Venture capital in MENA :domestic bias and syndication patterns -

Abstract

Using a data set extracted from ThomsonOne Reuters on the Venture Capital activity in the MENA region for the last 15 years, this project seeks to understand the evolution of this industry in the region and identify any characteristics unique to this region. All aspects of the industry from fund raising, to investments and exits are analyzed. Special attention is given to the geographic distribution of the VC firms involved in the region. This project moves on to analyze the syndication patterns between the local and foreign VC firms. For that purpose a unique scoring system is built, based on the paper by Lee et al. (2011), and applied for all firms involved in an investment in the region. This score is later on used in the syndication analysis in addition to several other independent variables. The regression analysis and the Probit analysis on the probability of syndication and the number of syndicating partners reveal two main findings: the foreign VC firms do not invest in the region by themselves and seek a local partner to venture with into the investment. And two, the probability of syndication decreases with the increase of the firm’s score. These two findings are coherent with the literature review that is also conducted on VC syndication as part of this project.