The Kuwaiti Fund Promising a Shortcut to Sovereign Wealth

We know that many of Silicon Valley’s investors are desperate to tap into the Middle East’s plentiful capital reserves. Less discussed are the hurdles Middle Eastern investors face while trying to land stakes in Silicon Valley’s best startups.

A new fund wants to help both sides. Fahad AlSharekh, vice chair of Kuwaiti asset manager Kamco Invest, tells me he has raised $50 million to invest in emerging fund managers located in the San Francisco Bay Area. AlSharekh’s pitch to those managers: Take my money and I’ll introduce you to sovereign wealth funds. In exchange, he hopes to gain access to their best deals.

It’s a compelling offer, especially during a period when newer venture capital funds are finding it challenging to raise money from U.S. institutional investors. And while these emerging fund managers are eager to look outside the U.S., it’s difficult for them to raise money from sovereign wealth funds. Their funds are simply too small to merit the attention of investors that manage hundreds of billions of dollars in assets. And their general partners often lack contacts with these government-controlled funds.