The State of Investing: Where Can Investors Find Value?

[Music] good morning everyone uh I hope everyone is having a wonderful start to day two of abui fin week sorry technical difficulty um I'm joined on on stage by my wonderful panelist uh Courtney Powell from 500 Global uh on my immediate uh left um right next to her is kristos from uh ilas ilot Partners uh following which we have Muhammad from Middle East lead SC Ventures and lastly I'm joined on stage by William from Kaa Association um thank you all for taking the time uh I'm going to start off with um a question that's directed to all of my panelists uh starting off with Courtney so Courtney the Middle East investment landscape is is so Dynamic and and evolving uh as we speak on a daily basis right what sort of uh opportunities are there in the region that investors can currently capitalize on yes I think you're right I mean it's been incredible to see the evolution and the growth of the region uh we actually made our first investment in 2012 uh and so from 2012 today as you can imagine um the opportunities have grown immensely and I think in terms of sectors um we continue to be very excited about the fintech uh opportunities that we've been investing in now for quite some time but more recently I think you're starting to see AI really trickle in uh to the region a little bit more of a focus on um consumer technology and B2B which you know early on we didn't see quite as much and I think also the stage of investment has changed I mean um within our first fund it was primarily seed stage investing and today you're seeing you real opportunities coming into later stage series being and Beyond as companies um are able to grow not just within the region but also then um expand to uh you know the US and in other regions worldwide so I think it's a great uh time to be investing in Venture across the Mina region and uh we believe it's going to continue at an even more accelerated Pace over the next couple of years uh speaking of opportunities Christos um iiot Partners just uh launched their new VC fund um earlier this morning um can you tell us a little bit more about that absolutely thank you so much for uh sharing that information so we're very proud to uh share uh that we uh announced the launch of our new fund ilad Partners has been uh an early player in the ecosystem uh we've been active since uh 2016 so we've been sort of early contributors to the ecosystem we've always been early Believers um in the potential of Founders and uh Tech startups here in this part of the world and um with this fund we're looking to execute our strategy at scale and truly believe um in its potential uh the focus of the fund it's a $50 million fund uh which we now did our first close uh the focus is geographically Mina with a focus on UA and Saudi these are two geographies that we believe there's a lot of opportunity investing at the early stage pre- series a and series a uh in sectors including um Logistics fintech and proptech these are three of the vertical that we believe there's a lot of opportunity our primary focus is B2B and a key part of our model is to systematically connect our startups uh with our LP base which is largely uh large conglomerates and that have interests in these sectors um so uh we see opportunities uh in these sectors in these geographies and uh we believe there's a lot of digitization and uh Innovation to be done uh still in the region and we're still at the beginning and we're very excited to be a part of this and work very closely with the founders uh speaking of opportunities Muhammad what are your thoughts on the Middle East investment landscape and the sort of opportunities it's offering investors in the region thank you thank you very much Amir and um maybe first of all allow me to recognize um this wonderful uh Forum I think abudhabi Finance week is a great opportunity for us to attend um very insightful sessions very insightful panels um and it's very encouraging to to have you here um joining us today so thanks for the opportunity and and thanks for a wonderful week before speaking about opportunities Amir and and and the Forum here allow me to refer to your to your first part of the question the Middle East and and Abu Dhabi and and the U and what makes this region unique and what makes Abu Dhabi unique is the ecosystem the way how the infrastructure is the way how um you know the the the partners the the service providers um the regulatory regime the the the maturity of um the entire ecosystem is something which we at SC Ventures look very carefully before even assessing the opportunities um that's indeed very very well established um and hence looking at the second part of the question which is opportunities um there are several opportunities here there are very much untapped areas which we at SC Ventures um looking forward to um partner with a like-minded Partners in in in the region and in Abu Dhabi um and um just to give you very brief examples so we we focus on four different themes which are very much aligned to the opportunities and the the vision of um the UAE and Abu zabi um we focus on themes such asme we focus on digital assets we focus on online economies we focus on um ESG and financial inclusion all of which they're very much aligned with the vision of of Abu DHI and the country and all of which um which you know come with different level of opportunities and different level of um um you know commercial angle for SE Ventures for for others maybe allow me also to to to share exclusively with the audience here today that um speaking about opportunities we've signed two M us yesterday um and the focus of these two M us is to establish um our Venture here from Abu Dhabi to the region and the M us were signed with Emirates post or what's known now as 7x and the other mou was signed with Lulu Finance perfect congratulations on that yeah sounds amazing we're looking forward to hearing more about that very soon uh William from an ALT investment perspective what are your thoughts about the the Middle East landscape and opportunities for investors here yeah thanks Amir and also I want to Echo the sentiments ad FW just great to have Ka here uh I don't have breaking news to announce like my uh prior uh speakers and also Kaa has the luxury of having opinions without having to invest a capital so we can appear somewhat righteous these folks doing the hard work but I look at what's gone on in the VC space over the last 15 to 20 years and the number of VC firms is up three and a half times the number of invested capital is up 10 times over so it's less about thinking about allocating to VC and really the entrepreneur is clearly very very important and I think there's a session later today on entrepreneurs as an asset class which I think is going to be an awesome panel and awesome discussion we spent some time with hub71 and to think about an ecosystem like that so very important where you can get the very best ideas and figure out investment thesis behind it but I look at this part of the world and you don't have uh some of the the hurdles you might have in other parts of the US and I was reminded in a discussion earlier this week that to get a mining permit in the US just to get the minerals out of the ground could take 15 to 20 years in parts of the UAE 18 months so it's an awesome uh point to point as an investor so I think there still a lot of work to be done uh today's Alpha is tomorrow's beta performance dispersion in the VC space is the widest of any asset class 3,000 bases points from the bottom to the top courti so the name of the game is very much manager selection so according uh 500 Global works with uh stakeholders across the board right investors corporates government how important is that Synergy sorry about that how important is that Synergy for the success of you know um the investors as well as what kind of lessons can we learn from other ecosystems across the region sure so I think the ability for a venture capital firm of our size to engage with multiple stakeholders is really critical 500 deploys half of its capital within the US and the remaining uh half outside across um about 90 countries so the more emerging a market is the more critical it is to really engage with Regulators early on with policy makers early on and those who are looking to really see uh an ecosystem accelerate I think um actually adgm is one of the best examples of you know Regulators who have been extremely open to input from you know venture capitalist and other asset managers to really build a platform to enable growth um and I think worldwide what you're seeing more and more is governments now believing for the first time you know over the last 5 years or so that technology venture capital is really a way to drive Economic Development so the more uh belief and the more um kind of examples of um huge winners coming from a particular region and creating jobs creating Capital creating you know additional um momentum the more support we're going to get and we need Venture capitalists to really lean in and be a part of those conversations so we can pave the way for our portfolios to continue to do well speaking of uh Paving the way kristos I mean Iliad is involved in you know early stage uh Tech startups U sorry about that I think we're having some technical difficulties with the mic um so uh what sort of support does Ard Partners provide and how do you overcome the challenges that these early Tech startups sort of face and scaling up across the region or just internationally sure so part of the inspiration to actually establish Partners was uh some of the challenges I faced as an entrepreneur before becoming a VC um and um you know back in the day there were actually a lot of them I think things have gotten much better but you know what do you need as a startup growing your business business development getting clients entering new markets so um my four fourth startup which I exited in 2017 was glambox it was a startup uh which we started in the UA and then expanded in into Saudi um so things like gaining clients uh if you're a B2B startup if you're entering a big market like Saudi um with business development but also some of the infrastructure uh such as you know board governance setting up a finance function so these are all the things that we as ilad uh try to support founders with um because we we believe it's very important uh and we've sort of learned that lesson as uh as entrepreneurs um growing the business revenues expanding into new markets um and just really we believe early stage Venture Capital you really have to be active in Hands-On you have to be by by the side of the entrepreneur supporting them uh you know uh being uh very interactive and almost operational uh I also have to say that it's very important to be part of a strong and nurturing ecosystem so we are actually based in adgm uh we really uh benefit from the Abu Dhabi ecosystem and our partners with hub71 um and uh being part of such a vibrant ecosystem in the broader UA is very important it's also very important to have access to Big markets and other ecosystems such as Saudi because at the end of the day as a startup you want to grow and scale um so I think investors being active in Hands-On but also being part of vibrant ecosystem and access to Big markets is very important Muhammad emerging Technologies you know AI blockchain web 3 Etc are sort of reshaping uh Financial Services how is SC Venture sort of leveraging these new opportunities and sort of changing the of uh of the landscape in the region thanks thanks Amir um first of all I've mentioned earlier that digital asset is one of our um key key themes out of the four themes we focus on as SE Ventures and um you know the reason why we call it digital asset first of all that it goes beyond web three or blockchain or tokenization or or other stuff so for us um we've been focusing on digital asset not just today or yesterday we've been focusing on on digital assets for for the past few years um before speaking about the challenges let me let me highlight that and let me proudly mention here that the opportunities and the support we get from the ecosystem especially in this part of the world is is increas increasingly important for us we've started building and moving some of our digital asset Ventures and businesses from different parts of the world deploying them here and increasing our um um you know investments in particular to digital asset we've also invested $100 million um by establishing a digital asset Fund in partnership with one of our strategic Partners from Japan and um obviously the opportunities the support the entire ecosystem is a very robust ecosystem as I mentioned um just a while ago now speaking about challenges um there is always an inherent risk associated with digital assets and without appropriate governance without appropriate International standard to make sure that um you know startups Ventures the entire ecosystem is growing in a sustainable and healthy manner um in a very short period of time the entire Market would struggle and we've seen many examples we in SC Ventures we would never compromise over governance the way how we build our digital asset Ventures we do it in a very systematic way we have a robust um governance structure supported by policies procedures um and we follow local and international regulatory framework I think by addressing that challenge and by working closely as Venture Builders as investors as um regulators and service providers that would ensure more and more that the vulnerability in the market is addressed and managed um William uh speaking of governance and transparency um Kaa sort of emphasizes um governance and transparency in education as well right so how are fintech and digital Assets in influencing professional certifications and educations and how is K sort of adapting to them and capitalizing on them well it's it's everything and I I love the way Muhammad summed it up that that you really have ESG and we may talk about that the G is so very important without that the the E and the S do not matter at all but we've got a whole new set of asset owners coming into this space and if you look at the global AUM Pi it used to be institutions all the time the individual investors is now dominant they have about 150 trillion versus 145 for the institution and that number is going to continue to grow the the single family office may look and behave like an Institutional asset owner but the mass affluent do not so as we're thinking about greater access to Alternatives including venture capital A lot of these fintech based tools are going to be a very very important part of it the thought of using blockchain and there are some firms in the US like Hamilton Lane they came out with a very standard uh offering for a secondary fund Cayman based fund and feeder funds hanging off of it if you want to get into the Cayman based fund $5 million minimum investment they have one run Perry pesu on the blockchain by securitize 20,000 to get into that one and it's really geared toward the management client so I think these F Tech based tools are going to be very important part of the ecosystem but if it's a faster way of taking advantage the client or a faster way of losing money that's not a very good outcome so I think the power of these tools is awesome but the governance part is critically critically important perfect seg going to my next question which is around ESG I mean with cop 28 happening in the UA last year the increasing importance of sort of sustainable finance and the growing conversation around that and with throwing EI into the AI into the mix now and how fast eii is Evol evolving how do you sort of balance um sustainable growth as well as long-term returns starting off with your Courtney uh well I think you know you mentioned cop which obviously just happened recently and uh at 500 we've made about a 100 investments in climate uh worldwide today and it's something that we're looking to do even more of um in a more dedicated strategy in the future um one thing that really stands out to us is a lot of the conversation around sustainability and climate has been very specific to um North America and kind of global North markets we'd really like to see the conversation change to talk about some of the needs that are going to be specific to the more developing World um where the impact of climate is looking to be much more outsized than um you know across the global North so I think there's still a lot of room for this conversation we are starting to see and actually invest in more um sustainability and climate oriented Technologies here in the Middle East um and we expect that uh portion of our portfolio to grow even more over the coming years perfect um kristos what are your thoughts around that does ESG and AI have any impact on sort of how ilot invests or or kind of um are you evolving your strategy to take that that into consideration yes it's definitely integrated in our part of our strategy I think the region has the opportunity to potentially leap frog in these areas uh you know into the future I think when it comes to early stage uh most of the times you're you're kind of focused on more fundamental things of you know actually being sustainable as a as a company and uh you know being able to to survive and grow so I think um at the early stage you you really have to sort of focus on as a startup um on on the basics of building sustainable companies in terms of viability Financial viability and being able to survive and grow in the future and that's something we really work with closely with with Founders uh to build companies that um will will grow sustainably from that uh perspective and of course we're watching AI very closely we think this is uh an emerging technology that here is here to stay and definitely will be integrated across the board in terms of the sectors uh we look at I think you know a lot of progress has been made in the region in terms of um these areas of of course still a lot to be done and of course we integrated it into our strategy as well uh Muhammad I mean SC Ventures digital assets is ESG a consideration for you guys in any capacity yes indeed so ESG and financial inclusion is is one of our four themes and um you know we we equally have responsibility to our communities to our clients and for us while return on investment is essential however it's always about doing the right thing and it's always about making sure that um these Investments longer term would make sense um maybe to give you some examples and um you know the current focus and we have many Ventures focusing on the sustainability angle but I would love to bring up some of the financial inclusion um you know businesses and and Investments which we've been done here very briefly and and we're very proud to do that because one of the very few in the market focusing on financial inclusion so my Zoey is one of our Ventures it's a UAE homegrown venture licensed um you know by the central bank and the primary objective is to support the blue color workers to provide them with a um accessible remittances Services saving scheme and even beyond that so that's one of our um you know fast growing Ventures um from started the the the hco is is based here and adgm and um because of the remittances angle should be on sh the other very brief example to share is um making sure that that we focus from the UAE um on the region and The Wider region so foraha is our um Purpose Driven um uh lending facility service provider based in the UAE focusing currently on some certain markets in Africa and the purpose of faraha is to provide students in Africa who cannot really um afford the the the school fee provide them with with h loans and pay them direct L to the school to make sure that it covers the educational part these are two quick examples and we have many other examples and many other um future plans um for ESG and we see this region as more and more um you know a regional a regional um Central hub for ESG and for financial inclusion perfect um from your perspective William how important is is education on ESG from an ALT investment perspective on the one hand a very important but I think ESG has a naming convention problem inside of ESG there's hundreds and hundreds of risk factors and for any LP or investor in the room to say you have to have concessionary returns that's not acceptable as a fiduciary the double bottom line has to be alive and well so I think you've got to be very very specific about the theme you're looking to solve for or risks you're looking to be exposed to so is it is it food security is it biodiversity is it climate is it energy transition you've got to be very specific on that point but if you go to your investor and say I want to have an ESG friendly fund it allows for a lot of wiggle room for exactly what you're trying to solve for and I think over uh an investment life cycle are you really going to get the benefit of that double bottom line I think not you've got to be very very specific on the theme perfect uh I think my last question to all the panelist starting with your Courtney is if there is there any specific Trend or sector in in 2025 that investors should be focusing on what are your thoughts around that I mean I I'll just skip AI because I feel like that's kind of a given at this point um I think despite the popularity of fintech that we've seen you know across the last 15 years of venture investing I still think there's a long way to go whether we're talking about financial inclusion whether we're talking about what AI will actually bring into fintech um I think fintech is going to continue to be a massive value driver across Venture and particularly Within this region and you know whether we're talking about developing or uh more advanced markets I think that's where we're going to continue to see the bulk of returns uh christas what are your thoughts I'll have to agree with Courtney on on AI I think this is an area which um is going to be top of mind I don't think we've figured out exactly how it's going to be impacting uh you know the various sectors but definitely something that we need to watch and see how we integrate beyond that in from our perspective we continue to believe in first of all digitizing the region and then innovating in key sectors we work very closely with corporates we believe you know with a lot of the traditional family groups that we work with digital transformation is on top of mind um and uh we work with them to digitize through our portfolio so there's still a lot of work to be done on the basics which is digitizing I think some great progress has been done over the last 10 years so as we as we complete the first wave of digitization in the region and then we innovate of of course AI will come and overlap across all these sectors uh so I don't think we have all the answers or even most of them but we definitely have to watch AI very closely and we we're definitely doing that Muhammad any particular sectors or trends that SC Ventures is watching out for so all sectors are still very um you know um positively growing and very optimistic about um different sectors we we've accelerated our businesses from two ventures in less than one year today we we have eight and more to come eight different businesses um the the very quick example to share here is we've just Incorporated here in adgm um our Venture um the primary objective is to provide um a B2B e-commerce for for Abu Dhabi and from Abu Dhabi to the entire region stay tuned that's something which we are investing heavily in and we are partnering with um as I mentioned earlier um you know the post office um the some of the financial institutions and the entire um ecosystem to support smmes to grow perfect William any last thoughts yeah and I see we're in overtime so I'll make this quick so uh Howard Mark's most recent memo ruminating an asset allocation it's excellent eight-page read so he talks about accessing a business do you want to be an owner Equity investor or a lender debt investor I think Venture debt at this turn of the market for the aforementioned reasons should be an interesting asset class to consider amazing thank you so much thank you to my wonderful panelist thank you to the audience for being a part of this conversation big round of applause please for my wonderful panelists [Applause] [Music]