Sawari Ventures Completes $71 Million Fund for North African Startups

Sawari Ventures, a venture capital firm headquartered in Egypt, has successfully finalized its $71 million fund. This fund is dedicated to supporting the expanding startup landscape within North Africa.

Fundraising Journey

The firm initially unveiled its fund in 2018, securing an initial commitment of $35 million. This amount was later increased to $41 million, with an original goal of reaching $70 million, as reported by Menabytes.

The initial investors included CDC, contributing $12 million, alongside the European Investment Bank, Proparco, and the Dutch Good Growth Fund.

Following an additional $30 million raise, Sawari Ventures exceeded its initial target by $1 million. A diverse group of new investors joined, including Banque Misr, Banque du Caire, Ekuity, Misr Insurance Group, National Bank of Egypt, and Suez Canal Bank.

Founding and Expertise

Sawari Ventures was established in 2010 by Ahmed El Alfi, Hany Al-Sonbaty, and Wael Amin. El Alfi and Al-Sonbaty brought over two decades of experience as investment professionals within Egypt’s technology sector.

Amin, prior to venture capital, founded ITWorx, a technology company that completed several significant acquisitions within the Egyptian tech ecosystem.

Geographic Focus

Sawari Ventures’ investment strategy centers on Egypt, Morocco, and Tunisia. The firm identifies these three nations as presenting some of the most promising investment prospects.

This assessment is based on the disparity between available capital and market opportunities. Furthermore, these countries share commonalities in language, culture, business practices, governance, and market dynamics, facilitating cross-border collaboration.

Investment Portfolio and Sectors

Since its inception over a decade ago, Sawari Ventures asserts it has invested in more than 30 companies, primarily located in Egypt.

Notable portfolio companies include ride-hailing service SWVL, software startup Instabug, and the AI-powered personal assistant Elves. The firm’s preferred investment areas are hardware, education, healthcare, cleantech, and fintech.

A company spokesperson explained to TechCrunch that they “try to cast a wide net” due to the ongoing digital transformation of emerging markets. They are observing substantial activity in the digitization of financial services, healthcare, and education technologies.

Opportunities also exist in SaaS products, semiconductors, and IoT, driven by the availability of skilled engineering talent.

Investment Stages and Flat6Labs

Sawari Ventures primarily invests in growth-stage companies. However, the firm also operates Flat6Labs, a seed-stage VC firm and accelerator.

Flat6Labs has been instrumental in executing Sawari’s seed investments since the establishment of its Cairo and Tunis offices in 2011 and 2016, respectively.

Sawari intends to allocate 10% of the closed fund to seed-stage companies through Flat6Labs Cairo and Tunis.

Allocation Strategy

Flat6Labs Cairo aims to seed between 80 and 100 companies, providing follow-on funding to 30 to 40. Flat6Labs Tunisia will seed 60 to 70 companies, with follow-on investments for 30 to 40.

The remaining 90% of the fund will be dedicated to investing in 20 to 25 growth-stage companies across Egypt, Tunisia, and Morocco, with a typical investment ranging from $2 million to $3 million.

This investment range aligns with the firm’s historical investment patterns since closing the first tranche three years ago. Sawari has previously invested between $1 million and $4 million in companies like Elves, Brantu, ExpandCart, Almentor, SWVL, and MoneyFellows.

Regulatory Compliance and Future Outlook

Ahmed El Alfi stated that the fund is a privately held entity regulated by the Financial Regulatory Authority of Egypt (FRA). This regulatory framework enabled the firm to attract capital from both local financial institutions and international development financial institutions.

“Our aim is to create exceptional returns through investing in knowledge-driven companies, which have the potential of bringing transformational changes to the Egyptian economy,” El Alfi added. “The fund will support local companies with dedicated capital, in addition to quality expertise from our seasoned and specialized team, and the value-add of our investors.”