Just last year, Bahrain announced that it had launched its $100M Al Waha Fund of Funds, with which it aims to spur entrepreneurship and innovation in the Kingdom and the Middle East. A so-called fund of funds is different from the usual venture capital funds, but certainly not unnecessary.
Unlike venture capital firms, which invest directly in startups in the region, a fund of funds invests in those venture capital firms. In other words, the fund of funds does not make direct investments into startups themselves, but leaves experts like venture capital firms to do that.
In 2019, Bahrain’s Al Waha Fund of Funds announced that it had already deployed $45M of its total $100M fund into venture capital firms, marking a milestone for the investment institution. With the investments, the fund of funds provides much needed liquidity to the venture capital space, as many of the largest venture capital firms are still in the process of fundraising.
Consequently, the number of investments that they make is limited, as they are still looking to raise money to do so. Hence, a fund of funds is crucial to the success and overall development of the startup and venture capital ecosystem. Read more about Bahrain’s fund of funds and the deployed capital here.