Sabah.Fund, launched in partnership with Sabah.Hub, a pivotal player in the local ecosystem, has announced its first close of $11mn, a notable figure by regional standards. The new fund aims to raise $25mn in total.
Among Sabah.Fund’s backers are two state-owned companies: SOCAR, the oil major, and AIC, an investment company aiming to diversify the country’s economy. Private limited partners include Azerbaijani firms Integrity Group and Moonwake Investment, as well as other high net worth entities and family offices.
The new fund’s scope, however, goes well beyond Azerbaijan, where technology startups are only starting to emerge.
“Our cross-border approach helps founders from the Caucasus and Central Asia expand into geographically and culturally close markets in the MENA region – and vice-versa,” said Abbas Kazmi, co-founder of Sabah.Fund.
The fund targets companies at the pre-seed and seed stages, with a primary, though not exclusive, focus on FinTech, CleanTech, Digital Health and EdTech.
Three startups have already received commitments so far: AILA, a Saudi Arabian startup developing AI approaches to enhance learning experiences; Canscreen, an Azerbaijani hiring tech solution; and Tredu, an Azerbaijani provider of online courses.
A multi-awarded serial entrepreneur and VC investor, Kazmi started his first company at 16, even before graduating from Oxford University. He co-founded the Oxford Accelerator, Collegiate Capital and BlackWood Ventures, and has held a variety of positions with funds and governments across the EMEA region.
Kazmi sees “a new dawn opportunity” in the geographies targeted by Sabah.Fund. These countries are “home to the largest pool of untapped talent and potential in the world and one of the best possible sources of wealth creation opportunities,” he believes.
“Once a global centre for innovation and learning, the Central Asian and MENA regions are now one of the most exciting frontiers in the global tech landscape, digitising their economies to diversify away from natural resources.”.
Sabah.Fund’s other co-founder, Rahim Bayramli, is a London School of Economics graduate. Back in his home country, he worked at McKinsey then co-founded Sabah.Hub, Push30 – one of Azerbaijan’s most well-funded startups – and Landau School.
VC internationalism in Baku
Established in a market that is too young for projects to scale locally, Azerbaijani players have engaged in a variety of international initiatives which Sabah.Fund calls ‘techplomacy.’ The latest example of this is Sabah.Fund’s co-founding of the “Turkic and Central Asian Venture Capital and Private Equity Association.”
Sabah.Hub also organises Baku ID (Baku Investment Day), an annual international conference. The most recent event, held in late June 2024, attracted industry leaders from the region and beyond. Among them was Günce Önür, general partner at Startup Wise Guys, a major early-stage startup accelerator and fund.
In a conversation with bne IntelliNews, Önür mentioned three investments in Azerbaijani startups, and said there were “even more in the pipeline”.
“Azerbaijan, with its young population, high internet and credit card penetration, serves as an ideal test market for tech startups,” he added. Conceding that “the local ecosystem is still too early,” Önür underscored the country’s “strategic position near important markets such as MENA, Türkiye and Europe,” and expects to see soon in Baku “more international investors and more global startups.”
Also praising the early achievements of the Baku ecosystem, Eric Weber, the founder of the Leipzig-based accelerator SpinLab, believed that joint programmes could help develop connections with German investors.
He suggested that “Azerbaijani startups could also evaluate the opportunity of creating German legal entities as an alternative to the current usage of Estonian or US Delaware vehicles.”
Sabah.Fund is the largest to date, but not the first regionally oriented venture fund from Azerbaijan. Launched last year with investment from state development agency IDDA and Pasha Holding, a prominent corporation, Caucasus Ventures invests across the region, including Central Asia and Türkiye. This $6.6mn fund already boasts a portfolio of a dozen startups.
Besides, Pasha Holding has just launched a venture studio, ‘Pasha Future Labs,’ aiming to develop startups in Azerbaijan, neighbouring Georgia and Türkiye, and potentially Central Asia, says its CEO Farrukh Ali. In a yet-to-be announced last move, the holding is in the process of launching an up to $5mn matching fund, in partnership with investors from Azerbaijan, Türkiye and Uzbekistan, to co-invest in startups across the region.
Other Azerbaijani corporate startup investors include ABB, one of the largest banks in the region, and AGA Group, through its affiliate Lofti Zadeh Technology Center (LTC).
Adrien Henni
