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Wednesday, 8 December 2021

Making it rain

Cairo Angels announces first close on USD 5 mn micro-VC fund. Angel investment group Cairo Angels reached first close on its Cairo Angels Syndicate Fund (CASF), it said in a statement (pdf) yesterday, without putting a figure on the value of the commitments it locked in for the first close. The first close was raised by individual investors, family offices and one institutional investor, who will formally join the fund in 1Q2022, the statement reads. The Delaware-incorporated fund aims to reach a second and final close at USD 5 mn by the end of May 2022 with institutional investors, CASF CEO Aly El Shalakany tells us.

CASF plans to invest USD 100-250k in 20 startups in the Middle East and Africa over two and a half years, with a focus on Egypt, the UAE, KSA, Nigeria, Kenya and South Africa, El Shalakany says. “Already now, there are more startups than we have money to invest in that are amazing,” he reveals, adding that he believes that the quality will keep getting stronger.

More may be available: The fund will enable LPs to commit additional capital on a case-by-case basis, potentially allowing the fund to write tickets of up to USD 350k per investment, El Shalakany said.

Most of the money is heading to Egypt: Two-thirds of the fund will be invested in Egypt. It is sector-agnostic and will focus on early-stage scalable startups.

Ready to deploy capital, CASF already gave a soft commitment to four startups. Sectors that are interesting for the fund are fintech, edtech, healthtech, SaaS and e-commerce.

Think of CASF as a micro-VC fund focusing on post-seed and pre-series A investments, to fill the “missing middle” of USD 100k and USD 500k. Startups wanting to scale can find themselves in a bind when seeking investments in that frame, since there are barely any investment vehicles that focus on that spectrum. The fund has the agility and mindset of an angel fund, and the discipline and speed of deployment of a VC, El Shalakany says.

The missing middle came to life because startups scale at a slower pace in “our part of the world,” he adds. Moving from seed to series A in Silicon Valley may take a year, while in our neck of the woods, it can take two to three years, El Shalakany says. Funding is critical in that period but that ticket size is a bit too much for an angel investor, while being too small for a VC outfit.

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