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Abu Dhabi’s ADQ invests $125m in female-led private equity fund

ADGM
Aliph Capital, based in Abu Dhabi's ADGM Square, wants to back up to 12 SMEs
  • Sovereign wealth fund ADQ to back Aliph Capital’s debut fund
  • Aliph, set up by Huda Al Lawati, aims to invest in about 12 SMEs
  • Women in VC are more likely to invest in female founders, studies say

An Abu Dhabi sovereign wealth fund has invested $125 million in a female-led private equity firm – just two weeks after a survey revealed that two-thirds of female founders in the region believe the only way to tackle the gender imbalance in funding is to have more women making the decisions.

ADQ’s investment is half the $250m targeted for the debut fund from Aliph Capital, which was launched last year by Huda Al Lawati.

“Aliph Capital will seek to acquire sizeable, active positions in privately owned mid-market companies across the GCC that possess robust business fundamentals,” ADQ said in a statement published by Reuters.

The fund aims to invest in up to 12 small and medium-sized companies for five to seven years.

The investment follows news that just two percent of the $2.4 billion invested in Mena startups in the first nine months of this year, or around $50m, went to companies founded solely by women, according to Wamda, the largest early-stage investment fund in the Middle East.

In September the monthly figure fell to 0.03 percent, the lowest percentage so far this year.

Wamda‘s research, unveiled on October 11, also surveyed startup founders across the Middle East. It found that 66 percent of female founders believe the best way to direct more cash into their companies is to have more women in venture capital firms.

“ADQ’s commitment to investing in Aliph Capital, a debut fund which is fully female-led, is very encouraging news for the UAE market,” said Ryaan Sharif, UAE general manager at Flat6Labs, a Cairo-headquartered venture capital firm that manages seed funds on behalf of around 25 institutions across the Middle East and North Africa.

“It sends a message that there is a real commitment to supporting both small-to-medium enterprises as well as female-founded businesses.

“Positive signals like these, when they are most needed in regard to the current economic dynamics, are why Abu Dhabi’s leadership is at the forefront of the investment landscape in the region and beyond,” Sharif told AGBI.

Dubai-based Lucy Chow is general partner at the World Business Angels Investment Forum Angel Investment Fund, which gives half of its funding to female or diverse founders.

“The fund launched by Aliph Capital is good news for both male and female founders in the region. In particular for scale ups that have found it difficult to find investors from the region,” she said.

“Excited that it is the first Middle East female-led private equity firm. I know there is room for the exact same model- female-led, but with a focus on early-stage capital.

“The investment from ADQ is crucial,” she added. “I would like to see much more private-public partnerships when it comes to the creation of funds. The opportunities exist in the region and I hope this signals that more funds, with government anchor investors will be forthcoming.”

The Center for Women’s Entrepreneurial Leadership, at Babson College in Massachusetts, has researched the impact of female decision-makers on funding.

It found that venture capital firms with a female partner are more than twice as likely as firms without one to invest in a company with a woman among the management team and are three times more likely to invest in a female CEO.

Aliph Capital founder Huda Al Lawati, seen on the big screen at a SuperReturn event on diversity in private equity, last November. Picture: SuperReturn Twitter

Jane Valls, executive director of the GCC Board Directors Institute, believes the Gulf needs its own version of the US initiative All Raise, which wants the number of female decision-makers at technology VC firms with assets under management of more than $25m to be doubled to 18 percent by 2028.

“Let’s ensure that VC funds have more women on their boards and in their teams and that startup investors broaden their portfolios to include female-founded startups,” Valls said.

The UAE government recently mandated that all listed companies must have at least one female director on their boards. In July, it was revealed that 8.9 percent of board seats at 115 listed UAE companies were held by women, up from 3.5 percent in 2020.

This suggests that legislative action can bring about swift change. Some industry experts believe the government should introduce a quota for funding female startups – and say doing so would be good for business.

Chow pointed to research by Boston Consulting Group that found every dollar of funding given to startups co-founded by women returned an average of 78 cents, while male-founded startups generated 31 cents. 

“If we want to see any measurable increase in funding going to female founders, quotas are required,” she said.

“I wish to reiterate again that this should not be seen as ‘affirmative action’. This is a smart return on investment strategy.”

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