Capital Advantage Local Investment Ecosystems and Global Alignment

[Music] good afternoon all please take a seat gentlemen how are you guys fantastic good to see you back on stage double duty for him yeah double everyone's probably getting sick of me by now but uh I promise to speak Less on this one oh they gave us more time so you don't have Choice good afternoon everybody so my name is Gabrielle en zerillo and I'm a financial regulator here at adgm I'm pleased to be joined by my Encore guest Bel Belo partner at shuk and Paul deare chairman and CEO of cagar now our session today is titled Capital Advantage local investment ecosystems and Global alignment which I think is actually quite a little bit of ground to cover for 25 minutes it's a it's a big title they gave us and they're like go go talk but I think the point of today's session is to be able to get a bit of insights from both of you on how to basically leverage local specificities when you have a global investment mandate when you can buy invest build anywhere in the world how do you actually localize that so first of all I'd like you to introduce yourself now since you've already been on stage I'm going to have to give the first tips to Paul please Paul could you please introduce yourselves quickly and tell us the audience what you're about yeah outstanding so PA Paul Dem from Canada uh I lead a firm called Sagar it's actually funny because we actually describe ourselves very similar to this panel's title where we often say we're a firm that has a local flavor in every Market we are but have Global capabilities and so uh it's a very apropo uh topic and so we invest globally we're at 30 billion uh AUM manager uh with strong presence in Europe and specifically in Paris and France Montreal us uh and recently open office here in Abu Dhabi wonderful now poor Bal both Paul and myself are Montreal natives so you're in a Montreal sandwich you're not from Canada are you I'm I'm not unfortunately you don't have a secret passport no no I don't no okay okay well Bal please introduce yourself to thank you so much so my name is belal Belo I'm a partner at shuruk uh we're one of the leading uh early stage Tech investors here in the minor region um and uh have been live since around 2018 and now oversee about half a billion dollars in AOL nice congratulations okay let's get it started now global investment obviously offers enormous opportunity in terms of deal flow there's always something out there there's always something to find but when it comes down to it we all know that there are local specificities that really do come into play when you are actually closing on these deals um I know for instance as everybody knows in the UAE you do have to come and show maybe a little bit more face than you would in other jurisdictions now I just wanted to ask you first what is the best way when you are first of all setting up an investment firm and such and when you build your investment thesis how do you localize that investment thesis Bel do you want to get a started and then I'll hand over to Paul yeah uh my answer is perhaps going to be a lot simpler uh and less interesting uh quite frankly because we are very much focused on the meaner region now some of our LPS have given us that mandate very explicitly some have not but we've chosen to First dominate our backyard because we think that's where quite frankly the bulk of our learning will come as investors in an emerging market and then we can Bounce from there to other comparable markets and perhaps uh a global ambition tell us about your your ditions that you're interested that you're in there right now so we have a we have a pretty liberal view of what constitutes Mina in our region so it goes essentially from you know North Africa all the way to Bangladesh uh includes Pakistan turkey uh and so we're mainly investing in uh these markets where we can unearth good value good valuations um we look primarily at at fintech companies but we are um foundationally sector agnostic and so have got companies in agriculture advertising uh uh biotech and the like uh where we're really trying to find early stage uh disruptors in in markets that perhaps uh for some funds might spook them um uh perhaps they had a sort of you know a quick entry into it and then had to exit quickly but we've stuck around in places like Egypt and Pakistan we have a local presence there a local team there and so as I mentioned you know we've we've very intentionally chosen to first uh look to dominate uh our own region and from there uh Go Global I think you've kept your region pretty broad so Paul please but you know what I love the word dominate your backyard because you know in the exact same way we've picked a few markets that we want to dominate and we also have a major fintech Focus uh and so Canada is a market that we dominate the thing about fintech is it tends to be very local and what's interesting is that in local markets you can create really big companies and so we created the largest digital broker in Canada we now manage $50 billion we grow $4 billion a month uh it's one of the highest valued fexs now in Canada and we only do Canada uh and one of the reasons why we win is that focus and so I think you know especially when you're you know betting on very specific Industries do dominating that industry and that geography is really important um when we think about deal flow you know if I think about our private Equity businesses that localization is so important because you know in a market like Europe that's very competitive um before the deal process starts you must already know the company the team exactly what you're going to do with it and how much the CEO wants to sell the company and we've been able to preempt 100% of the processes that we've participated on in the last 6 years uh and and that's because we're local we're on the ground we we call it a gestation period we work generally two years with the entrepreneur before investing uh and and that can only be done by being local and then we win the entrepreneurial because he sees our Global capabilities and we meet his ambition because often his or her ambition because often they are in geographies and they dominate their Market but they have Global Ambitions and we can accompany those entrepreneurs as they have those global Ambitions so I'm sensing that it's yes it's local but it's more about building trust and you got to do that by being there and present um Paul stay with me because you did mention that you are dominating Canada essentially but you are you do come to the UA come to abui two three times a year so you do definitely do business here and you see the differences could you do you have could you tell us a little bit about the differences you feel between the Middle East the UAE and Canada well they're actually very similar in that there's small markets and so companies that are built here must think often multi- geography uh and and it's actually very different and that you know we were talking about this earlier in places like the US like the US is a miracle of capitalism right like the networks the connectivity the amount of people that have experienced scaling is infinite yeah but in markets like Canada and the UAE there's definitely a kind of mentorship vacum where firms like shurooq can play a major role in kind of connecting the entrepreneur in Egypt that did something with the entrepreneur and Abu Dhabi do something and share those learnings in a way that that density doesn't necessarily exist and and and that's what we try and do in these markets is we try and bring our exper experience across you know we have 150 portfolio companies today bring our experience across all of those portfolio companies and share it and try and overcome that you know inefficiency just because there's less density of people that have truly scaled businesses in my home country but also here very nice no I mean that makes sense Bel obviously you know Middle East is your region but the Middle East is the Middle East it's very I wouldn't say it's fragment but it's a very you know you have different cultures different types um different economies that all make up this one thing so can you tell us a little bit more about how of course you know that differences play into how you're basically setting up your teams for instance going out there and investing um how do you prepare people to take on these opportunities yeah so look we have a phrase at sharuk which is repeated both internally for our team but also in how we think about investing which is strength leads to strength uh and it sounds a bit cliche but but that's how we really view the Mina region um you know we think that the strength of Abu Dhabi uh as an ecosystem uh and adgm very specifically where we're sitting right now can be an attraction for Founders from around the region who are looking for uh the right kind of sandboxes where they can test their products with risk but calculated risk where they can have access to Capital where they can have access to talent and they can do it in an environment where from a regulatory perspective there is agility right um but we also think the strength leads to strength in other ways where products and businesses built here can then be scaled and connected to ecosystems such as Egypt or Jordan uh or bakan where some of our companies have expanded out their products from here we're very fortunate that one of my partners who founded the firm is Korean Canadian so there is a Canadian link um and uh we're backed by one of the Korean Sovereign wealth funds kavic uh which allows us to then also take some of our companies to Korea and bring Korean companies here so it you know what whichever visual helps you the most call it a hubs and spokes strategy call it a sort of you know uh a um a two-way street but we want to be able to leverage each of these markets that we're in and get them to to support and strengthen one another both at the founder and the company level structurally but also in terms of capital flows uh as well uh so so you know when we look at our region yes of course it's very diverse it's very large and and you know culturally politically economically these are very different political economic orders but um we see a very clear red thread in which we can impact and influence the all in the companies that we're that we're investing in and the and the and the green space is is is vast right uh you can come in uh as a fintech company built out of the UAE and help create uh massive amounts of financial inclusion in a market that is adjacent to here uh I can't imagine too many parts of the world today where where you can do that with with the kind of excitement that we have here Bel remind us your sweet spot in terms of investment and your sector preferences because I mean you did say a little bit agnostic still so sector agnostic we do have the bulk of our exposure in fintech that's less a focus on thesis and more a function of the market that we're in uh we do preedee to series a typically uh $1 million checks to 8 million we can go beyond that uh The Sweet Spot is somewhere in the middle um but look we're we're we're excited bying looking at um Innovative B2B companies so we don't really do much b2c maybe the odd one here and there but but B2B is our is our bread and butter okay Paul can I jump back to you um tell us a little bit also about what kind of sectors you're looking at and also the range because obviously you have many fingers in The Pie when it comes to private equity and other such um Financial activities so if you could just remind us so we can actually get your your perspective and so you know one one of our big areas of expertise is fintech you know series a series B but we also have a startup Studio where we build companies from scratch uh it's a more balanced mix of B2B and b2c uh I'd say in Canada we're very well known for B Toc uh but in Europe we've done mostly B2B uh and we we're bringing actually a lot of our B2B companies to the region here especially a company called alaka which uh empowers you know a lot of the trading apps in in the region uh which is a company that we're kind of really excited about um we actually have made an investment here in the region uh in well in the larger Med region if you include turkey uh I sit on the board of a company called Midas in Turkey um and uh and ultimately are bringing our expertise of bringing building the leader in Canada to building the leader in Turkey uh so that's one of the big areas we also do a lot of uh normal technology investing in France and in Europe so that's buying uh B2B software companies and helping them scale in North America um and so uh and we just do that over and over again but interestingly enough we end up buying a lot of things that are related to the financial services world and so one of the ways we differentiate ourselves is that um we have about 40 financial institutions as our LPS uh we actually have one of the largest you know series a series B ftech funds globally it's a 600 each one of our funds is 650 million uh so scalable funds um and and backed largely by financial institutions and we have a big uh Partnerships practice where we work closely with our portfolio companies and financial institutions to form Partnerships and we have you know over a hundred Partnerships that we've formed in the last kind of 48 months and so it's a it's a real kind of focus of ours very good very very good now obviously right behind you there's the the headline partner logo of adq who is also on our lanyards but it does also make us think about you know when you guys are doing in these investment this private Investments right it's always there's always the possibility of also getting public Investments or public um counterparties that are involved in these sort of deals and such whether it's through funding grants actual is co-investments um would either of you like to comment on and then we'll swap around on how that fits so public institutions uh getting involved in in in our sandbox what we do yeah look I think uh the one that you you didn't reference there is companies like uh companies within the portfolio of an organization like adq can be major users uh of the technology companies that we're investing in one of the most exciting things about the UAE broadly is the the Deep interest and political will behind digital transformation and so all of the household names that you can think about whether it's you know eand on your mobile phone or or etard Airways that you fly uh to and from a different part of the world on all of these companies are looking for ways in which they can continue to evolve and get teched up and and digitally transformed and what makes our region incredibly exciting is all of that is accessible right so you have adq is not just sponsoring this this entire conference uh at the face of it it trickles down to substantive efforts to be able to build relationships with founders with tech companies with investment funds like our own so that we can uh deepen the ecos system together and and of course look there is a there's a very um clear focus on returns for it as well uh all companies today are trying to figure out for example how can we use AI to improve productivity um so I think that's the piece that perhaps gets overlooked and then there are all the other ways in which you mentioned in terms of doing funto fund Investments sometimes doing CVC Investments so on and so forth all of that is well known but I think it Bears mentioning just how fresh it is that in a in a nent emerging ecosystem you one at the same time have got Legacy corporates that are willing to take advantage and leverage that ecosystem that is really really uncommon very nice Paul please and so I agree with everything that was said here and actually adq is an uh through Lunette as an owner of my GP uh and and we actually have an example we have one of our portfolio companies that does all of the ESG reporting for adq called nisto and then adq introduced us to their subsidiary taka and we now do the SG reporting for taka and we recently won the Emirates ESG reporting uh you know mandate as well so totally agree with that um I'd say you know it's interesting because in the region everybody's focused you know every country is focused on building their ecosystems and and and I think the mistake people make is they often think it's just a question of money but I think what was said here is exactly accurate an ecosystem only happens not if there's money but it's if there's money if there's corporate engagement if the universities are involved if there's willing families and investors and it's that combined Network that creates an ecosystem and and you could throw a lot of money at a problem and get nowhere uh if you don't have that engagement and so that's important in our case you know in Canada uh we we have a very similar ecosystem to here uh in that we have our equivalent of sovereign wealth funds we have our equivalent of Business Development funds and it's actually because we actually did a first in Canada where Canada has an organization called export development Canada and they actually formed their largest partnership in their history with our firm with a mandate to basically invest across six of our different fund strategies and then focus on helping create Canadian Champions and so we will bring in the investment the governance and the knowhow of like scaling companies but then we partner with export Canada for financing uh guarantees on foreign revenues uh door openings internationally uh co-investments and so that I think what we're going to see with public institutions is more and more uh close Partnerships with kind of asset managers like us um and these institutions you know building Partnerships because we're we're going to be much more on the ground than they will um and and as a result we'll be able to kind of you know tangibly make the machine work uh when when them from their kind of public standpoint it's a lot harder I see okay very very interesting um we've been talking about ecosystems a lot uh I I think that's now you know almost the term that everybody uses just to talk about what makes a what what how to thrive you need to have a functioning attractive uh ecosystem right because we need everybody have to play a role now I just want to talk a little bit more and get your guys opinion on what what makes an ecosystem attractive now Paul in the back we talked a little bit about stickiness right uh and basically networking and how that's how you can build um much more proactively and much more quicker can you kick us off on what you think makes an attractive ecosystem well I think first and foremost can you create an attractive ecosystem even absolutely like you know ultimately I think it's about bringing people together and it's about finding people that have similar Ambitions and bringing them together in places like Silicon Valley this happens organically in places like Canada um and and basically everywhere else other than Silicon Valley uh it kind of happens inorganically where you need to make it happen and so I we we've been involved in a group called creative destruction Labs which basically Bally helps connect entrepreneurs with business builders that have scaled companies in a very kind of structured way and ultimately this organization has ended up creating a large percentage of the best funded companies in Canada uh and this organization has now scaled to uh France and the UK and to certain non-silicon Valley regions uh in the US same thing I sit on the board of endeavor in Canada I'm a founding board member of endeavor Canada that is and that's an ecosystem that's very strong in the region here as well um that is another example of an ecosystem that helps connect Founders that are looking to scale with Founders that have scaled and and and I think when you know or governments like Abu Dhabi and the UAE are looking to create these ecosystems partnering with those types of organizations that come with a kind of Global Network right off the bat makes a big difference um and and uh and can be a real advantage and then partnering with firms like ours that are you know that have these Global Footprints you know some you know regionally and some globally I think is also really important it's it's figuring out ways to bring all those people together in a constructive way that ends up making the the kind of uh Jello uh become gelatinous okay so this stickiness we were talking about um I guess it's true you get people together and everybody has something that they can Prov Bel obviously you're very active you know and shuruk has been tremendously active for years at this point now in the abudhabi ecosystem in UAE as well and abroad but I see you mostly here in Abu Dhabi when you're in our backyard um tell me about a little bit about how what you consider an attractive ecosystem not not not just the one we're trying to create and build here but also you know elsewhere where you think there are maybe lessons that we should be learning from yeah I want to take advantage of the fact that um I now been on three panels so to adjust your question a little bit uh which is what you said earlier which is can you even create a thriving ecosystem and I think we talk a lot especially here and and over the sort of past couple of days about the importance of capital the importance of allocators and fund managers and investors such as ourselves uh and all of that is absolutely critical but I I do want to give a mention to Founders for Founders to be able to to help create an ecosystem in real time while they're also building their own companies is immeasurably difficult and what I've seen since I've been here investing in early stage tech companies is they take that on uh with uh a plum right we have Founders here that are focused on building their companies but also turning up to help advise State organizations on regulation are also turning up to uh accelerator and incubator events to be able to speak to younger Founders who might be just at the start of their Journey who are talking to government officials foreign investors new entrance into the market to help the process of Education regulation bringing new Talent into the region and this is almost like having two separate jobs and so uh that is absolutely facilitated by the the the structural variables in the UAE that uh you can have the support the system quite frankly also the life to be able to do that um but but that's one that's one force in the ecosystem building part that I'd mention is is the role that Founders play here and when I compare that to my own experience as a Founder in the US I didn't have to think about what was happening Visa V regulation granted I wasn't in something like blockchain or crypto where perhaps Founders do but I didn't have to think about the regulator architecture I didn't have to think about whether there was you know whether whether there was a sufficient number of accelerators and incubators that I could be a part of I didn't have to think about where could I go and shop for Grants I didn't have to really go and you know cherry pick um uh investors and angels all of it was in abundance um and if I would have had to do that here I don't think I would have been able to focus as much on on my own company and business so I really commend the founders who you know consistent stly and with with real Verve keep focused on on not just building their companies but helping to build the ecosystem here as so and what he just said is really important and there's a role that groups like yours can play in facilitating that and so you know if you look at you know what we do is we do like founder Gatherings we do CMO Gatherings we do CFO Gatherings where we bring them all together in New York and in Montreal and different cities where we're taking all of our CEOs catskiing and Whistler next year but it's crazy like it sounds ridiculous but the value that you know 30 Founders get from spending three days together doing like some ridiculous activity is incredible like seoa takes all of their Founders camping at the Sequoia Ranch and you know it's something that you know the government here could actually play a big role in doing because they could organize communal events where they spend time together exactly for exactly the reasons he just said which is really really really powerful and helps connect connect everybody and create that underlying tissue that that's really important I think I do think and this I noticed obviously because I've not been coming into the region since 2017 and obviously hub1 for instance I've done a tendous job in the last three four years really building up that founder community and Inter and connecting people you know so this person a knows this person B and person C when you compare it to obviously what years are you in in Silicon Valley I was in DC oh you're in DC okay okay so the times I spent in Silicon Valley when I was investing back there I could go out to just any bar any even the park and there would be a gathering of sorts and you could just sort of wander in there and then you meet someone and you'd have like a really great 45-minute conversation and I do think that sometimes it is is very hard to replicate that openness in a way um so I guess it comes down to you know what you were talking about trust before being a trusted adviser so that people want to be invested by you but also building more of a shared Dynamic um Paul would you want to comment like earlier you're telling us that you doing a lot of work on the mentorship side we have a few minutes but I think that's very interesting because it is a top down initiative and if you can give us a secret in ingredients it's always nice yeah I mean so we we do a lot around mentorship around indigenous communities and uh black communities in Canada uh where we've effectively created two networks the indigenous leadership Circle and the uh afro descender afro descended leadership Alliance and basically those are kind of self-propelling networks where you take people that have historically felt very disconnected if you're a young indigenous super motivated person that's interested in technology in some Village in the high Arctic you feel very lonely and by creating a network of 70 similar people across the country we've basically created community and we figure out ways to bring those people together around interesting speakers and topics uh and then we do inperson uh offsites every year and it it creates a shared of common ambition and uh and and I believe that that goes very similar to what we're talking earlier about how do we get Founders engaged in paying it forward and actually a big a big theme of endeavor and the Endeavor network is how do we get entrepreneurs to pay it forward and and and and give back to that Community because there are certain individuals that are truly super connectors and figuring out the entrepreneurs that are the super connectors that will end up spawning entire ecosystems is really important you know if you look at each geography where there's you know healthy ecosystems often it has come from one or two companies that have end up being super successful and have ended up spawning the entire ecosystem of next companies are you referring to the quote unquote fintech mafias that have been created across the world there's the FC Mafia there's the Blackberry Mafia in watero I mean waterl was born out of blackberry the PayPal Mafia in California the PayPal Mafia it's it's it's a common thing the Kareem Mafia in the UA we heard that okay o the time is up the time is up okay we need closing remarks belal is there anything you want to tell us to the audience about what it means to have a strong ecosystem and having a strong investment thesis attached to that yeah look I think uh everyone here especially those of you that have been here for the last couple of hours have seen me talk enough uh what I will say is is actually just a thank you to to one of our friends and partners which is hub71 um it really is quite uncommon to find an institution like hub71 that across programming across spotting uh uh startup companies across connecting them to Capital and being able to do this year and year out and innovate at the same time uh it's really quite uncommon and without them this ecosystem wouldn't be what it is so I just wanted to say thank you and a nod to them oh let's just clap for Hub 71 and and then Paul will finish up well close us off I think the region here is well on its way and has another Advantage I mean the connect ity of this region if you look at the flight connectivity the ports everything that will also give it an advantage over time and so you know I wrote a paper a few years ago about why we open an office in Abu Dhabi and why I think Abu Dhabi truly is the capital of capital uh and and and I think it's only going to grow in importance and what I tell people is that whatever your presence is in Singapore today your presence in Abu Dhabi should be the same just as important we love that okay Round of Applause everybody for our panelists but mostly for Hub 71 [Applause] [Music]