VC to benefit from Middle East diplomacy changes

The Abraham Accords normalised relations between the UAE and Israel, and investors in the Middle East are optimistic about the opportunities.

Jon Medved

Investors in the Middle East are optimistic about the venture markets in Israel and the United Arab Emirates after the signing of the Abraham Accords.

The agreement, agreed in late September, normalised diplomatic and business relations between the nations, potentially uniting and accelerating the established Israeli venture market and the UAE’s fast-growing tech ecosystem.

Investors see strong potential opportunities. Jerusalem-based OurCrowd was quick to embrace the new frontier. Firm founder and CEO Jon Medved says he noticed a change in sentiment a year ago when speaking at a conference in Abu Dhabi, noticing Emiratis were interested in what he had to say about the Israeli market. “That was an indication to me that things had changed,” Medved says. “I was just welcome. No one ever said anything negative.”

OurCrowd, the global crowdsourcing venture firm, got to work. Since the signing it has announced multiple projects across the region, including a memorandum of interest with Phoenix Capital, the business development company headed up by Al Naboodah Investments. The pair committed $100 million to a partnership to invest in tech companies in both countries.

“For us, this is strategic, not just opportunistic,” Medved says. “We want to build a strong base there. We are talking to the regulators. We are setting up shop not only to help access capital for our funds, but more importantly to invest there.”

The firm also hired Sabah al-Binali as a venture partner and head of the Gulf region, in September. Al-Binali, who counts more than 22 years’ investing and operational experience, will source potential portfolio companies and investors while also helping OurCrowd portfolio companies expand between the two countries.

Medved thinks investments into the UAE could become a significant portion of OurCrowd’s business. He forecasts attractive opportunities in areas such as fintech, transportation and logistics.

A strong partnership

Medved predicts other firms and LPs from both countries will follow suit.

Matthew Salloway is a co-founder and managing partner of SIP Global Partners and the CEO of GSI Ventures, a single-family office of a Middle Eastern family. SIP Global Partners focuses on technology companies that could expand into underserved markets. “We believe that the technology ecosystem in the Middle East will be so accelerated now with the similarities that exist between the Israelis and Emirati,” Salloway says.

Al-Binali agrees: the Gulf region has had a long history of entrepreneurship but a relatively short history of venture capital, which he thinks will change.

The fundraising environment will evolve too. Some of the largest sovereign wealth funds and potential LPs in the world are based in the region and this will allow Israeli managers to more easily access these capital pools.

“When you talk about investors investing in Israel, I don’t think that you had the scale that you will have now,” Salloway says.

For instance, Abu Dhabi Investment Office, a UAE state-owned investor, announced in September that it will open its first office outside of the country, in Tel Aviv. Investors highlight this change won’t just reflect positively on the two countries involved, or even just within the Middle East region, but could create strong opportunities for global investors and the global venture ecosystem.

“Israel is the gateway to the West and the UAE is the gateway to the rest of Asia,” al-Binali says. “This bridge between the UAE and Israel… just strengthens the connection from the West to the East.”