Private equity capital had been paying some hefty valuations in the last two years. Chances are those startup valuations could see some cooling down this year. Image Credit: Supplied

Dubai: Dubai’s aim-for-the-skies D33 program aims to build on the strengths the city has already garnered, in trade for instance. Then there are those priorities that will have Dubai flesh out its strengths further, notably in the startup space.

Startups, innovation, digital smarts, and access to funding and investors – these will remain constant themes for Dubai and the UAE over the next 10-year cycle. The funds are there, whether that comes from government-affiliated entities, such as the Khalifa Fund or ADIO, or from private sector entities such as MEVP, GII, CE-Ventures and others.

Tushar Singhvi is Deputy CEO and Head of Investments at Crescent Enterprises, and part of his remit includes overseeing CE-Ventures, which is the PE arm of the UAE-based entity. Through recent years, CE-Ventures had picked and chose its way through a slew of startups/early stage businesses and thus provide a platform for entrepreneur ideas to turn into profitable reality. Both in the UAE and outside.

In an interview, Singhvi goes through CE Ventures strategy roadmap – and how it plans to cash in on those funding commitments it makes in businesses.

Isn’t it a fact that CE-Ventures has focused more on startups in the mid to late stage funding phase. If yes, is it time for some exits too?

CE-Ventures is focused on both early stage and growth stage companies, depending on geography, domain, and sector. For example, we’ve been part of earlier-stage investments in MENA and India, and we are also looking at early-stage in Southeast Asia.

In the US, or focus has been more in mid-stage growth companies.

In terms of exits, our investment philosophy is a long-term one, where we look to build value with our partners. We are not a fund that is required to return capital to its investors within a pre-defined time period. We look to monetize our investments at the right time, when we believe the value has maximized.

Last year, you’ve been quite active in taking exposures in ventures – where are all of these digital entities? Because you also had F&B and other categories too when you started out.

We look to invest across sectors, with tech-enabled solutions being a core concentration. Over the past five years, we have invested in the areas of foodtech, fintech, and edutech as examples.

Our investment philosophy is one that focuses on companies that are solving real problems, scaling globally, and that are using technology as a competitive advantage in solving the given problem.

Over the last 18 months, parallel to other sectors we explore, we’ve had particular interest in deep tech and biotech, carving out a separate pool of capital for these fields that leverage technology to address real problems and to scale significantly.

How much have you invested under the CE Ventures banner to date? Do you plan to raise a specialist fund to widen your investment horizon?

We established CE-Ventures in 2017, and seeded the strategy with $150 million, which was deployed over a period of approximately two years. We supplemented with a further $150 million allocation, carving out a dedicated pool to foster transformational, and innovative technologies in the biotech and deep tech space.

We plan to continue capitalizing on upcoming and anticipated trends driven by tech-enabled solutions and the broader market.

People in the industry talk about ME startup valuations starting to soften just a little. Your thoughts?

There is no doubt that during the COVID-19 pandemic, certain sectors were fueled unsustainably, like food delivery, quick-commerce, and crypto. Breakthroughs in AI, electric vehicles, and innovative technology, have also had a direct impact on virtually every aspect of the quintessential startup blueprint and ecosystem.

The US venture industry set an all-time high in 2021, generating a record number of companies valued at more than $1 billion, exceeding the combined total of each of the previous five years. Investors deployed more than $71 billion across 340 Unicorn deals in 2021, according to PitchBook data.

The frenzy of the US market, helped drive unrealistic valuations across the globe, including the Middle East market, though to a lesser degree. With these valuations, a correction had to take place, which is a healthy and required market check, bringing valuations down and leading the Middle East market to a less volatile phase.

Currently, the focus of venture money is on building sustainable models that can achieve profitability, and not fueling growth at any cost as we have seen in the past few years.

This year, given the talks about recession, do you think you will go slow on more investments? And even turn cautious on exits?

We now see the next 2-3 years as an opportune time to deploy capital. The last 30 years have shown that a recessionary environment as well as the years immediately following a recession tend to be the best years.

At CE-Ventures, we’ve been patient in deploying capital and will continue to be so, but our horizon is a long term one and we will continue to steadily deploy capital for the right opportunities.

In terms of exits, we look to build value with our partners, and with proprietary capital, we are not bound by a pre-defined time frame to return capital, strategically monetizing our investments when we believe the value has maximized.

CE-Ventures has built up funding exposures in these ventures: