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China-Bahrain Venture Capital Fund Announced, Can Invest Outside Kingdom

Funds established in Bahrain are not restricted to investing in the kingdom; Bahrain has the region’s largest Fintech hub – Bahrain Fintech Bay; The combo provides great investment opportunities for private and public entities in South Asia and Asia also.

BE2C2 Report – A Chinese-Bahraini venture capital fund is on the cards to
help start-ups from around the Middle East gain access to the capital they need in order to expand.

The fund announcement comes amid major economic reforms in recent years, including a reduction in the minimum capital required for starting a business, the launch of the region’s largest Fintech hub – Bahrain Fintech Bay, measures to enable onshore crowdfunding in conventional and Sharia-compliant finance and the introduction of a regulatory sandbox for Fintech.

Talking to the Gulf Daily News (GDN) on the sidelines of a Ramadan majlis organised by the investment promotion agency in Manama, Mr Al Rumaihi said, “We are also hopeful of announcing another investment with a Chinese venture capital firm because we think a bridge to the east is as important as a bridge to the Middle East and the West.”

The MENA region is witnessing one of the fastest growth in digital economy albeit e-commerce led by Arab youth. According to the nearly two-thirds of the people in MENA are under the age of 30.

Headquartered in the kingdom’s capital Manama, the unique fund will bridge Bahraini entrepreneurs with Chinese business models, said Economic Development Board (EDB) chief executive Khalid Al Rumaihi.

Mr Al Rumaihi has just returned from a week-long trip to Los Angeles and San Francisco, having met several technology companies and remains very positive about Bahrain’s ability to attract other significant names on the back of Amazon Web Services.

“We had very positive meetings and hope to build on them and I think we will see increased momentum in terms of our attraction for the technology names we all know.”

“I think we will start to see the funds we have deployed start to set up in the country in the next few months so you are going to see physical evidence of VC funds here.”

“We are also hopeful of announcing another investment with a Chinese venture capital firm because we think a bridge to the east is as important as a bridge to the Middle East and the West.”

“That will be a very unique fund. It will be set up in Bahrain as its headquarters and will bridge Bahraini entrepreneurs with Chinese business models.”

“The EDB will soon announce a Los Angeles based sister working place for Bahrain Fintech Bay (BFB). So we will soon have a sister location for BFB in the heart of California, so we can link Silicon Valley with Bahrain to allow entrepreneurs between the two locations to interact and be focused on Fintech.”

“We feel the regulations in Bahrain are so advanced, US companies would want to set up here.”

Mr. Rumaihi said there are still challenges though. “When we talk to Fintechs and other start-ups there is one area that consistently comes up more than any other as a major constraint on growth – funding.”

“This is why we were particularly excited when Bahrain Development Bank launched a new $100 million venture capital fund of funds – capitalizing on Bahrain’s position as a regional financial center to help address this challenge.

The Al Waha Fund of Funds will invest in venture capital funds that have a presence in Bahrain. As a result, it is expected to help attract new funds to Bahrain, boosting the local start-up ecosystem by bringing funds and expertise to the country.

“Al Waha has had an impact globally, people have heard of Al Waha, we’ve had several meetings with people who were interested and we are inundated with requests from funds that want to be considered.”

While funds need to have a presence in Bahrain, they are not restricted to investing in the kingdom, he said. The fund will not only provide a boost to Bahrain, but also help start-ups from around the Middle East gain access to the capital they need in order to expand, reported GDN.

Additionally, a number of other innovative initiatives to connect private capital from around the world with investments in Bahrain have been undertaken. For example, we recently saw the launch of the Bahrain Energy Fund, the first fund of its likes in the GCC that is seeking to raise $1 billion. The fund will be unique in providing institutional investors with access to local energy assets.

(BE2C2   Report is a data journalism initiative of Irshad Salim Associates, a New Jersey, USA, based consulting firm in association with BE2C2 in Pakistan)