Avanz Capital Joins Algebra Ventures’ Fund II in Landmark Secondary VC Deal

Private equity firm Avanz Capital, through its direct investment arm Avanz Manara, has acquired a stake as a secondary Limited Partner (LP) in Algebra Ventures’ second Egypt-focused venture capital (VC) fund. This transaction is considered a significant milestone, representing one of the first secondary LP investments in Egypt’s VC market.

Strategic Importance of the Deal
- Activating the Secondary Market: According to Haytham Wagih, Managing Director of Avanz Capital, the deal is crucial for activating the secondary LP market for Venture Capital and Private Equity in Egypt, a market that is currently inactive but robust in more developed economies.

- Signaling Confidence: The investment aims to demonstrate to the broader market that feasible LP-to-LP opportunities exist, easing the pressure on General Partners (GPs) like Algebra to rely solely on primary exits (selling the portfolio company).

* Bringing Local Capital: Both firms stressed the need for local institutional investors to increase their allocation to private capital. While Algebra's fund is currently backed 90-95% by international LPs (like the IFC, EBRD, and EAEF), Managing Partner Tarek Assaad noted that local capital is vital, especially during tough times when international investors may be unsettled by currency fluctuations.

Algebra’s Investment Focus
Algebra Ventures’ second fund, which initially closed at $100 million in 2022, plans to invest in 31 early-stage startups. These investments target key sectors deemed essential for solving fundamental problems in Egypt, including fintech, agritech, edutech, and e-commerce.

Avanz Capital’s Future Focus
Avanz Capital is now working on launching its next fund, which will combine its fund-management experience with a direct-investment strategy across Egypt and Africa. This new fund intends to target the "forgotten middle" the growth stage gap between companies that have successfully graduated from VC but are not yet large enough for traditional Private Equity (PE) investment. The strategy will focus on filling financing gaps in sectors geared towards export, import-substitution, and cost-reduction for companies competing internationally.