Modus Capital's new $75M fund to focus on SMEs and early-stage startups
The last time we sat with Kareem Elsirafy, Founder and Managing Partner of Modus Capital, we delved into the differences between US and MENA VC markets, his investment mandate and how he plans to make a difference in the market here. While they started investing in MENA startups late last year, they have now announced the launch of their first regional fund of $75 million: Modus MENA Venture Fund I (MMVFI).
The MMVFI is targeting early and growth stage tech startups and SMEs across the region, focusing especially on those that have strong positive social impact as a by-product, including those with a focus on women and financial inclusion, health, education, and battling unemployment. The verticals they are particularly interested in include FinTech, HealthTech, Direct to Consumer e-commerce, Enterprise & Consumer SaaS products in addition to products leveraging Blockchain Protocols.
Modus Capital will be making investments between $50k and $250k through its incubation programme. The maximum that they will be investing in Seed and Series A rounds will be $1 million.
They will also be setting up co-working spaces in the region, and curriculum-based series of programmes and workshops that focus on knowledge transfer addressing local entrepreneurial challenges and skills gaps.
In addition to Modus Capital, the group has launched Modus Operations, Modus Events and the Modus Collective, offering a 360° approach and structure to nurture startups and foster their growth and success.
We followed up with Kareem to know more about his plans and investment visions. Check out our conversation below:
The fund has invested in startups since Q4 2018. How much of the $75 million has already been deployed, and in how many startups/SMEs?
We have approximately 3.2m in economics across our portfolio companies.
Could you tell us more about Modus Operations and how it helps entrepreneurs?
It provides holistic support (think a safety net) for entrepreneurs helping plug any operational/skills gaps they may have throughout their journey. it also helps them by recruiting talent and helping implement tried and tested frameworks to help them flourish on their own.
Think of it as a full-service digital agency that's only mandate is to support entrepreneurs; not just through talking points but rolling up our sleeves and writing code, executing marketing plans, managing ad spend, designing products and user experience, become investment ready for their next funding cycle etc and all the strategy that goes along with the execution itself.
What parameters will Modus Capital use to determine and calculate the impact made by companies in which it plans to invest?
We identify which KPI's (key performance indicators) a business focuses on that is both in-line with its strategic growth objectives and that also identifies positive outcomes. This is different for every startup but it’s clear from their value proposition. For example, if an application that helps connect independent doctors with patients in the comfort of their own home then it would be:
a. Number of independent doctors who were able to help find patients.
b. How many individuals had a doctor visit them in the convenience of their home.
c. Minimizing costs to insurance companies as this is much cheaper than an ER visit which in-turn reduces the overall insurance premiums for subscribers.
How can startup and SME entrepreneurs include a social impact model to their businesses?
It can come in many forms but it can be directly through creating job opportunities from the growth of the company itself (ie. how many jobs has Careem given drivers in the MENA region) or simply by having their value proposition solve a problem. Solving problems for consumers and/or businesses will inherently have some second or third order impact but the ones that solve for the biggest pain-points are those that have the higher social impact. In short, reach high!
Kareem also revealed the list of companies that Modus Capital has invested in. They are as follows:
Arbor: an app that lets you create, share, and manage your network in an efficient and green way. It addressed the opportunity of simplifying the process of exchanging valuable contact details that are typically on a business card in a modern and digitized manner.
Yumzy: An app where home and professional chefs can receive tips for their culinary masterpieces.
AtHomeDoc: an app that brings doctor visits, medicine deliveries and diagnostic testing, right to your home.
Meddy: Another app that facilitates appointments with the doctor, making it easy for consumers to find healthcare providers with the help of reviews and specialities. Modus Capital was part of Meddy’s Series A that closed in October 2019.
DXwand: An AI driven Cognitive CRM software that automatically responds to businesses communications through various social channels, converting chats into proprietary insights and analytics further supporting data driven business and growth decisions. With the support of Modus Operations, DXwand has since seen month-on-month growth of 28%, and reached its financial breakeven point in September 2019.
iSpportCause: an online platform that helps create meaningful campaigns with integrated social media marketing for activists and NGO’s aiming to raise awareness on significant causes. $75,000 from the MMVFI has been invested in iSupportCause and for the last seven months, Modus Operations, the operational arm of Modus Capital, has been cultivating the product suite development and growth strategy. A revised product is scheduled to roll out in Q1 of 2020.
The fund has also invested in ChappMe, BioRestore Health and GloAR.