Wamda Capital’s former Managing Partner Khaled Talhouni is leaving the firm after spending six years with them to launch a new fund that will invest in startups across the Middle East, North Africa, East Africa, Turkey, and Pakistan. The fund called Nuwa Capital is targeting $100 million in commitments and would invest in direct-to-consumer (D2C), fintech, mobility, logistics, and enterprise startups.
Khaled announced the launch of the fund at Step Conference in Dubai earlier today, saying that Saudi conglomerate Al Faisaliah Group is joining Nuwa Capital as a strategic partner and anchor investor.
During his time with Wamda, Khaled led and managed investments different investments on behalf of the firm including Careem, Twiga Foods, Insider, and Mumzworld.
Speaking to MENAbytes about leaving Wamda Capital, Khaled, said, “I’m very proud of all the work we’ve done at Wamda Capital and am extremely grateful to have had the opportunity to be part of something so very special and to work closely with Fadi. Working closely with founders and entrepreneurs over the years, I felt inspired by their stories and felt that it was the right time to undertake my own entrepreneurial journey.”
Redefining Venture Capital in emerging markets
Nuwa Capital is not just another VC, at least on the surface. In their own words, they aim to redefine the relationship between founders and capital by providing a progressive founder centric approach to investing in the emerging markets.
Khaled spoke to MENAbytes to explain what this effectively means and the thing that stands out in their model is value creation.
“We will deliver on value creation through providing access to our portfolio to a network of the region’s most accomplished founders that will help support all our entrepreneurs,” said the managing partner of Nuwa, adding that they have already signed up names like Hosam Arab, Samih Toukan, Husam Khoury, Nour Al Hasan, to help their future portfolio companies.
Nuwa will also have operating partners who are subject matter experts in their respective fields and will help the entrepreneurs that Nuwa invests in by providing support across technology, product, recruitment, legal, growth hacking, and corporate finance/fundraising.
I have been speaking to VCs in the region for over two years and haven’t come across anyone who wouldn’t use ‘value creation’ and being ‘founder friendly’ as their USPs but the unfortunate truth is that not many in the region follow a structured approach towards value creation, a gap Nuwa could fill.
It is incentivizing both the founders who join its network to help its portfolio companies and the operating partners who are subject matter experts (apparently working part-time for Nuwa and) will help the companies with different things. Khaled did not share further details about the model but told MENAbytes that they are incentivized through a uniquely structured upside sharing mechanism that reinforces the relations relationship between the founders, the operating partners, and the underlying portfolio companies.
Khaled thinks that the biggest challenges faced by startups in the region include complex operational environment, lack of on-the-ground support and limited value add from investors, and lack of alignment between capital and founders. They’re trying to solve some of these with Nuwa.
Sharing the upside with their founders
Nuwa Capital will also share the carried interest (the share of profit of the fund that normally goes to its general partners) they make from their investments with the founders of the startups they invest in. The carried interest is typically 20 percent of the profits with the rest of 80 percent taken by the limited partners (LPs) of the fund.
“We want to build lasting partnerships with founders and we believe that entrepreneurs are at the heart of our story. In recognizing that and in building lasting relationships with these founders, we will share our upside and carried interest with the founders of each company we invest in,” said Khaled, speaking to MENAbytes.
“This is the first step in demonstrating our deep commitment to aligning with founders and building a differentiated entrepreneurial network that is collectively incentivized towards delivering value,” he added.
The multi-market opportunity
Al Faisaliah Group, the conglomerate that’s anchoring Nuwa Capital will help Nuwa’s portfolio companies with their entry (and growth) in Saudi, which Khaled (rightly) points out is a key market in MENA. Al Faisaliah has a presence all over the Kingdom through its companies and joint ventures that operate in different sectors including dairy, healthcare, consulting, petrochemicals, food, and beverage, petrochemicals and pharmaceuticals.
“We believe there is an opportunity to help scale companies from each of these markets into each other and we will actively look to invest in companies that we can help support in scaling across not the GCC and MENA but also across Turkey, Pakistan and East Africa,” said Khaled.
Nuwa Capital hasn’t started investing yet but is already speaking to different startups in the region and expects to close a few investments in the next few weeks. It did not share the details about how much it has already raised but said that they have a warehousing facility that will allow them to start investing immediately.
The fund will invest in seed to Series B startups and is looking for founders that share its passion for “upending the status quo and redefining the industries and sectors that they are operating in.”
Speaking of their pipeline, Khaled said, “It is extremely healthy both qualitatively and quantitatively. We feel uniquely blessed to form this investment platform right as the markets we operate in are starting to mature.”