A US company has partnered with a Dubai firm to launch a US$100 million Islamic venture debt fund to tap into the lucrative burgeoning sector of tech start-ups in MENA.
The fund, known as the Yas Liquidity Fund, is a partnership between fintech and fund manager Liquidity Capital and the UAE’s YAS Investment. Domiciled in Abu Dhabi Global Markets, the fund is to offer minimal-dilutive growth financing options to MENA-based tech start-ups irrespective of sector. This could open up new financing lines for Islamic fintech start-ups in the region.
“The Middle East is a real hotbed for innovation right now, but venture finance has historically not been open to technology businesses in the region. This means start-ups always had to trade equity to fund growth, which is a very expensive form of capital,” said Ron Daniel, the founder and CEO of Liquidity Capital. “We are excited to be partnering with YAS Investments; together we can lead the charge to build a financial ecosystem for the region that will support tech innovation, attract highly skilled workers and help these promising companies expand globally — all while remaining compliant with Islamic finance laws.”
The fund is Liquidity Capital’s second for this year. Launched in 2017, Liquidity Capital utilizes real-time data with proprietary machine learning technology to provide customized financing solutions. It has deployed approximately US$450 million in start-ups including e-Toro.
The entry of Liquidity Capital into the Islamic venture finance arena builds on promising activities in the sector which has seen new entrants of late, including the UK’s Ethos Invest which is setting up the largest Islamic tech-based private equity (PE) fund to try to rival Malaysia’s Employees Provident Fund’s US$600 million Islamic PE fund introduced earlier in February. The direct/co-investment separate management account fund is managed by international heavyweights such as BlackRock, HarbourVest Partners and Partners Group. Watheeq Financial Services last month launched an Islamic venture capital fund investing in property technology start-ups.