Riyad Taqnia Fund eyes investments in artificial intelligence, fintech

Saudi Arabia’s Riyad Taqnia Fund (RTF) is currently considering investments in various tech sectors, including artificial intelligence, fintech, and social media analytics services, Ivo Detelinov, vice president and head of private equity funds at Riyad Capital, told Argaam.

The fund looks mainly at web-based businesses targeting consumer or industrial technology, said Detelinov, who serves on the investment committee of RTF – a SAR 500 million venture capital fund created by Riyad Capital and TAQNIA to invest in Information and Communication Technology (ICT), energy and sustainability, and advanced materials.

“We look at a lot of artificial intelligence. We look at payments, mobile payments [are] very big. We look at apps that solve the addressing problem, especially in Saudi Arabia. Basically, we're trying to solve local issues, ideally with local talent,” he said, speaking on the sidelines of a recent conference in Dubai. 

Fintech is also of interest, as are companies that analyze Arabic social media, given that these are relatively few compared to similar services in English.

“Social media is very big and everybody is online. Corporations need to know where they stand reputationally and what are their consumers saying. Paper surveys are not done anymore, it's all casual, and all of that is picked up and analyzed,” Detelinov added.

With a base of Saudi institutional investors, RTF aims to support entrepreneurs based in the Kingdom and GCC, as well as enable international businesses to expand regionally.

The fund recently led a $10 million Series B funding round for UAE-based personal finance comparison site Souqalmal.com. It was also involved in a $5 million Series A funding round for UAE-based peer-to-peer lending platform Beehive.

So far, RTF has invested about 10 percent of its SAR 500 million, Detelinov said.

“We'll finish this year with seven completed investments. In a particular investment, we would invest between $2-5 million,” he added, noting that the fund is “very, very picky” in terms of the businesses it chooses to invest in.

When asked how investment opportunities are identified, Detelinov said RTF usually dismisses concept-stage companies and mostly invests in Series A funding rounds.

“Our investors want us to invest in companies with revenues,” he said, adding that price is also important, but not a sole deciding factor.

“We don't want to invest cheap; we want to pay a reasonable price for a company that will grow.”

Commenting on public appetite for tech investments in the Saudi market, Detelinov noted that there is still some skepticism, largely due to a lack of liquidity and dividend distributions.

“The availability of capital is not the same as it would be for real estate, healthcare, or public equities because those asset classes or industries are very liquid, whereas what we do is mostly virtual,” said Detelinov.

“In general, we cannot commit to a dividend because our exits are infrequent and chunky, whereas a publicly listed company can. So investors naturally gravitate towards investments that give them liquidity and cash distributions,” he added.

As a result, it is important to create good precedents, Detelinov noted, adding that the region needs to see more large-scale deals in the tech and e-commerce space, like Amazon’s acquisition of Souq.com this year, or the recent launch of Noon.

“Some investors have invested in venture and got burned. So we need to be extremely careful. If we create good precedents with this fund, it will be easier for others to raise funds.”

Write to Jerusha Sequeira at jerusha.s@argaamnews.com