Avanz Capital Egypt has joined the second fund of Egyptian tech-focused VC firm Algebra Ventures as a secondary limited partner (LP). The investment was made through Avanz’s direct investment arm, Avanz Manara.
A Milestone For The Secondary Market
The deal represents one of the first secondary LP investments in Egypt and is being viewed as a milestone that reflects the strength and growth of the local ecosystem. A secondary transaction occurs when an LP sells their stake to another LP, a market that is currently inactive in Egypt but common in developed markets. Haytham Wagih, Managing Director of Avanz Capital, stated that part of their role is to “activate the secondaries market in VC and PE”. He noted that activating this market can ease pressure on general partners (GPs) for constant exits that may not always serve fund performance.
The Push For Local Capital
The partnership also highlights a broader strategic goal to increase local investment in Egypt’s private capital markets. Currently, the majority of capital in the sector comes from outside Egypt. Tarek Assaad, Managing Partner at Algebra Ventures, noted that while 90-95% of his firm’s capital is international, there is a strong desire to increase local capital. Assaad explained that in difficult times, the ecosystem needs local capital, as international investors can be spooked by sharp currency moves, whereas local investors better understand the market’s long-term potential. “This is when the local capital should step in. Avanz is taking a leading role here, and we hope to see more,” Assaad said.
Fund II And Future Outlook
Algebra Ventures’ second fund reached a first close of $100 million in 2022, surpassing its initial target of $90 million. The fund was backed by international LPs including the IFC, EBRD, and EAEF. So far, Fund II has invested in 14 companies, two of which are in Morocco. While 80% of the fund will target startups in Egypt, Algebra Ventures is also exploring expansion opportunities in Morocco, Nigeria, Kenya, and South Africa.
About Algebra Ventures
Algebra Ventures is a leading tech-focused venture capital firm in Egypt. Its second fund aims to back 31 startups pursuing early-stage investment opportunities in sectors like fintech, agritech, edutech, and e-commerce. The firm has a strong relationship with Avanz, having been co-investors in portfolio companies prior to this partnership.
About Avanz Capital
Avanz Capital is a private equity firm that aims to bring local investors into the Egyptian market and activate the secondary LP market. The firm is currently working on its next fund, which will feature a blended strategy of fund management and direct investment, targeting the “forgotten middle” growth stage between VC and PE.
Source: Enterprise
