Beltone’s VC arm is undergoing a significant expansion: Beltone Holding’s venture capital arm, Beltone Venture Capital (BVC) has successfully completed its first direct international investment through a strategic investment in French e-bike rental company with a strong footprint in the Moroccan market VelyVelo, the company said in a statement(pdf). The investment is one of a number of other international strategic investments BVC aims to carry out before the end of the year as part of a wider expansion plan through which it looks to grow its portfolio well beyond Egypt.

Enterprise spoke with Beltone Venture Capital CEO Ali Mokhtar (LinkedIn) to learn more about the investment, BVC’s expansion plan moving forward, and what it has gotten done since its inception.

Enterprise: Beltone launched BVC a little over a year ago. How much of what you had set out to accomplish has already been done, and what still needs work? What are the growth prospects of Beltone’s local VC activity?

Ali Mokhtar: We started in April 2023. Since then, we finalized close to 13 different transactions, with a mix of equity and debt financing. At the beginning, the focus was mainly Egypt and mostly early stage startups, plus a couple of opportunistic growth equity investments.

We’re sector agnostic, so we carry out transactions across different sectors. We have invested in direct to consumer brands, like Ariika and Lychee, e-commerce platform WayUp Sports, and last mile delivery startup Bosta. We also invested in auto marketplace Sylndr, healthtech startup SehaTech, proptech company Bidnest, pharma platform Grinta, and trucking startup Trella.

Most of the startups we invest in have a plan to grow beyond Egypt — all offering high growth in Egypt but with regional expansion plans, and we work hand in hand with our portfolio companies to help realize this growth.

E: What markets outside Egypt are you looking at and what do they offer that makes you want to expand into them?

AM: VelyVelo operates in Morocco and in Europe. And we have another investment brewing in the Moroccan market in a logistics startup that operates in markets across North and West Africa, giving us access to more opportunities than our initial equity investments, which were mostly operating in Egypt and in the MENA region.

We’re also looking at an additional four opportunities in Morocco — some of which also operate in Europe and in Africa. One is a pure HR SaaS solution, one is a fintech company, and another is a direct to consumer brand.

And we’re closing an additional debt transaction in a company that mostly operates in Saudi, with business in Egypt and Iraq.

Morocco is like what Egypt was like maybe 5 or 6 years ago. The valuations are very reasonable and the funding rounds aren’t as big. With decent funding, you can get a very good entry point into the companies in the market. Because Morocco is a market that’s still gaining momentum, you can still have very good transactions at great entry points.

Another thing is that the founders are really solid. For us, Egyptian founders are the strongest in the region. They’re incredibly resilient, and are able to take more hits than founders anywhere else. Morocco is a bit similar in that they haven’t really been exposed to huge funding rounds, so they can build businesses with smaller amounts. All these factors make Morocco really attractive for us.

We see Morocco as a market with a lot of potential. The market is still taking off, and a lot of the opportunities there give you good exposure — many of the startups present in the country operate both in Morocco and in Europe and some others operate in Morocco and other African markets like Senegal and the Ivory Coast. So it really helps diversify your portfolio.

E: What kind of startups is BVC most interested in?

AM: We operate with a hybrid model, investing in both pure tech startups and tech-enabled, highly profitable companies. We believe this approach offers a great mix of early-stage startups with exponential growth potential in addition to established companies with strong profitability and proven track records.

We do have specific sectors that we find interesting, such as proptech and fintech — fintech is a really interesting space, it’s very crowded and the competition is high, but there’s still plenty of opportunities. Mobility is another one we find interesting, because it’s a sector that’s seeing a massive shift. SaaS companies are also something we’re looking at, and we want to expand our exposure to that sector in the future.

E: How do you decide on the startups you end up investing in?

AM: We have a score card that takes into account the team, the size of the addressable market, competition, the product market fit with unit economics and exit plan — and the company needs to have a very clear path for profitability, even if it’s an early-stage company. The company needs to be building something sustainable that will become profitable sooner or later. We’re against the concept of growth at any cost — we’re more fundamentally driven. It also has to be able to resist pressures that could come along the way.

E: Earlier this year, BVC announced its partnership with UAE’s Citadel International Holdings’ CI Venture Capital to manage a USD 30 mn fund backing fast-growing startups in the MENA region. Did this help you expand your footprint and expose you to more regional startups?

AM: We’ve already made 10 equity investments through this fund, some within Beltone’s portfolio companies and some outside of them. The investments included UAE-based fintech Qlub and Iraqi ride-hailing service Baly. We’re making our first exit from one of those ten companies soon, with a very decent return. Our first investment through the fund was a year ago and it was a fintech company that operates in a number of GCC markets. But we’ve also invested in a carbon credit company operating in Saudi and the UAE as well as a number of BVC portfolio companies.

E: Why is now the right time for Beltone Venture Capital to expand?

AM: We now have very solid traction in Egypt and the partnership with Citadel will give us even more traction across the region — the partnership has seen us co-invest with most of the top VCs in the region. So we have a very solid pipeline across the area, which makes it the perfect time to expand, be it in the MENA region or in other markets across Africa and Europe. If you combine our business in Egypt, Morocco, and the GCC countries, we have more than 15 companies in our pipeline, we’re expanding our team, and we’re looking to raise additional funds.

E: What’s BVC’s timeline for expansion?

AM: From now and until the end of the year, we’re set to close another 2-3 transactions, including another equity investment in Morocco, the debt financing firm in Saudi, and another transaction in Egypt. In 2025, we plan to expand even further beyond Egypt. Our growth equity investments are at an inflection point because they need additional funding to fully take off in terms of profitability and scale, so that’s something we aim to work on.

We’re also planning on launching two additional funds — one is a venture debt fund that will focus on Egypt and will lend in local currency and the other is a venture debt fund in USD that will target startups across the region.

Under our criteria, startups need to have at least 18 months of cash runway and it’s a bonus if an Egyptian company generates FX revenues.

E: Other than Morocco, what other markets are you interested in?

AM: We’re still very bullish on Egypt. We’re doubling down on all our companies in Egypt, and we’re still investing in Egypt quite a lot. Despite all the shocks the market has sustained, these companies still offer really decent growth prospects. Most of our investments will continue to be in Egypt, and it’s a huge plus if these companies can expand abroad. Other than Egypt, North Africa and being opportunistic across the region is what we’ll be focusing on in the near future.

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