Introduction
I am delighted to present this third edition of our annual MENA Venture Law Guide, a selection of articles prepared by myself and my excellent team of lawyers on the legal aspects of venture capital financing and fund management aimed at both founders and investors.
It has been an exciting year for our firm. We are proud to have significantly strengthened our MENA team, adding key expertise in intellectual property and investment funds through the hiring of senior specialists with deep knowledge of the region’s ecosystem. Additionally, our client base in the tech and VC sectors continues to grow, and we are expanding our team to meet this increased demand.
After a challenging couple of years, the venture capital ecosystem in MENA is at a pivotal point, presenting both challenges and opportunities. As Head of our Corporate practice and as a seasoned corporate lawyer in our region, I’ve had the unique perspective of witnessing the rapid evolution of the ecosystem and have been retained by several key regional and global players to represent them and help them navigate the nuances of their most critical milestones.
On the investor side, it is fair to say that Limited Partner (LP) sentiment has evolved. There is a growing preference for fund managers with proven track records and institutional-grade practices. And there is no question that a top tier of VC firms has emerged that can show healthy returns on capital in the form of cash distributions rather than simply ‘paper gains’.
These players are undoubtedly pushing out less experienced managers who lack the necessary credibility, but no matter where in the pecking order you stand, the last year has been extremely challenging for those raising capital. Nevertheless, in our Investment Funds practice, we have been incredibly busy working with fund managers to establish new funds and on the downstream side, we have been fortunate to work on some fantastic deals.
On the founder and company side, we have had the pleasure of working with some super founders this past year raising significant capital from tier 1 funds at various investment stages. At the same time, we have also noted an increasing amount of friction, between founder and investor constituencies, often stemming from governance issues and shareholder disagreements dampening the positive momentum.
One of my favourite parts of this job is being able to work with management teams and investors to navigate these tricky situations and help everyone remain focused on achieving outcomes that deliver the maximum value to all stakeholders.
One of the most exciting trends this year has been the emergence of secondaries as a distinct asset class bringing exciting opportunities to several stakeholders in the ecosystem. For founders of successful scale-ups, it represents an opportunity to de-risk their lives and allow them to focus on building, scaling and achieving great exits. For early-stage investors, it is an opportunity to realise a return on an ageing investment and do something else with the cash. For experienced investors who can bring real value to growth-stage companies, it represents an opportunity to get on a cap table and assist in the creation of future value.
We have been privileged to work with the region’s first dedicated secondaries fund focused on venture-backed companies and we are very excited about helping the fund execute on some fabulous deal opportunities.