New Venture Capital Shop Opens In Dubai To Fund Emerging Markets

Dubai: A new venture capital (VC) firm, focused on investments in emerging markets, is set to launch in Dubai, backed by the embattled Abraaj Group.

In an exclusive interview with Gulf News, senior executives at Bakery, which is set to officially begin operations in the coming months, described in detail the remit of their new investment vehicle, and the role that the Abraaj Group is playing in their business.

With an investment scope ranging from $500,000 to $5 million (Dh1.8 million to Dh18.3 million), covering early-stage funding all the way through to expansion and later-stage funding, Bakery will operate in Dubai, Lahore, Cairo, Lagos, Nairobi, Istanbul, and Karachi.

That said, the company says it is not ruling out any investment, so long as it is in an emerging market.

“We’re tired of looking to the West. There’s a lot of talent, a lot of quality ideas and commercial thinking and acumen here, we should be building that locally over here,” an official company spokesperson told Gulf News in a recent interview.

The company is currently self-funded by its founding members, who include Faaris Naqvi, son of Abraaj Group founder Arif Naqvi.

On its relationship with the Abraaj Group, one of the largest private equity firms in the Middle East, the spokesperson for Bakery said Abraaj had “effectively allowed us to get to this stage.”

They declined, however, to comment on the firm’s current turmoil. Abraaj’s chief financial officer recently departed the company, the most prominent executive to quit since founder Arif Naqvi announced his intention to leave over concerns related to the alleged misuse of funds.

Alongside Bakery’s internal investors, the company says it has been funded by external backers too.

Current investments

The company’s spokesperson refused to say who was investing externally, or exactly how much the company had raised, but did say that Bakery’s vision for the future was to eventually raise a fund.

Traditionally, venture capital firms turn to wealthy individuals and institutional investors such as pension schemes or insurance companies, to raise a fund, with a specific investment strategy and philosophy.

As for its current investments, Bakery’s spokesperson said that the company had only made one so far, with a further two expected to close in the coming months.

“We have one transaction that has closed completely towards the end of last year, and we have already been actively involved in growing that business,” they said.

Describing the start-up as an educational technology and software business, they said that the company had developed a school management system, focused on “growth market schools with an emphasis on data analytics.”

Saying it would actively reduce inefficiencies in a school’s operations, the spokesperson said it was a business that Bakery was “extremely excited about.”

“Personally I think it’s a huge winner in our portfolio. In the Middle East and North Africa region today, it’ll be very hard to come across a business and a management team like the one we have with that business,” they added.

Investment philosophy

The company declined to disclose any details about the other two start-ups, only saying: “If we gave any information about them, you’d immediately know who we were talking about.”

Responding to a question about the VC’s investment philosophy, the spokesperson said “the Bakery is built on the belief that emerging markets are more similar than they are different.”

“Karachi is much more similar to Cairo or Lagos than it is to Dubai,” they continued, adding: “That is due to the infrastructure and efficiencies that exist in these markets.”

As a result, the company says it wants to enable an entrepreneur in Cairo to be able to launch, or expand, their business from any Bakery across its network.

“Often you see entrepreneurs in Cairo that have scaled quite well, and when they look to expand their business to Saudi Arabia or the UAE, because of language and proximity, they struggle because in essence the problems they are solving in Cairo don’t exist in these markets.”