EIB, cornerstone investor of Sadara Ventures First capital fund targeting Palestinian tech companies
- Apr 20, 2011
EIB has been the first investor to have committed to the Fund (EUR 5m or approx. USD 7m), which has closed with total commitments amounting to USD 28.7m.
The Bank’s participation as a cornerstone investor has played a critical role in attracting other investors to this first time fund operating in a very difficult environment, in particular given the current economic situation. The Bank is the first IFI to support the Fund. Its involvement has acted as a catalyst to allow the Fund to attract other investors. EIB’s interest and involvement in the Fund is perceived by other financial institutions and by the Palestinian Authority as a very important sign of trust and optimism in the potential of a knowledge-based Palestinian economy.
The Fund has secured $28.7m from leading international companies, foundations, and other investors for the first venture fund targeting Palestinian technology companies, as follows at First Closing :
- European Investment Bank
- Cisco (the US-based multinational corporation) in Israel and California;
- NY-based Soros Economic Development Fund;
- Skoll Foundation;
- Google Foundation;
- Basel Asset Management;
- Case Foundation (Alps Investment, LLC);
- Peter & Deborah Weinberg Foundation;
- a number of high net growth individuals.
The Fund is beginning to evaluate investment opportunities from its office in Ramallah.
- First tech venture capital fund ever in the Palestinian Territories
The Sadara Fund will invest in start-up companies in the internet, mobile and software sectors created by ICT entrepreneurs in the West Bank. Palestine IT and software exports have grown consistently over the last decade. Several major multinational technology companies including Cisco, HP, Intel, and others have begun outsourcing development work to Palestinian software companies, capitalizing on the educated and entrepreneurial population and developed IT infrastructure, which includes several thousand skilled Palestinian engineers and 13 higher learning institutions.
The Fund is promoted and will be managed by an independent management company founded by Yadin Kaufmann (over 22 years of venture investing experience in Israel and in the US) and Saed Nashef (a seasoned technologist and successful entrepreneur with over 15 years experience in the software and high-tech industry in the West Bank and in the US). The management company will have offices in Ramallah (West Bank) and Herzliya (Israel).
The two key managers of the Fund will bring complementary skills with many years of venture capital investing, entrepreneurial and operating experience.
The Fund will contribute to the development of a private equity industry that offers a type of financing still relatively new in the region. It will respond to the equity financing needs of innovative companies in the start-up phase and will assist Palestinian entrepreneurs in accessing international markets.
The Fund will also have the social objective of revitalizing distressed regions encompassed by the Palestinian Territories by investing in small and medium sized businesses, thereby increasing economic opportunities, stability and security, and creating jobs for Palestinians.
- An example of partnership : the Palestine Information and Communications Technology Incubator (PICTI)
EIB has provided EUR 200,000 technical assistance under the FEMIP Trust Fund to PICTI, the Palestinian incubator.
PICTI is an independent, not‑for‑profit, non‑governmental organisation, based in Palestine. Its main mission is to provide entrepreneurs with an integrated package of world class business development services to nurture and support the commercialisation of ideas and to enhance the development and growth of dynamic enterprises. This will constitute one of the important sources of deal flow for the Fund.
The EIB is financing a technical assistance to PICTI to help it face the challenge of extending and sustaining its service-lines. The general purpose of this technical assistance is to contribute to the growth and development of the Palestinian ICT sector, by helping the principal Palestinian ICT incubator improve the quality of its incubating services and thus to increase the number of viable ICT start-ups flowing into the market.
In terms of results, a much wider transfer of knowledge to the ICT community and financial intermediaries across the Palestinian territories is expected in the long term, as well as the following points :
Capacity building through coaching and training to reinforce PICTI’s staff expertise in deal sourcing and appraisal and providing strategic support services to incubees, in order make them investment-ready;
Establishment of processes and techniques to develop a consistent approach for the selection of projects and the sustainable and efficient provision of incubating services.
Enhancement of PICTI’s staff communication with outside investors, by focusing on liaison processes and establishing due diligence and deal structure check lists and templates.
The Facility for Euro-Mediterranean Investment and Partnership is the principal financial partner between Europe and the Mediterranean, and the foremost investor in risk capital. Through it the European Investment Bank has committed over EUR 230 million to 39 investment funds throughout the region.