China's MSA Capital backs Saudi B2B start-up
China’s MSA Capital has joined a $30.5 million round for Saudi Arabian B2B services marketplace Sary as part of a deepening Asia-Middle East agenda.
The round was led by Dubai-based VentureSouq and included participation from Raed Ventures, Derayah VC, and US-based Rocketship.vc, as well as Saudi sovereign wealth fund PIF. It follows a $6.6 million round last year that also featured MSA.
MSA is considered a pioneer in cross-over strategies between the two regions. Its previous investments in the Middle East and North Africa (MENA) include United Arab Emirates-based financial technology provider Tabby and Egyptian bus-hailing app Swvl.
The VC firm set up a $50 million fund with Al Salam Bank-Bahrain targeting cross-border opportunities between China and MENA in 2019. Its second flagship fund is supported by Bahrain-based fund-of-funds Al Waha, which aims to transform the Gulf region through technology-related connections in Asia.
Sary will use the new funding to expand its geographic footprint, as well as to further develop its products and technology. The company, which connects small businesses with wholesalers and brands, also plans to move into credit services.
“We’ve seen similar business models win in other emerging markets, and we believe that the MENA market as a whole represents a similarly interesting opportunity.” Suneel Gokhale, a co-founder at VentureSouq, said in a statement.
VC investment between Asia and MENA is an emerging strategy, although there are indications it could be starting to take hold as a trend. According to Preqin, VC investment in MENA with Asian participation averaged only $1.2 billion a year between 2016 and 2019. Last year, it jumped to $2.1 billion.
“It’s definitely accelerating in the last two years. We’re seeing more crosspollination and more interest from VCs in the Middle East,” Philip Bahoshy, founder of MENA venture capital data platform Magnitt, told AVCJ earlier this year.
“In the start-up world, scale is the name of the game. To get your unicorn valuation and beyond, you need to be able to operate in geographies across multiple continents. Valuations are a lot lower in MENA, which provides a great opportunity for Asian investors to acquire companies in MENA to build out their proposition toward IPO or acquisition.”
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