VentureSouq and IFC Are Driving Climate Equity

In November last year, UAE-based venture capital (VC) firm VentureSouq was selected as one of 10 fund managers — and the only one from the Middle East — to participate in the first cohort of the We Fund Climate program staged by the International Finance Corporation (IFC). The initiative, which brings together the best climate-focused venture capital funds in emerging markets, aims to help them develop gender-lens investing strategies in the climate space through a year-long peer-to-peer program. 

Moustafa Salem and Fran Deininger, managers of We Fund Climate at IFC, told Inc. Arabia that the peer learning platform is designed to unite climate-focused venture capital funds that are committed to supporting female entrepreneurs in the climate sector. The program will promote and assist these funds in developing strategies that help to advance outcomes for women and accelerate financial inclusion, with the aim of increasing investment in women-led climatetech, which currently amounts to only 10 percent of global investments.

Moustafa Salem and Fran Deininger, managers of We Fund Climate at IFC.

According to Salem and Deininger, VentureSouq’s investment strategy at the intersection of climate and gender is what made it an ideal candidate for the program. “VentureSouq is one of the few VC funds in MENA that takes an integrated approach to gender inclusion and investing in solutions to address climate change,” Salem and Deininger tell us. “The fund has always been enthusiastic about engaging in programs that promote financing opportunities for women-led startups, including IFC’s She Wins Arabia program, which focused on advancing women-led ventures in the MENA region. Our dream would be to have all global funds implement investing approaches that deliver tangible and ambitious value for women, and do their part in closing the huge financing gaps that exist for women founders. We hope that Venture Souq, alongside the other funds in the program, will pave the way for this long-lasting change.”

While the program aims to increase investment in female-led climatetech startups, Salem and Deininger highlight the fact that We Fund Climate is not exclusively focused on women-led VC funds. In fact, the program is designed to actively engage male investors to support female entrepreneurs in the climate space, and achieve a gender-balanced and collective approach in order to drive meaningful change. Plus, in addition to gaining new knowledge derived from real-life and best-in-practice case examples, participants will network with a global cohort of climate-focused fund managers, IFC experts, and other players in the startup ecosystem to learn, connect, and share challenges and innovative approaches. Fund managers will also gain access to a network of highly qualified, climate-focused, women-led startups supported by IFC’s She Wins Climate Program.

Speaking to Inc. Arabia, VentureSouq’s Sonia Weymuller (co-founder and general partner), and Lola Fernandez (principal) explain that gender diversity has been a foundational strength of the firm since its founding in 2013, with female leaders occupying key positions from top management and portfolio founders to backers. “We see women as powerful agents of change to drive innovation and new investment theses, including climatetech,” they explain. “Our gender lens framework is embedded in a holistic stakeholder approach, recognizing the multifaceted roles women play across the innovation ecosystem, and the different ways a technology product can impact women in the marketplace. We incorporate the role of women throughout our investment process, and into our investment thesis, paying special attention to the diversity of founding teams, their hiring strategy, and their culture.”

According to Weymuller and Fernandez, one of the key takeaways they’ve had while running their enterprise is that their female-founded portfolio ventures offer a different perspective on both business opportunities and ways of doing business, with many of them demonstrating an “exceptional openness to strategic conversations, the willingness to explore unconventional market opportunities, and an adeptness at leveraging diverse networks, particularly other women, to drive expansion.” Plus, they point out that gender and inclusion tend to influence both the types of companies and the products that they invest in. “As for the types of products we invest in, we consider the role of women to be crucial, especially given our focus on emerging markets where women play a quintessential social and economic role - we simply cannot ignore 50 percent of the market.”

Weymuller and Fernandez also believe that the cultural and historical challenges of gender equity in emerging regions present an opportunity rather than an obstacle. “As female investors ourselves, we are positioned as catalysts for change in male-dominated ecosystems,” they say. “By championing diverse teams, we’re not just seeking returns – we’re helping reshape the investment landscape to create a more inclusive entrepreneurial environment.” In addition, the duo believes that female entrepreneurship in climate innovation is on the rise, which presents a strong opportunity to leverage the experience, knowledge, and experience of women to tackle the climate crisis and create new opportunities for women in climatetech.

“Our long-term vision is to create a fly-wheel effect in which the companies we back can nurture the next generation of diverse teams across the Middle East and Asia, setting an example of how teams and products can recognize and incorporate women’s work and perspectives as a clear economic opportunity,” they declare. Plus, from experience, Weymuller and Fernandez also believe that diverse teams can create more balanced organizations and solutions. “Our investment thesis aims to cultivate a balanced portfolio of founders, and encourage diversity where we see a lack thereof,” they say. “This is accomplished via proactive gender-smart sourcing and due diligence along with post-investment engagement. We also realize that inclusion needs to happen at all levels, and we are seeing the positive ripple effects of gender inclusion on boards and mid-management across global ecosystems over the past decade. Our conversations with founders also entail strategies for gender inclusion in teams, boards, and supply chains.”

After five years of investing in climatetech, VentureSouq launched its early-stage fund focused on the sector in 2022, and it has since made 20 investments in the space already. Its investments include startups like UK-based AI and drone technology ecosystem restoration and reforestation platform Dendra Systems, UAE-based digital ecosystem for the global seafood trade Seafood Souq, and US-based B2B cultivated meat technology company Orbillion. VentureSouq’s main investment objectives in climatetech focus primarily on food security, supply chain transparency, carbon accountability, and financial resilience — all sectors where it sees a deep appetite for innovation and opportunities for emerging markets, particularly the MENA, to lead in adaptation efforts. And while Fernandez and Weymuller acknowledge that climatetech startups across the MENA must navigate multiple hurdles, they stress that access to capital, access to offtakers, and scaling across fragmented ecosystems and markets are three key challenges that enterprises in this arena continue to grapple with.

Moreover, the duo believes that the VC ecosystem plays a critical role in catalyzing innovation and empowering founders in climatetech by taking the initial risk of investing in them. “This level of risk-taking enables experimentation with potentially transformative solutions that more traditional funders may prefer to avoid,” Weymuller and Fernandez explain. “We are there to help accelerate commercialization and can serve as a signal to other stakeholders from the public and private sectors about the viability of specific climate solutions. It’s quintessential for us to continue demonstrating the commercial viability of these climate ventures, so that we can move away from the two-pocket thinking mindset, and towards the idea that sustainability and profitability can and must go hand in hand. A lot of the work we have been engaged in over the last couple of years has also been around ensuring policy alignment by providing concrete examples or applications of climate solutions we have backed.”

For investors and entrepreneurs interested in the intersection of venture capital and climate action, Fernandez and Weymuller advise them to build their knowledge in the space, finding climate subsectors that resonate with them the most, and staying informed about developments in each of them. “Start building relationships with founders in the space, attend climate events happening around you, dig your heels in, and be a part of the emerging climate ecosystem in the region,” they say. “Do all of this, and then start identifying the gaps you see and explore how best to address them — focus on product design and development, business model, regulatory and licensing requirements, partnership and collaboration opportunities, impact measurement, and monitoring.”

As for VentureSouq itself, through IFC’s We Fund Climate Program, it aims to develop its network and refine its approach to investing at the intersection of climate and gender. Weymuller and Fernandez also say that, as the only fund selected from the MENA, they intend to share their learnings from the program with the rest of the startup value chain in the region, from limited partners to other general partners to founders. “Our intention, at a firm level, more generally is to formalize our gender lens framework, by deepening our knowledge of best practices and assigning metrics that can serve to guide our operations and portfolio,” Weymuller and Fernandez say. “The IFC’s WeFund Climate program aims to champion the best venture managers in emerging markets focused on the intersection of climate and gender lens. We see this as an opportunity to be at the forefront of emerging and disruptive narratives of climate investing, and to leverage this training to source and invest in the best startups.”

Pictured on image: Lola Fernandez, principle at VentureSouq and Sonia Weymuller, co-founder and general partner at VentureSouq. Images courtesy VentureSouq, IFC. 

This article first appeared in the January/February issue of Inc. Arabia magazine. To read the full issue online, click here.