Saudi Fransi Capital and MIS to launch $40m tech-focused venture capital fund

Al Moammar Information Systems Company (MIS), listed in Riyadh, and Saudi Fransi Capital have signed a first pact to create a venture capital fund, to invest in early-stage tech start-ups in Saudi Arabia as the kingdom diversifies its economy away from oil.

The required initial size of the fund is expected to reach 150 million Saudi Riyals ($40 million), focusing on areas of the technology sector such as software, digital services, systems, security, consumer services, health tech and fintech, MIS said. in a statement to the Tadawul stock exchange on Wednesday.

“The fund will target investments in concepts and ideas that promise significant technological innovation, whether it’s transforming its strength in traditional industries or meeting the new demands and needs of the digital economy,” said MIS.

The largest economy in the Arab world is in the midst of a major diversification program, aimed at reducing its dependence on oil revenues. One of the priority sectors is technology, with Riyadh encouraging start-ups and attracting investment from local and foreign funds.

Saudi Arabia aims to increase the contribution of small and medium-sized enterprises to its gross domestic product to 35% by 2030, from 21% currently, as part of its Vision 2030 economic diversification plan. Last year, the Ministry of Investment has launched the National Investment Strategy to unlock the investment potential offered in the kingdom to domestic and international investors.

Venture capital funding for Mena start-ups jumped to $2.6 billion in 2021, data platform Magnitt reported. The most active markets in the region – the United Arab Emirates, Saudi Arabia and Egypt – each had a deal worth more than $100 million.

MIS aims to set up, either as an internal division of the company or as a separate subsidiary, a business incubator, accelerator and innovation laboratory, called MIS Lab. This will allow it to filter, identify and develop technology start-ups focused on [regenerative] and innovative technologies,” he said.

MIS Lab will develop and leverage MIS’s internal technology start-ups, as well as provide a platform to nurture independent entrepreneurs from across Saudi Arabia and the surrounding region, the company said. He will be appointed as the fund’s exclusive investment adviser and innovation partner, with a mandate to advise on acquiring stakes in companies that align with the fund’s investment objectives.

The fund is expected to launch early in the third quarter, according to the exchange’s filing.

Updated: April 06, 2022, 10:20 a.m.

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