Dubai Ideas Oasis reveals its VC plans

The Dubai Internet City-based business incubator tells itp.net how much venture capital it plans to make available to startup companies

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By  David Ingham Published  April 12, 2001

Dubai Ideas Oasis (DIO) today revealed details of how it plans to operate as a venture capitalist for startup companies. CEO Avi Bhojani told itp.net that DIO aims to create three venture capital funds in all, each aimed at companies in different stages of the pre-IPO cycle.

An “incubator fund’ for companies at the very start of their lifecycle has $8 million in cash to invest. Dubai Ideas Oasis, which is owned by the Government of Dubai, has provided all the capital.

A second “private equity fund” is aimed at companies seeking their first and second round of capital. The fund has a targeted capitalisation of $25 million, of which $8 million has been provided by DIO.

The rest of the “private equity fund” will come from the private sector. Bhojani declined to say who contributors might be.

A third “later stage fund” with a targeted capitalisation of $100 million is also on the drawing board. Further details are not yet available.

DIO aims to take a maximum 30% stake in each startup that it incubates. “DIO wouldn’t be interested in a single digit stake [in startups],” says Bhojani. “But we want to ensure the founders have a large enough stake to stay interested.”

As for the process of selling equity in Dubai Ideas Oasis itself, Bhojani was non-committal. The government of Dubai has set the market capitalisation of DIO at $30 million and told the company that it can sell up to 25% of its equity to outside investors.

Visa has expressed an interest in taking a stake in DIO, but there is no other official interest yet. Bhojani said further buyers have approached the company from overseas and that announcements could be made in the next two weeks.

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