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US venture capital firm Activate Capital will open its first office outside the US in Doha as Qatar’s sovereign wealth fund expands its effort to make the country a hub for tech and startup investors through its $3 billion Fund of Funds platform.
Qatar Investment Authority (QIA) put in an undisclosed sum to become a limited partner in Activate as part of the deal, and will help the San Francisco-based growth equity firm bring some of its portfolio companies into the region. Those businesses work in areas like energy, space, supply chain resilience, and climate adaptation.
Activate is the 13th venture firm to become part of QIA’s program in Doha joining other venture investors including B Capital, Founders Circle, and Liberty City Ventures. Qatar has also used partnerships with QIA as a way to attract firms including JPMorgan and Goldman Sachs to build up operations in the country.
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QIA’s move to back venture firms taking risks on startups represents a small fraction of the $580 billion fund, but is part of a broader strategy to develop the local economy, and get access to emerging managers with the potential to deliver outsize returns. Its long-term goal is to build up a venture capital and entrepreneurial scene in Doha that helps the country generate more value from research and innovation.
“It’s a commercially driven program. We’re in the business of making money here,” QIA’s head of funds Mohsin Pirzada told Semafor. Managers are also held to development goals tied to Qatar’s national strategy, he added.
The program’s aim is to bring venture firms, their portfolio companies, and their know-how to Doha. Managers must staff a local office with senior investment professionals. QIA encourages them to relocate the startups they back, offering those companies incentives like compute power once they open shop in Qatar. Pirzada also pitched Doha as a gateway market: “a four-hour flight that captures a population of 2 billion.”
Talks with QIA began about a year ago, said Anup Jacob, Activate’s co-founder and managing partner. Despite the breakout of the Iran war, decision-making stayed on schedule. “In any normal massive disruption that we’ve had in our lifetimes … business as usual just stops, and we did not find that here,” Jacob said.
Activate’s backers requested the Doha office invest from the same pool of capital rather than a separate regional vehicle, according to Jacob. Its Doha team will look for deals in Qatar and across the Global South, and will steer portfolio companies toward the region’s “much cheaper energy and much better access to compute,” Jacob said.
Being backed by QIA also helps Activate access competitive deals, he said. Jacob described a CEO with an oversubscribed round who asked, “Why should I let you into my round?” Without backers like QIA, “our capital is just capital.”
There’s still a learning curve for fund managers coming from abroad, according to Haya Al Ghanim, Qatar funds director at QIA. The most frequently asked question, she said, is about the dress code. Once they are on the ground in Doha, though, many are investing more in the country than they originally planned to, she said. “Across all the fund managers, they come in with a plan of what they are committing to do in Qatar, but what I see from all of them is they are going beyond that.”
Notable
- Like most of its peers in the Gulf, Qatar Investment Authority is maintaining its appetite for investment during the war, Semafor reported.
- The UAE and Saudi Arabia dominate venture funding, accounting for almost 90% of the $3 billion raised by startups in the region, according to venture capital tracker MAGNiTT.