Silicon Valley Firm Joins Gulf Investors to Fund Tech Deals

(Bloomberg) -- A Silicon Valley venture-capital firm is targeting cash-flush Middle Eastern investors to fund technology companies, all while scouting the Gulf for buying opportunities.

Tribe Capital Management LLC partnered with Dubai-based boutique financial and investment adviser Arrow Capital in a first-of-its-kind cooperation deal for the Gulf, according to Arjun Sethi, Tribe’s co-founder.

“We need a touch point everywhere,” he said in an interview. The need to adapt to the “future at a faster pace” has seen premiums for tech companies soar, while also spurring Silicon Valley companies to broaden funding sources as they expand and invest globally.

The San Francisco-based firm has invested about $450 million in companies like software developer Carta Inc. and self-driving simulator Applied Intuition Inc. since its formation about 2-1/2 years ago.

The push for new avenues of financing comes as investors from the Gulf seek alternative assets such as private equity or venture funds to diversify away from real estate, fixed income or equities. Ultra high-net-worth individuals and family offices are looking to follow sovereign wealth funds making technology investments abroad.

Abu Dhabi’s Mubadala Investment Co. led a $700 million funding round for a technology startup backed by SoftBank Group Corp. The fund also joined global investors who poured billions of dollars into businesses controlled by Indian billionaire Mukesh Ambani.

Saudi Arabia’s Public Investment Fund has taken a similar approach, while Kuwait’s $124 billion pension fund owns a quarter of U.S. private equity firm Stone Point Capital LLC.

‘Pockets of Innovation’

Investors are chasing investments in technology firms before valuations become too elevated, said Sumit Mehta, managing director of Arrow Capital.

At the same time, “pockets of innovation” from the region are attracting interest, Mehta said, which has resulted in a wave of deals involving global investors.

Uber Technologies Inc. acquired ride-hailing rival Careem Networks FZ for $3.1 billion last year. Amazon Inc. in 2017 bought Dubai-based online retailer Souq.com, while General Atlantic in 2018 invested $120 million in real-estate advertising company Property Finder.

Investments in Middle East and North African startups jumped 35% during the first half of the year, with companies in the United Arab Emirates raising the bulk of the funding, according to Dubai-based Magnitt Inc.

Dubai-based Amanat Holdings PJSC last month made its first foray into venture capital as part of a plan to deploy about $272 million. Atomwise Inc., a San Francisco-based company that uses artificial intelligence to discover medicines, this month raised $123 million from investors including Saudi Arabia’s Sanabil Investments.

Tribe Capital looks beyond geopolitical woes when considering investments.

“We’ve already partnered with folks in the GCC and not all investments are equal,” Sethi said. “We always need to look outside of political tensions that might exist everywhere.”

©2020 Bloomberg L.P.