Managing Partner Walid Hanna announcing the investments
The Middle East Venture Partners fund (MEVP), one of Lebanon’s larger Venture Capital funds, held last Friday the 24th, a signing ceremony with six Lebanese banks with its recently launch IMPACT Fund.
Being the first fund to comply with Banque du Liban Intermediate Circular 331, and with investor commitments in excess of $70 million USD, the IMPACT Fund is the largest non-government sponsored VC firm in the region.
Managing Partner Walid Mansour, says that one of the deal’s main challenges was to convince investors that VC is viable, relying on previous regional success stories to convince them. “We based our argument on the increasing amount of successful exits, and MEVP itself is witnessing some exists this year which we will disclose later on,” he told Wamda during the ceremony.
Even though it was “very difficult to put an independent fund structure within the lebanese rules,” as Mansour says, the fund still managed to pull it off. The IMPACT Fund is co-sponsored by BLOM Invest Bank and MedSecuritiesInvestment, and has already received for its first closing, investment commitments from most of Lebanon’s leading Banks including BLOM Invest Bank, BankMed, Bank Audi, Fransabak, Credit Libanais Investment Bank and Al-Mawarid Bank.
The signing ceremony took place at the Four Seasons Hotel Beirut and MEVP expects several other Banks to join the second closing of the IMPACT Fund, including Banque Libano-Francaise, Bank of Beirut, BBAC, LGB Bank, First National Banks, BML and others.
The whole ecosystem is expecting a lot out of this fund. “We expect this fund to do very well as we are investing in the best businesses this country has to offer and in expats who came back to Lebanon to work on these businesses, and grow their teams out of here,” says Mansour.
To date, IMPACT Fund’s Investment Committee has approved five investments worth $12.5 million USD in aggregate, four of which have been finalized, with one expected to close by the end of 2014. These five investments are:
A $3m USD investment in Mobinets, a telecom software provider launched in 2011 and specialized in next generation smart Operation Support Systems (OSS) solutions. Mobinets key product NEP (Network Entreprise Product) allows telecom operators to control and manage their network infrastructure in real time at lower costs than existing solutions. Mobinets has built a very strong portfolio of Telcos that include A1 Touch, Vodaphone Group, Orange, Zain, MTN, Ooredoo, Meditel and others.
A $2m USD investment in Fuel Powered (previously Grantoo) as part of $3.5m USD financing round alongside the Rising Tide Fund. Fuel Powered platform helps mobile games add multiplayer functionalities instaneously enabling gamers to compete with each other. The company has 30 million online accounts created and signed prominent clients such as Miniclip.
An undisclosed amount invested in Fadel Partners, a software company (local office in USA) that developed and commercialized IPM Suite and IP, Rights and Royalties managment product for a variety of global industries (media, publishing, pharmaceuticals).
A $1.5m USD investment in Klangoo, owner of the text analysis technology Magnet. Klangoo is the result of 50+ years of high profile research and development in areas of Natural Language Processing and Understanding. Magnet technology can be applied to several verticals ranging from content publishers, advertising platforms and customer support. This advanced technology has witnessed a strong interest from leading content publishers and IT companies in US, Europe, South America, and the Middle East, and will be announcing major client deals before the end of the year.
A $4m USD investment in Bookwitty, an international online book distribution company. The company started as an online seller for books sourced in Lebanon then extended its catalogue to suppliers based in France, the UK, Germany, and the USA. It relies on highly optimized supply chain processes as well as smart algorithms and services for online sales, and gives access to bookstores and publishers to more than 25 million references. This is a fast growing company with a 2013-2014 Revenue CAGR of 81.8% and expxected 2014 revenues of $36m USD.
For the businesses benefiting from the IMPACT Fund, MEVP is adopting the same approach they have been following in their previous portfolio companies. They take a board seat at each and help them manage their growth, strategic planning, and follow on funding.
But when it comes to dealing with the other banks involved MEVP is following a General Partner Limited Partner (GPLP) structure, which is followed by funds globally, so it separates the investor from the manager. “Here the investor is a silent limited partner, they don’t manage the investment nor the investment process,” explains Mansour.
MEVP launched the IMPACT Fund in December 2013 and they received in July 2014 BDL’s approval as compliant with Intermediate Circular 331. The Fund will invest $500k to $5m USD in next generation knowledge based Lebanese SAL companies that focus on the ICT sector, and other creative intellectual property driven sectors, and that are expected to grow into regional and even global success stories.
Therefore, the fund’s potential investments should have target markets covering at least the MENA region, if not the global market, while still maintaining core R&D, and back office capabilities in Lebanon.
MEVP expects the investment incentives from Intermediate Circular 331 to encourage Lebanese expat entrepreneurs as well as foreign entrepreneurs to establish ICT ventures using Lebanon as their launching pad. The ultimate goal is to create sustainable, highly tech jobs that will energize Lebanon’s future economic development.
“When you have structured smart capital executed properly, you have good investment opportunities,” said Mansour.