SOSV Leverages Chinese Expertise for Digital Investment Opportunities in the Middle East

Years of experience in China are helping U.S.-based venture capital firm SOSV’s approach to new investments in the Middle East, partner Minjia Wu said in an interview with Forbes in New York.

“The Middle East has a lot of infrastructure that still needs to be built,” ranging from hotels to physical transportation structures, Wu said. “And once you have physical infrastructure, you definitely want the digital infrastructure to put that all together.”

China is a good investment reference for the Middle East’s burgeoning needs, said Wu, who oversees stakes in more than 20 software companies worldwide. She spoke on the sidelines of the U.S.-China Business Forum organized by Forbes China and held at Forbes on Fifth on Aug. 29.

Before the Covid pandemic, SOSV’s investment arm known as Chinaccelerator in Shanghai was a high-profile connector of Internet startups with multinationals in the country looking for new ideas.

Chinaccelerator re-branded as Orbit Startups last year, stopped investing in mainland China, and is now focused on startups in 30 countries spanning Asia, Africa, the Middle East and the Americas. Chinese digital businesses and venture firms as a group have also been expanding into Asia and the Middle East, Wu noted.

Earlier this year, Wu traveled to the LEAP tech fair in Riyadh which attracted more than 172,000 attendees. “It almost felt like China’s massive conferences” of years past, she said. (See related post here.)

When it comes to transportation and travel investments in the Middle East, “Saudi Arabia is particularly interesting,” she said. When holding an international portfolio, one is often looking for underlying similarities between markets, says Wu. Religion is a parallel, such as the regular Hajj and Umrah pilgrimages to Mecca from around the world, she noted.

“We’ve been actively investing in Southeast Asia, where Indonesia has one of the world’s largest populations of Muslims.” The movement of pilgrims reminds of the flow of Chinese around the world for the country’s holidays, Wu said. “It’s almost like Chinese New Year,” she said. “Think about the scale.”

As an example of her approach, Wu led Orbit’s investment in Umrah Companions, “a company that basically is like a Booking.com” but able to handle the regulatory environment of the Middle East and customized travelers in connection with Umrah, and soon, Hajj. “We’re lucky to have found a company” with a credible team already making millions in revenue without fully digitalizing the platform, she said.

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“I kind of see it as another WeChat,” Wu noted. “In China, if you look at any sort of platform, the idea is as long as you can get the users – like Xiaomi, you can create an entire ecosystem around it. And that’s why you can have a Meituan invest in a Mobike, which seems totally disparate.”

The Mecca pilgrimages are a “catalyst for bringing people together, meeting people, and having experiences together. And once you have that kind of platform, you can layer on financial services, you can layer on other services for the trips themselves or otherwise in preparation of the trips,” she said. “There are definitely a lot of opportunities there.”

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