As high-velocity economic diversification becomes the need of the hour in the Middle East, global leaders highlight opportunities for smart and well-capitalized investors at the Investopia Conference 2023 in a session titled Venture into Untapped Markets: Private Growth Investing.
The discussion was led by Arjun Sethi, Co-Founder & CEO of Tribe Capital, Noor Sweid, Managing Partner of Global Ventures, Ahmed Al Nowais, Founder & CEO of Annex Investments, Ron Daniel, Founder & CEO of Liquidity Group and Ravi Viswanathan, Founder & Managing Partner of NewView Capital.
The discussion delved into unique approaches to deploying capital and being opportunistic in the current environment. It also underlined the impact of excessive diversification and high-velocity profit-making and that looking forward the focus should be on industry-specific areas of investment, and efficiency-based growth.
Arjun Sethi, Co-Founder & CEO of Tribe Capital, suggested that quantitative analysis is essential in capitalizing on investment waves. He noted that experienced investors need to focus on the long-term durability of companies, rather than solely on interest rates. Sethi also observed that the R&D and healthcare sectors have received the most investment capital. He stated that the venture capital asset class focuses on short-term focus which eventually detracts from long-term durability, which is crucial for success. Finally, he emphasized on the importance of flight to safety, as well as distribution and velocity, in today’s investment climate.
Ravi Viswanathan, Founder & Managing Partner of NewView Capital, believes that due to the current overhang in the venture capital industry, firms should focus on high-velocity profit making. He remarked that reserve management is an issue in many firms, and they need to prepare for a long period of downturn. Viswanathan highlighted that larger firms have thousands of companies in their portfolio, and this is the point wherein growth goes down from 100% to 30%, lowering the options for companies.
Noor Sweid, Managing Partner of Global Ventures, said that as a UAE-based VC firm that focuses on Series A investments in many countries, the company has covered around $3 billion, with one-third of it was in Saudi Arabia. The region’s ecosystem has grown significantly in the last five years, but it is still in its infancy compared to other regions. The company is betting on two industries – supply chain tech and agritech – to be completely different in the next five years. She also said that the government is supportive, and founders are very creative.
Ahmed Al Nowais, Founder & CEO of Annex Investments, that his focus is on three verticals: MENA region startups, launching a venture builder soon, and representing multinational companies and startups. He plans to launch a venture builder because he has experience as a founder and has built nine companies. Many startups in the region fail due to difficulties finding the right talent.
Ron Daniel, Founder & CEO of Liquidity Group, lends to late stage companies. He believes that the industry needs to adopt new methodologies that keep pace with the fast-moving market. While automating decision making and due diligence, it is essential to employ a hybrid approach of human and machine learning, rather than relying solely on machines for critical decisions. The purpose of a good partner is to provide a sanity check for the technology, and every decision that technology makes must be reverse engineered to arrive at 10 to 100 million-dollar decisions in less than a day.