • Institute for Venture Design • Intel Capital
• Intersouth Partners • Invest4Good • Itochu • Johnson & Johnson • Joseph Advisory SVCS • JP Morgan Partners • Jungle Ventures • Kansas City Equity Partners • Karlin
Asset Management • Kenda Capital • Kernel Capital • Keytone Ventures • Kickstart Seed Fund • Kitty Hawk Capital • Kleiner Perkins Caufield & Byers • Knight
Foundation • Komli Media • L Capital Partners • Latin Idea Ventures • Lehman Brothers • Lepe Partners • Levensohn Venture Partners • Lilly Ventures • LSPvc • L
Venture Group • Magazine Luiza • MAKOTO • MASA Life Science Ventures • Matter Ventures • Maxygen • McMaster Univ. • Mercury Fund • MEST Incubator • Mid-Atlantic
Venture Funds • Ministry of Economy, Mexico • Mission Bay Capital • Mitsubishi • Morgenthaler Ventures • MPM Capital • NAFIN • National Semiconductor • NCB
Ventures • NDRC • New Enterprise Associates • NIC Costa Rica • Nokia Siemens Networks • NOLA Project • Northwest Energy Angels • Northwest Technology Ventures
• Northzone • Novartis Venture Fund • Nth Power • Nxtp.Labs • Oak Investment Partners • OKCupid Labs • Olympic Venture Partners • OMERS Ventures • Omidyar
Network • OneLiberty/Flagship Ventures • ONSET • Opus Capital • Oracle • Oxford Capital Partners • Pacific Community Ventures • Panorama Capital • Pennyslvania
Treasury Department • Physic Ventures • Playfair Capital • Prime Minister's Office, Singapore • Prism VentureWorks • ProQuest • Proteus Venture Partners • PTC
Therapeutics • QBF/QIC • Quaker Partners • Qualcomm Technologies • Radius Ventures • RBC Venture Partners • Red Abbey Venture Partners • Research Corporation
Technologies • Rice Univ. • Richard Chandler Corporation • Richmond Global • RiverVest Venture Partners • Riyada Enterprise Development • Robert Bosch Venture
Capital • Roll Global • RRE Ventures • Rusnano • Sadara Ventures • Safeguard Scientifics • Sandbox Industries • SAP Ventures • Sawari Ventures • Scale Venture
Partners • SEAF • Seaflower Ventures • Seedcamp • Sequel Venture Partners • Sequoia Capital India • Silas Capital • Sinbad Ventures • Skyline Ventures • Slated, Inc.
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A Hybrid Venture Capital Model
for the Middle East
Tarek Sadi
Class 17
Youth unemployment in MENA,
according to the Skoll Foundation,
is around 26% and among certain
demographics it goes up to 65%.
1
Governments and large corporations are doing
everything they can to create jobs, but more is
needed. It is crucial that an efficient
and successful venture capital
industry be created to fuel further
economic growth, and therefore
employment. The frst venture capital funds
were launched in the Middle East and North
Africa (MENA) in 2010, a promising beginning. At
Endeavor, a global nongovernmental organization
committed to transforming world economies
by supporting the world’s most impactful
entrepreneurs, we believe more can be done to
build a successful venture capital industry in the
MENA region.
To understand the challenges for venture
capital and the best way to unlock its value in
the region, I conducted a series of interviews
with three distinct groups of stakeholders to
understand their perspectives:
1
Jamie McAuliffe, “Addressing the Youth Unemployment Crisis
in the Middle East,” Skoll World Forum, 9 April 2013, http://
skollworldforum.org/2013/04/09/addressing-the-youth-
unemployment-crisis-in-the-middle-east/.
1. Ten active family offces in the Middle East.
2. Five entrepreneurs who have raised capital in
the region and beyond.
3. Four venture capitalists who have been
actively looking for opportunities in the
region.
Having had the good fortune of being an
entrepreneur and an investor across three
continents before joining Endeavor, I have no
doubt of the power that entrepreneurs and
investors have when their interests are aligned.
In this article, I use the interview data to
explore how to accelerate the creation of new
venture capital funds in the Middle East, so that
entrepreneurship can achieve accelerated job
creation and economic growth.
The Situation on the Ground
Interviewees revealed three main
challenges to venture capital in
the Middle East and North Africa.
Lack of LPs
None of the potential LPs whom I interviewed
view venture capital as a viable asset class in
the region (even though four of the fve are
limited partners in U.S. funds, and understand
the asset class). Venture returns are unproven
in MENA, while returns from more
A Hybrid Venture Capital Model for the Middle East
2 Kauffman Fellows Report volume 6, 2015 www.kauffmanfellows.org © Kauffman Fellows Press
traditionally non-liquid assets in
the region, such as real estate, are
high—yielding in some cases 3x
in two years.
2
This investment environment
increases the opportunity cost for investors,
making local VC funds a less attractive asset.
All three family offces I interviewed also
raised the concern that there are few credible
VC investors in the region. According to the CEO
of one of the largest family-run industrial groups
in Saudi Arabia,
We see great fund managers when we invest as
LPs in the U.S. and Europe, but in the region I
have not come across fund managers that we
could back.…VC is not in the culture that we have
in the Middle East. Bring me someone who worked
for 10 years at Sequoia and I will back him.
3
Lack of Venture Capital Diversity
As of this writing, there are 15 venture capital
funds active in MENA. By country, these funds are
distributed as follows: Lebanon (3), Jordan (4),
Saudi Arabia (3), UAE (3), and Egypt (2). Only
three of these funds invest signifcantly on
a regional level (Wamda, MBC Ventures, and
STC Ventures). The relatively small
number of funds operating in
each country allows for active
cooperation among the funds, to
the detriment of entrepreneurs.
Entrepreneurs can face a barrier when
raising capital, as term sheets are often
standardized across the funds and therefore very
tough. According to Ghaith El Yaf of ScoopCity, a
daily deal website and online retailer targeting a
high-end demographic, the term sheet they got
while raising their Series A round was punitive.
When they tried to negotiate, it was made very
clear that there was no room to maneuver:
Either they accepted the provision to guarantee
the returns to the VCs through a put option, or
they would not get the investment. The second
fund they went to did exactly the same.
4
2
Interview with CEO of leading family-run business in Saudi Arabia,
22 April 2014.
3
Interview with CEO of leading family offce in the Middle East, 22
April 2014.
4
Ghaith El Yaf (founder of ScoopCity), interview, 15 May 2014.
Once the investment is made, entrepreneurs
usually fnd little value-add from their VCs.
According to Rabih Nassar of Element N, “I saw
my investors on the day we signed, and since
then I get a call every few months asking me
how things are going; beyond that, there is
no interaction.”
5
This was a recurrent theme
across the fve interviews I conducted with
entrepreneurs. This VC situation de-motivates
entrepreneurs and can act as a deterrent to
launching new businesses.
Limited Pipeline
Although there is increasing momentum in
entrepreneurship in the Middle East, quality
startups and scale-ups in the
market are few. Since 2007, there have
only been three major success stories—the
acquisition of Maktoob by Yahoo! in 2009 at
an estimated $164 million,
6
the acquisition of
Diwanee by Webedia for an estimated $30 million
(including $5 million in capital increase),
7
and
the acquisition of Talabat by Rocket Internet for
$170 million.
8
International investors have also
made two sizable Series C investments (Sooq.
com, Marka VIP).
Five years after Yahoo acquired Maktoob,
Webedia recognized that Diwanee was a well-
run business with a clear vision and strategy,
and that at the time, it was MENA’s only digital-
content business run at a global standard. The
core of Diwanee’s successful acquisition (i.e.,
the global standard) existed because of the
rich experience of the company’s founders and
team. Theirs is a rare case in the region, as
most entrepreneurs have only a
few years of experience before
launching their own businesses. In
another of these fve successes—Marka VIP—the
5
Rabih Nassar (CEO of Element N), interview, 9 May 2014.
6
CrunchBase, “Yahoo! / Maktoob,” 26 February 2010,https://www.
crunchbase.com/acquisition/0be25f0c9e835122ae9d68b3980fdf48.
7
Nina Curley, “Majority Stake in Diwanee Acquired by Paris-based
Digital Publishing Company Webedia,” Wamda, 19 March 2014, para.
2,http://www.wamda.com/2014/03/diwanee-acquired-by-paris-
based-digital-publishing-company-webedia.
8
Lucy Knight, “Rocket Internet Acquires Kuwait’s Talabat for $170M,
Largest MENA Tech Acquisition since Maktoob,” Wamda, 11 February
2015,para. 1,http://www.wamda.com/2015/02/rocket-internet-
acquires-kuwaits-talabat-for-170m-largest-mena-tech-acquisition-
since-maktoob.
Kauffman Fellows Report, vol. 6, 2015
3 Kauffman Fellows Report volume 6, 2015 www.kauffmanfellows.org © Kauffman Fellows Press
founder had seven years experience at Zazil in
the Bay Area before returning to the Middle East.
Local MENA funds I talked to argued that
without a stronger pipeline, it is hard for them
to give better terms and be more hands-on with
their portfolio companies. According to Antoine
Boustany of Saned Investments,
We want to support our investments more
actively, but investing in a large number of small
early-stage opportunities makes it very diffcult to
do so from the start. As we start seeing outliers,
we start honing our efforts on them.
9
Interviewees revealed that governance in
the funds I spoke to is often weak, and GPs
do not have to demonstrate to their LPs how
much effort they put in to supporting portfolio
companies. With more engaged LPs, however,
this relationship will change.
Leverage Points for Change
The interview data on barriers to
successful venture capital growth
in the region can be summarized as follows.
1. LPs do not see VC as a strong investment
compared to other opportunities.
2. LPs would prefer to back more experienced
VCs.
3. VCs do not fnd quality opportunities that they
can easily exit, so they protect their capital by
over-structuring.
4. Entrepreneurs are generally not experienced.
5. Entrepreneurs often get poor deals because
there is not enough VC diversity to create a
competitive funding marketplace for them.
To accelerate job creation and innovation
in the region, venture capital frms need better
access to both capital and opportunity. While
most potential LPs are reluctant to invest in
venture in the region, an added incentive to
compensate for the lack of current returns could
unlock this capital.
As most of these LPs are family offces
tied to businesses that specialize in specifc
sectors, VCs should build funds
that are relevant to these family
businesses in order to add a
strategic component that will
9
Antoine Boustany (Managing Director of Saned), interview in Beirut,
Lebanon, 14 May 2014.
compensate for the lower returns they are
currently perceived to yield. In other words,
GPs should position themselves as “outsourced”
corporate VCs to these family offces, with
transparent investment structures and
incentives for the VCs and the entrepreneurs.
Entrepreneurs will beneft because of the
support they can get from these groups and from
more specialized VC funds.
Of the 10 family offces that I spoke to,
7 mentioned that they already invest in and
acquire opportunities relevant to their core
businesses. On the other hand, all view startup
investment opportunities as too small and too
much work to make a difference to their core
business. When asked whether they would back
a fund that would help grow companies relevant
to their core industries, however, four of these
family offces said they would be interested.
It is important to note that some of these
groups have acquired companies in Europe to
gain their technologies, which they then use
in their core businesses. Investing in young
companies with specifc intellectual property
is therefore not a foreign concept to these
corporations, and blending this strategy with a
VC approach is worth exploring.
In the usual structure, LPs are mainly mutual
funds, pension funds, and insurance companies—
very different from the private equity funds
and strategic buyers that venture funds seek to
exit to. In the Middle East, however,
there is a challenging confict of interest. The
same groups that are potential
LPs are also the exit strategy for
investments in the region. Successful
venture capitalists must recognize and accept
this reality, and address the potential conficts of
interest.
A Hybrid Corporate VC Model
for the Middle East
At Endeavor, we believe successful
entrepreneurial ecosystems are created around
core competencies that are found locally,
leveraging local expertise and demand. Most
MENA startups to date have been clones of
successful U.S. and European models that focus
A Hybrid Venture Capital Model for the Middle East
4 Kauffman Fellows Report volume 6, 2015 www.kauffmanfellows.org © Kauffman Fellows Press
on consumers, with less attention given to local
market dynamics. While companies such as Marka
VIP and Souq.com (both in e-commerce) are
making around $100 million and $400 million in
revenue per year, respectively, no other digital
businesses in MENA have yet reached that level
of scale in terms of revenues or subscribers.
The VCs and entrepreneurs I interviewed
stated that this lack of momentum is due to
limited exit opportunities. As discussed above,
exit routes are unclear in the region, making
it diffcult to fnd additional funding beyond
Series A. According to Antoine Boustany of Saned
Ventures, a pan-regional seed stage investor, a
number of their portfolio companies are limited
in their follow-on investment options, straining
the resources of seed investors trying to fnance
their growth. This barrier to scale-up in turn
limits the creation of new companies, and thus
the momentum around entrepreneurship is less
than desired.
A model that aligns startups
with the needs of the region
would also align innovation with
the requirements of the large
corporations in MENA who
become the exit strategy for these
entrepreneurs. This model will help fuel existing
industries, increasing innovation in these
sectors and help to create sustainable, long-
term economic growth. Furthermore, as more
companies from MENA expand into Africa and
South Asia, this “outsourced” innovation will
become an important source of competitive
advantage in new markets.
Upon preliminary analysis, four sectors in
MENA have built considerable expertise and
compete both locally and globally. These sectors
would most beneft from such a hybrid VC model:
oil and gas, warehousing and logistics, food
manufacturing, and construction.
By partnering with VCs who tailor their
portfolio to local needs, MENA’s leading
corporations will beneft from new sources of
innovation and agility, while strengthening the
competitiveness of their business at a global
level. As Palo Alto is a global tech hub, Dubai can
become a global hub for innovation in logistics.
As Boston is today a global hub for life sciences,
Khobar in Saudi Arabia can become a hub for
innovation in oil and gas. Instead of importing
technology and innovation, these regions
can export it. This shift has the potential to
transform the MENA region and its economies.
Case Studies
Existing examples of local innovation helping
regional businesses grow indicate a real need for
innovation by acquisition. Two case studies of
recent successes illustrate the potential of this
hybrid VC model.
Aramex and InfoFort
InfoFort was launched in 1999 as a document and
data storage startup in Dubai. By 2001, it had
expanded into Egypt where it quickly became the
leading data-management company. Aramex, the
leading regional courier business, was developing
a strong offering in terms of warehousing and
logistics, and saw InfoFort as an opportunity
to leverage its infrastructure further while
developing a deeper relationship with its clients.
Aramex acquired InfoFort in 2005 and rolled it
out across MENA. Today, InfoFort is the leading
data management company in the Middle East
and Africa, and a core offering of Aramex.
10
If InfoFort had had VC support from launch,
however, it could have scaled up faster and
yielded a better return for its investors. This
difference would in turn have allowed Aramex
to expand its footprint and new service more
aggressively.
Abdul Latif Jameel (ALJ) and Marka VIP
ALJ, the leading car distributor in Saudi Arabia,
invested an estimated $40 million in Marka VIP,
a leading regional e-commerce business. This
investment was strategically important for Marka
VIP to leverage ALJ’s know-how of the Saudi
market. For ALJ, a company based on consumers
in the Middle East, access to the knowledge
developed at Marka VIP gives it a unique insight
on how to evolve its relationship with its
customers online as the region becomes more
connected.
11
This access would have been very diffcult
for ALJ to achieve on its own without acquiring a
10
Endeavor Lebanon sources; Riad Ghandour (investor), interview,
5 May 2014.
11
Endeavor Lebanon source; I am also a seed investor.
Kauffman Fellows Report, vol. 6, 2015
5 Kauffman Fellows Report volume 6, 2015 www.kauffmanfellows.org © Kauffman Fellows Press
share in a business that had built this expertise
over the previous years. By investing in Marka VIP
and gaining insight into the e-commerce world,
ALJ will be able to learn more about the sector,
gain expertise around e-commerce execution,
and potentially identify ways to beneft its core
business. With its investment, ALJ acquired
innovation while funding a leading regional
scale-up.
Real-Life Potential
Both of these examples, albeit very different,
show the importance of entrepreneurship
to corporations in the region and highlight
the symbiotic relationship that governs
innovation in the Middle East. In the hybrid
model proposed here, VCs focus on exploiting
that dependency, which allows them to
quickly demonstrate to investors the returns
that innovation can yield in a region where
the true power of entrepreneurship has
traditionally been underestimated. This access
to innovation on a local level will help to fuel
the creation of new funds and drive investors
to back them, as these same LPs
will not only benefit financially
from their investment but also in
kind as entrepreneurs help their
companies innovate. At Endeavor,
we are adamant that the key to reducing
unemployment in MENA is leveraging the fnancial
reach of large regional businesses.
Next Steps for MENA Entrepreneurship
This preliminary idea will beneft from further
analysis, such as an investigation into each of the
named sectors to understand their potential and
requirements. There are also clear conficts of
interest in this model that need to be addressed,
primarily, how to encourage LPs to pay to build
something they will most probably end up buying
themselves. Nonetheless, the potential
returns are inspiring, both for
individual stakeholders and for
the region as a whole.
As part of Endeavor, my goal is to encourage
companies in the region to play the crucial role
of funders and acquirers of innovation. Like
Aramex and ALJ, by having access to the right
entrepreneurs they can evolve their groups and
compete on a global level. We intend to help
grow MENA startups into successful companies,
and to align with—instead of against—the
business culture of the region, by offering
professionally managed VC funds that cater to
the region’s LPs in their roles as both investors
and acquirers.
Existing VC funds in the region have helped
created a fertile ecosystem where entrepreneurs
view building world-class companies as a viable
professional path. Today, a small number of
growth funds are being created by those same
GPs looking to fnance their best portfolio
companies through their next investment
rounds. Funds such as Wamda, Beco, iMena,
Sadara Ventures, and Leap are targeting bigger
tickets across the region, which will encourage
more traditional capital such as high-net-worth
individuals and family offces to engage in VC.
In my opinion, this growth will be a catalyst for
exits in the region, creating further confdence
in LPs who will continue fueling creativity and
innovation in a region that is trying to diversify
its resources and income. By waking these
“sleeping giants” with the promise of global
investment opportunities in their backyard, VCs
will help the Middle East and North Africa to curb
its unemployment time-bomb.
Tarek Sadi
Tarek is the Managing Director of
Endeavor Lebanon, an economic
development nonproft focused
on supporting outperforming
entrepreneurs to create jobs and transform
economies. He has extensive experience in venture
capital and corporate fnance in the Middle East,
Europe, and Latin America. Tarek also launched
and exited two startups in Mexico. He holds a BS in
political science and economics from Georgetown
University, and an MBA from London Business School.
Kauffman Fellow Class 17. [email protected]
Singularity and Growth in Latin America:
Nine Drivers of Category-Leading Companies
Ariel Arrieta • In describing these drivers, the author
demonstrates that Latin America is ripe for the development
of a new crop of category-leading, $1+ billion companies.
Three potential threats to that development exist, but can be
overcome by following some key strategies.
Kauffman Fellows on the Science of Capital
Formation
Phil Wickham • To describe the unique contribution of
Kauffman Fellows to the venture capital ecosystem, the
author introduces a Startup Capital Hierarchy of Needs.
While fnancial capital and intellectual capital are most often
discussed, three other “shadow” capital types are needed for
success.
The Kauffman Fellows Report is available for redistribution.
Contact us if you’d like to make this volume available to your community of practice. [email protected]
A Hybrid Venture Capital Model for the Middle
East
Tarek Sadi • Based on interviews with MENA family offces,
entrepreneurs, and VCs, the author identifes three unique
challenges to venture capital in the region. His hybrid VC
model aligns entrepreneurial efforts with the requirements of
the region’s large corporations that are both its LPs and exit
strategies.
The Evolving Landscape of the Life Sciences
Sector: New Approaches in Therapeutic R&D
Daniel Janiak • The core components of a rental economy
are infltrating the historically closed drug discovery and
development ecosystem. The author describes fve specifc
catalysts fundamentally altering how new therapautics are
discovered and developed, and by whom.
Benchmarking VC Investment Ecosystems:
A Data Model
Ajit Deshpande • VCs need a way to aggregate activity in
their surrounding ecosystem, as an ongoing benchmark to
measure their own performance. The author shares a simple
model to help a VC frm become increasingly agile over time—
and in the process, help the industry optimize investments.
Rebooting Basic Healthcare in Brazil:
Thinking Outside the System
Thomaz Srougi • This story of dr.consulta describes one
man’s incredible effort to create an agile, high-quality,
humane, and affordable solution to Brazil’s healthcare crisis.
dr.consulta clinics have served 150,000 uninsured families,
and they are scaling toward 300+ clinics and 30 million
medical visits per year.
Facilitating Pharmaceutical Licensing into
Russia
Kenneth Horne • Two Kauffman Fellows analyzed and
then ventured into the Russian pharmaceutical licensing
landscape. The author recounts how their efforts
resulted in the creation of a frm, Ruphena, to match and
facilitate license negotiations between Russian and U.S.
pharmaceutical companies.
Jumpstarting Medical Device Innovation:
New Incentives Create VC Opportunities
Anh Nguyen • Early-stage funding is a key element in the
translation of medical knowledge into successful therapies.
Recent federal regulation changes make non-dilutive funding
available for clinical trials, reducing uncertainty for investors
and offering a template to evaluate clinical value.
Outside the (Tech) Box: Successful Non-Tech
Venture
Trevor Thomas • A more sector-inclusive approach to
venture will be critical to capture value in the future, and
VCs are recognizing that innovation and scalability are not
necessarily linked to technology. The author describes the
shifts and factors that make non-tech venture both possible
and proftable.
Venturing into the Industry:
Lessons Learned from a VCpreneur
Ahmad Takatkah • What does it mean to disrupt the
venture capital industry using an entrepreneurial mindset?
The author shares his experience as a “VCpreneur” and the
founder of VenturePicks, and analyzes the potential effects
of crowdfunding on the venture ecosystem.
MENA’s Internet Industry: The Opportunity,
Challenges, and Success Stories
Khaldoon Tabaza • Internet business growth in emerging
markets follows a pattern—growth, infection point,
hypergrowth. The author gives specifc advice for successful
investment in the Middle East and North Africa, and assesses
the top three markets that are poised for hypergrowth —and
$1+ billion companies.
Table of Contents for Kauffman Fellows Report Volume 6
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Kauffman Fellows Press. Publishing services
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community on a broad range of topics relating to
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.406 Ventures • 212 Ltd. • 3i • 3M New Ventures • 500 Startups • 5AM Ventures • Aberdare Ventures • Abraaj Capital • Accel Partners • Accelerator Corp. • Acumen
Fund • Advanced Technology Ventures • Advent International • AES Corporation • Africa Angels Network • Agency for the Promotion of Innovation (Italy) • Alliance
Technology Ventures • ALMI Invest • ALPHA Associates • Alsop-Louie Partners • Alta Partners • Amadeus Capital Partners • Amgen • Andes Capital • Andreessen
Horowitz • Angel Ventures Mexico • Angeleno Group • Angels Forum • Apax Partners (Patricof & Co.) • Applied Ventures • Aquilo Capital Partners • ARCH Venture
Partners • Archangel Informal Investment • Ascend Venture Group • Ascension Ventures • Asia United Capital • Astrec Invest • Atlantic Bridge • Atlas Venture • Austin
Ventures • Austral Capital • BADIR Program • Baroda Ventures • Battelle Ventures • Battery Ventures • Bay City Capital • BBC Worldwide • BDC Canada • Biotechnology
Value Fund • BioVentures Investors • Bloom Equity • Blue Chip Venture Company • Blueprint Ventures • Bridgescale Partners • Broad Institute • Brown Savano Direct
Capital Partners • Burrill & Company • CalCEF Clean Energy Angel Fund • Canaan Partners • Capital Indigo • Carbon War Room • Cardinal Partners • Carlyle Group,
Brazil • Centennial Ventures • Central Texas Angel Network • Chicago Ventures • CID Equity Partners • Cisco • CITIC Capital • Citrix Startup Accelerator • Clearstone
Venture Partners • Clovis Oncology • CMEA Ventures • Cocoon Ventures • Comcast • Core Innovation Capital • Correlation Ventures • Creandum • Credo Ventures •
Crescendo Ventures • Cromwell & Schmisseur • CSK Venture Capital • Databank Private Equity • DBL Investors • Dell • DFJ Network • Doll Capital Management •
Domain Associates • dPixel • Draper Fisher Jurvetson • Draper Nexus Ventures • Easton Capital • Eastpoint Ventures • EC1 Capital • Echo VC • EDF Ventures • EMBL
Ventures • Emergence Capital Partners • Endeavor Global • Endeavor Brazil • Endeavor Indonesia • Endeavor Jordan • Endeavor Lebanon • Endeavor Mexico •
Endeavor South Africa • Endeavor Turkey • Essex Woodlands Health Ventures • European Investment Fund • Evolution Equity Partners • Expansive Ventures • Fidelity
Biosciences • Finance Wales • Flagship Ventures • Flatiron Partners • Flywheel Ventures • Founders Fund • Fudan Univ. • Gabriel Venture Partners • Galicia
Investments • GE Ventures • Gemini Israel Funds • General Atlantic • Genesis Partners • Gerbera Capital • Global Environment Fund • Golden Gate Ventures • Good
Energies • Gotham Ventures • Granite Global Ventures • Gray Ghost Ventures • Greylock Partners • Groupon • Halo Fund • Hatteras Funds • Headwaters Capital
Partners • Highland Capital Partners • Houston Angel Network • HSBC Private Equity (Asia) • Hyde Park Venture Partners • IDG Ventures India • IDG Ventures Vietnam
• IE Business School/Vitamin K • IGNIA Partners • Imprint Capital • In-Q-Tel • INCJ • Indicator Capital • Innovationsbron • Institute for Venture Design • Intel Capital
• Intersouth Partners • Invest4Good • Itochu • Johnson & Johnson • Joseph Advisory SVCS • JP Morgan Partners • Jungle Ventures • Kansas City Equity Partners • Karlin
Asset Management • Kenda Capital • Kernel Capital • Keytone Ventures • Kickstart Seed Fund • Kitty Hawk Capital • Kleiner Perkins Caufield & Byers • Knight
Foundation • Komli Media • L Capital Partners • Latin Idea Ventures • Lehman Brothers • Lepe Partners • Levensohn Venture Partners • Lilly Ventures • LSPvc • L
Venture Group • Magazine Luiza • MAKOTO • MASA Life Science Ventures • Matter Ventures • Maxygen • McMaster Univ. • Mercury Fund • MEST Incubator • Mid-Atlantic
Venture Funds • Ministry of Economy, Mexico • Mission Bay Capital • Mitsubishi • Morgenthaler Ventures • MPM Capital • NAFIN • National Semiconductor • NCB
Ventures • NDRC • New Enterprise Associates • NIC Costa Rica • Nokia Siemens Networks • NOLA Project • Northwest Energy Angels • Northwest Technology Ventures
• Northzone • Novartis Venture Fund • Nth Power • Nxtp.Labs • Oak Investment Partners • OKCupid Labs • Olympic Venture Partners • OMERS Ventures • Omidyar
Network • OneLiberty/Flagship Ventures • ONSET • Opus Capital • Oracle • Oxford Capital Partners • Pacific Community Ventures • Panorama Capital • Pennyslvania
Treasury Department • Physic Ventures • Playfair Capital • Prime Minister's Office, Singapore • Prism VentureWorks • ProQuest • Proteus Venture Partners • PTC
Therapeutics • QBF/QIC • Quaker Partners • Qualcomm Technologies • Radius Ventures • RBC Venture Partners • Red Abbey Venture Partners • Research Corporation
Technologies • Rice Univ. • Richard Chandler Corporation • Richmond Global • RiverVest Venture Partners • Riyada Enterprise Development • Robert Bosch Venture
Capital • Roll Global • RRE Ventures • Rusnano • Sadara Ventures • Safeguard Scientifics • Sandbox Industries • SAP Ventures • Sawari Ventures • Scale Venture
Partners • SEAF • Seaflower Ventures • Seedcamp • Sequel Venture Partners • Sequoia Capital India • Silas Capital • Sinbad Ventures • Skyline Ventures • Slated, Inc.
• Sofinnova Partners • Sofinnova Ventures • SoundBoard Angel Fund • Sozo Ventures • Spectrum Equity Investors • Sprint • Sprout Group • SR One • Stanford Inst. for
Innovation in Developing Economies • Startup Wise Guys • StartX • Storm Ventures • SV LATAM Fund • SV Life Sciences • Syngenta • T2 Venture Capital • TAQNIA •
TauTona Group • Tech. Devel. Fund, Children's Hosp. Boston • Telecom Italia • Temasek Holdings • Texo Ventures • TL Ventures • Torrey Pines • TTGV • Tullis-Dickerson
& Co. • TVM Capital • U.S. Food and Drug Administration • Ulu Ventures • Unilever Technology Ventures • Univ. of Tokyo Edge Capital • Universal Music Group • US
Venture Partners • Valhalla Partners • VantagePoint Venture Partners • Velocity Venture Capital • Venrock Associates • VenSeed • Venture Investors • VentureHealth
• Vickers Venture Partners • Viking Venture Management • Vilicus Ventures • VIMAC Ventures • W Capital Partners • Wellington Partners • Westly Group • Weston
Presidio Capital • White Star Capital • Whitney & Co. • Wild Basin Investments • Wind Point Partners • Woodside Fund • Work-Bench • Zad Capital
The premiere leadership organization in
innovation and capital formation globally,
Kauffman Fellows operates at over 400 venture
capital, corporate, government, and university
investment organizations in 50+ countries.
Commencing each summer, the latest class of
35 Kauffman Fellows engages in a practical
24-month apprenticeship that includes quarterly
sessions in Palo Alto, California, field research
projects, mentoring and coaching, and industry
and regional events. During the fellowship,
Kauffman Fellows work full-time at venture firms
or related organizations committed to building
innovative, high-growth companies.
Inspired by Ewing Marion Kauffman and his legacy
of shared ownership, accountability, and experi-
mentation, we measure success in enduring new
businesses that generate long-term returns for
principals, investors, and society as a whole.
The following firms have participated in the Kauffman Fellows Program since its inception.
How Management Research
Can Transform Your Business
THE IVORY TOWER
UNLOCKING
Eric R. Ball, Joseph A. LiPuma, Ph.D. D.B.A. &
doc_278096774.pdf