The skyline of Doha, Qatar.
Tim De Waele | Corbis | Getty Images
The Qatar Investment Authority is leveraging its over-$500 billion in assets to attract venture capital firms to the hydrocarbon-rich state.
The sovereign wealth fund’s $1-billion fund of funds program — which invests in both international and regional VC funds — is designed to bolster investments in areas such as technology and health care, as Qatar looks to diversify away from its dominant oil and gas industry.
Now, it’s accepted its first group of venture capital fund managers.
B Capital, a tech-focused firm led by Facebook co-founder Eduardo Saverin, is among the group of VCs set to launch in Doha, opening its first Middle East office in the Qatari capital. It joins Rasmal Ventures, Utopia Capital Management and Builders VC, which have also joined the program.
Raj Ganguly, co-CEO of B Capital, hailed the Gulf state’s approach to artificial intelligence, and its support for the sector, as of particular interest.
“With all the sandboxes that have been created here in the GCC (Gulf Cooperation Council) to trial new types of AI, we think it’s an incredibly exciting time,” Ganguly told CNBC at Web Summit Qatar in Doha on Monday. “We believe innovation can come from anywhere. We want to back founders from the GCC who have a global mindset.”
B Capital, which focuses on enterprise, fintech, health care and climate investments, has over $7 billion in assets under management and says it targets seed to late-stage growth technology investments.
Mohsin Pirzada, head of funds at QIA – a huge sovereign wealth fund with stakes in prize assets ranging from London’s Harrods to Heathrow Airport — told CNBC that the program has a dual investment mandate.
“Firstly, we seek strong commercial returns and secondly, we seek for positive impact across the VC ecosystem in Qatar,” he said.
He added that the fund of funds was looking for VCs looking to deepen their roots in the country. It aims to “have a beneficial impact on the local economy, to boost deal flow in the market and to support the development of a thriving ecosystem underpinned by a strong private sector,” he added.
A test for Doha
The move comes as Doha faces a particular challenge in attracting financial services firms. In addition to boasting a young, digital-savvy population, many countries in the Middle East also offer incentives to lure storied financial services firms.
Riyadh, for example, has launched a program requiring any company that seeks government contracts to move its regional headquarters to Saudi Arabia, offering corporate tax incentives. The Kingdom has seen several Wall Street firms move to the Saudi capital as a result, including Morgan Stanley, Goldman Sachs, Lazard and BlackRock.
The UAE is also targeting global firms, with billionaire Ray Dalio, hedge fund Brevan Howard, asset manager PGIM and private equity giant General Atlantic all setting up offices in capital Abu Dhabi.
“The key word here is ‘compliment’ — this is a relatively small region, so when one country wins, we all win. If we are all attracting businesses, innovators and helping companies to scale, we will all benefit,” the QIA’s Pirzada told CNBC.