Saudi’s Watheeq Launches $26.7M Proptech Fund As Venture Capitalists Jump Into The Flourishing Sector
Saudi’s Watheeq Financial said it has launched a $26.7 million (SAR 100 million) Venture Capital Fund to invest in global, scalable startups which are leveraging technology in the real estate sector and meet Sharia compliance standards, as investors are tapping into the flourishing sector.
“Venture capitalists are jumping into Proptech," said Khaled Zaidan, Managing Partner of the Fund and Head of Alternative Investments at Watheeq, in a statement.
While Watheeq is still in the capital raising stage and expects to reach the initial close by the third quarter of this year, Zaidan tells Forbes Middle East that it is now in discussion with two startups from Europe and four different startups from the MENA region, including two from Saudi Arabia.
"The W Proptech VC Fund plans to invest in early stages, including Seed, Pre-Series A, Series A, Pre-Series B, and sometimes Series B companies to limit the overall risk. Its size ticket is different in stages and will start from SAR 200,000 ($53.,300) up to SAR 5 million ($1.3 million) in some cases", according to Zaidan.
The fund is not only focused in Saudi Arabia. However, at least 50% of the portfolio companies will be in the Gulf country. “It means that they must have a Saudi company registration and operate in the Saudi market which will include regional and some global startups," says Zaidan.
He continued that the reason behind this is because “we know our strength in the Saudi market and how we can assist our portfolio companies."
While the investors who are backing the fund are not yet disclosed, Zaidan stated that most of them are the top market leaders in real estate sectors, big real estate development companies, construction companies and real estate investors. "Alongside we are in the due diligence process with the fund of funds, locally and regionally."
MENA’s proptech startups are raising significant investments. Saudi’s P2P rental marketplace Gathern was the latest to secure funding of $6 million in May, Morocco’s Mubawab raised $10 million in March, Egyptian Sakneen secured $1.1 million in a seed round and RentUp gathered six-figure funding.
Also, the UAE’s XPLOR and Stake gathered $3 million and $4 million respectively, while Dubai-based online mortgage platform Huspy raised undisclosed seed funding in April.
According to Zaidan, climate change, population increases, and even the pandemic could be the main drivers of the accelerated adoption of technology used by the real estate and construction industries, which were forced to go digital amid global lockdowns.
Huge projects in the region and, especially in Saudi Arabia, following the 2030 vision are also playing a role. “Most of these projects need technology to adapt to it and if we look deeper, we can find that these technologies are Proptech," says Zaidan.
The Managing Partner of the W Proptech VC Fund and Head of Alternative Investments at Watheeq believes that real estate hasn’t met its tech-potential yet. “Even though the real estate sector is the largest investment asset class in the world (reported as $9.6 trillion globally in 2019), it still under-utilizes technology."
According to a statement by Watheeq, it took Fintech four years to meet global investments of $12.7 billion, and only two years for Proptech to achieve the same amount. “Since the start of 2021, over $2.55 billion has been invested in Proptech, a strong indication of Proptech’s potential."
In comparison to global Proptech hotspots in California, the US east coast, Western Europe (particularly the UK) and metropolitan areas in Asia, most other regions, including KSA, have undeveloped Proptech sectors.