Oman develops technology fund to invest in global entrepreneurs

Recently, Oman created a $200M+ venture capital fund to spark innovation in Oman and the MENA region. I interviewed the CEO of the Oman Technology Fund – Yousuf Al Harthy – and a member of the Board of Directors – Hanan Askalan. Yousuf and Hanan have extensive technology, government, and business experience. Yousuf was an entrepreneur for 10 years after working for the Oman Ministry of Defense and has played an integral role developing the country’s information security profession in Oman. Hanan worked for the World Bank, held CTO for Marco Polo Networks, and was the CIO of the Dubai International Finance Centre. Furthermore, His Excellency Talal Alrahbi is Chairman of the Board for the Oman Technology Fund.  

Can you explain what the Oman Tech Fund is and why it was started? Is this part of the strategy to help reinvent Oman? For example, most of the population in Oman is under 30 years of age, and you’re seeking to create more opportunities for them to become entrepreneurs, which I learned after meeting with His Excellency Talal Alrahbi.

Yousuf: The Oman Technology Fund (OTF) is a fund that invests in high growth potential technology startups. It was created because there was a gap in the funding ecosystem. The local private equity funds do the usual investments and have little experience and appetite to invest in companies that do not make profit as they grow. International VCs are not paying enough attention to the region either, which left technology startups with little funding opportunities. This is unfortunate because the region is actually poised with a great opportunity to take advantage of the high population of youth entering into the workforce. The market size and requirements of the regional markets that still need to be addressed by innovation are still untapped, and this is a significant market opportunity that needs to be developed and accelerated.

Is the fund government-owned?

Yousuf: Yes, the government is the majority stakeholder. Over the last three years the government has helped to establish two venture capital funds in Oman; one is investing in research generated through University (i.e. deep tech), while the Oman Technology fund is a traditional venture capital fund that works with startups from seed to growth. Now, we are in our second year of the Oman Technology Fund, and we’re looking to attract private investors from the region and internationally.

What are some of the government technology investment trends you’re seeing?

Hanan: The regional trends we saw over the last couple of years were dominated by consumer service platforms. We are seeing a shift toward big data and data analysis more and more. Specifically, Artificial Analysis platforms that target businesses and high-end consumer needs are booming. The region is playing catch-up with the more developed VC world that has been investing in artificial intelligence and machine learning for quite some time. This is a natural progression because AI is helping to make decisions and perform actions based on the data that has accumulated. This is also a significant trend that we’re seeing in VCs all around the world.

Beyond AI and machine learning, we’re also seeing virtual reality and augmented virtual reality startups popping up in increased numbers. These platforms are mainly being utilized for better education, healthcare, and real estate programs, as well as gaming, of course. We’re also seeing big investments in drones, especially for agriculture and real estate purposes. For example, regarding real estate, drones are being used in the whole process from A to Z, including better construction monitoring and building.

Additionally, the area of clean tech has big potential in the region due to the weather conditions. However, investment in energy is not necessarily viable for all VCs. It died down for a while due to the availability of cheap oil but is now picking up again with the gradual rise of oil prices. This is mirrored by Smart Grids and their issue of mixing energy sources to provide a sustainable energy supply. I think clean tech has come back for good, but only for specialized VCs.  

We are also seeing more attention paid to investments in Blockchain. Many venture capitalists were skeptical about Bitcoin, but there is a lot of optimism regarding Blockchain. Most VCs realize that there is money to be made in the cryptocurrency industry and now VC funds are trying to figure out how to best invest in this space.

Last time you were in San Francisco, we had dinner at the Swiss Consul General’s Holiday Party. There, you were super excited about many of the companies you were meeting with! Can you talk about the kinds of companies in which the Oman Technology Fund is investing?

Yousuf: On the point of trends, people have to realize that the startup scene and the maturity in the region are both still lagging behind. There is a lot of potential centered around consumer-share innovations – like automated food delivery and taxi services – that you see in the western hemisphere. Even though these platforms have been adapted internationally and are seemingly not innovative, there are still huge opportunities for untapped ideas with this framework. There is still demand for these types of services and hence, opportunity for startups to scale quickly, especially since these business models are well known at this point. Addressing these needs for a region with a population of over 300 million with adequate disposable income can create value for investors and would unveil new markets even still. These assumptions have been validated by several apps. Souq, which is not a new invention by any means, has just been acquired by Amazon; Cream has been able to raise more and more money and is now valued at over a billion dollars; and Talabat is a food delivery app that was acquired for over 200 million US dollars. These brands are in line with how tech scenes usually develop and evolve globally. Typically, it starts with a focus on consumer-centric services, and then new tech upstarts become more technically sophisticated. We’re expecting that companies will start to become more technologically differentiated in response to this trend.

Currently, the Oman Technology Fund (OTF) is mainly investing in software. OTF invested in a hardware startup that is currently performing very well. Additionally, we’re also diving into edu-tech, which serves Oman’s specific economic needs because the country is investing in and focused on the healthcare industry. We are building five new hospitals and developing a new health city, which is why OTF invested in an edu-tech startup that provides medical education, which again is in direct response to our specific needs. Our investments are aligned with the overall industry and economic sectors that Oman is focusing on to ensure that we have a competitive advantage. This helps us to not only give startups access to capital, but also to access to markets, both of which are very important for the growth and sustenance of these sprouting companies.

One of the companies Oman invested in recently is TrakInvest, which is focused on teaching education tech companies about cryptocurrencies and Blockchain. Is this one of your portfolio companies?

Yousuf: That is actually not a company we have invested in, but in Oman, there has been a lot of emphasis and attention paid to Blockchain. Last year, there was a whole symposium centered around Blockchain and an association was created to promote Blockchain technology. Just a couple of weeks ago, we had a high-profile conversation with the private sector and the government around the 4th Industrial Revolution. AI and Blockchain are the cornerstones of the 4th Industrial Revolution and there’s a realization that we need to be prepared to take advantage of this wave of development.

What kinds of global partnerships is OTF looking to build?

Hanan: The OTF initiative is really about ecosystem building. We’re trying to boost entrepreneurship, creativity, and innovation. This ecosystem building is a long-term commitment and OTF is playing a very active role in this endeavor. OTF has an incubator and an accelerator, each with funding alongside a growth fund. The incubator and accelerator programs have partnerships with European and Silicon Valley-based accelerators and incubators that allow us to bring mentoring and coaching to our startups.

For the growth fund, we have a partnership with Atlantic Bridge – an early growth fund with presence in Silicon Valley and Ireland. The number one priority here is to help mentor and coach our portfolio startups. Subsequently, the resulting goal is to build a bridge to Silicon Valley. These partnerships give startups market access and also give them exposure to the necessary mindset to be able to compete globally.

How does the fund help to drive direct foreign and reinvent your brand?

Yousuf: The OTF has a regional and international mandate. Our competitive advantage is that we have countries surrounding Oman with great talent pools. Some of the talent is coming locally from Oman and some talent comes from Pakistan and Egypt. Their combined population of 300 million includes a lot of people who have engineering and science backgrounds. Amongst these three countries, we have access to a sizeable talent pool that is comparable to that of the United States’. These talents are very much underserved of VC funds, which is why we have tried to establish Oman as a hub to give them equal opportunity to be realized. For example, one of our portfolio companies is led by an Australian entrepreneur with the aim to make Oman a magnet for talent. Once the talent is there, we believe capital will follow – we just need to demonstrate our value and that there is actual potential for growth.  

Oman is a small country, so it tends to be more agile than larger countries. Since we are owned by the sovereign wealth fund that owns many businesses, we have the ability to open markets for these startup companies, which could be a huge attraction to VCs. We’re able to do this because our anchor shareholder is the Oman Investment Fund, which has shares in the telecommunications, banks, and many other industries. We are not just bringing capital, world-class skills, and coaching; we are also providing access to markets. As a result, Oman is becoming increasingly known as a regional tech hub. For example, we hosted the Stars of Science, a Pan-Arab TV show that celebrates entrepreneurs from around the world.

Hanan: Moreover, Oman is hosting the MIT Pan-Arab competition in April, which occurs on an annual basis across the Arab region. The final fifteen startups will come to Oman and the Jury will select the final ten.

That is great!  I am coming to Oman to judge the e-government awards!  To this end, what advice would you give to an entrepreneur seeking investment from the Oman Technology Fund?  

Yousuf: Work hard and we will work with you all the way from seed to growth. If selected as a portfolio company, we have the whole value chain available to entrepreneurs, as well as funding in all stages, from ideation to acceleration to growth and beyond. And, Oman welcomes everyone!