Welcome to the third edition of the MENA VC Playbook!
In our first edition, we explored how the region's top investors build deal flow pipelines. In the second, we flipped the lens entirely and tackled how those same investors raise the capital they deploy. This time around, we're going one step further down the chain to look at what happens once a deal actually lands on the table, which is to say, how do you figure out whether it's any good?
If the fundraising edition had a single uncomfortable truth at its centre (that almost every VC in MENA is pulling from the same remarkably shallow pool of LPs), the due diligence edition has its own, and it is arguably even more uncomfortable: at the earliest stages in this ecosystem, D&D is less a process and more a bet on human beings, conducted with less data than you would use to decide which apartment to rent.
That sounds glib, and it's meant to be slightly glib, but the underlying point is serious. MENA's venture ecosystem is barely old enough to have a meaningful track record. The comparable data that VCs in the US take for granted (Crunchbase, PitchBook, a decade of benchmarking against similar companies at similar stages) largely doesn't exist here, and if it does, the ecosystem is still so nascent that it's still very difficult to extrapolate out.
The regulatory environments vary wildly from one country to the next. And the companies you're evaluating at seed stage frequently have little more than a product, a founder with conviction, and perhaps a few months of traction that may or may not be representative of anything whatsoever.
And yet with all of that said, decisions obviously do get made, capital gets deployed, and occasionally spectacular companies emerge. The question is how, and the answer, as it turns out, is whilst admittedly somewhat clichéd, more art than science, and more relational than algorithmic.
That's what this edition sets out to unpack – wish us luck!
State of Private Markets: 2025 in Review
It was a strong year for venture fundraising on Carta, with startups raising nearly $120B in 2025. As the market adjusts to an AI-driven landscape, a new normal is beginning to take shape.
In the full State of Private Markets: 2025 in Review, we unpack these shifts with 27 additional charts and expert insights on fundraising trends, valuation changes, deal dynamics, dilution, and the evolving global venture landscape.
Download the full report to explore more.
Over the following two parts, we break down the mechanics of due diligence for MENA-based VC firms, drawing once again on the same group of investors whose sourcing strategies and fundraising playbooks anchored our first two editions.
Table of contents
The founder bet: Why due diligence at seed stage in MENA is fundamentally a judgment call about people, plus the frameworks, red flags, and hard-won instincts the region's best investors use to make it
The risk calculus: From Egypt's devaluation cycles to Palestine's regulatory vacuum to Saudi's competitive dynamics, how to evaluate deals when the conventional playbook hasn't been written yet
Thank you once again to Hasan Haider (Plus VC), Ambar Amleh (Ibtikar Fund), Zach Finkelstein (Class 5 Global), Ivo Detelinov (Oryx Fund), Laila Hassan (Algebra Ventures), Khaled Talhouni (Nuwa Capital), Michael Lints (Golden Gate Ventures), and Hussein Attar (Tech Invest Com) for opening up their fundraising strategies.
Now, let’s dig into it.
Step 1: The founder bet
Before spreadsheets, legal reviews and the customer reference calls, there is rather large part of the equation called the founder.
And in MENA's venture ecosystem, particularly at seed stage, the founder isn't just the most important variable in the due diligence process, they are, for all practical purposes, the due diligence process.
More often that not companies that MENA seed investors are evaluating typically have somewhere between zero and 18 months of operating history. Revenue, if it exists at all, might be a few thousand dollars a month. The product is likely still being iterated on.
The market data for whatever vertical they're pursuing in whatever geography they're based in ranges from sparse to nonexistent. The maths underpinning TAM calculations often exceedingly dubious and best characterised as glass overflowing. Unit economics are back of napkin aspirations.
Which means the traditional due diligence toolkit, the one that relies on audited financials and multi-year cohort data and detailed competitive benchmarking, is about as useful as a chocolate teapot.
What you're left with is the person sitting across from you, their vision, their judgment, their ability to execute, and whether you actually like them enough to be in a relationship with them for the better part of a decade.
Our companies at the time when we invest in them for the first time have fairly little in terms of legal documentation, contracts to review. The one thing they do have is a product and founder ambition. And so we try to see through the founders. We spend a lot of time on the founders themselves. We use legal help for the review of the legal documents, so we don't review these necessarily ourselves. We ask the experts to do that. So the legal due diligence is very important to us. But where we spend most of our time is getting comfortable on product, market, and especially the founders. And we have found over and over again that founder at the seed stage is everything.
It’s the kind of statement that sounds like a platitude until you sit with it for a moment and appreciate it's at the end of the day, it’s actually just an admission of how little else there is to go on.
The long courtship
One of the more striking patterns that emerged from our conversations is how long the best MENA VCs tend to know founders before they invest in them. It's not uncommon for the relationship to predate the company itself, sometimes by years.
We usually know the founders for quite some time when we invest in them, which is actually interesting because the companies themselves are one or two years old and in some cases we know the founder for longer than that time. So we would know the founder for let's say two or three years. We may have worked with the founder in some other capacity. We may have bumped into the founder at an event. Or she had a different project in mind at that time, we really liked the personality and what we saw, we ended up not investing. They come back to us, different project.
This long courtship serves a function that no amount of accelerated due diligence can replicate. By the time the investment decision arrives, the VC has already observed how the founder responds to setbacks, how they iterate on ideas, whether they take feedback gracefully or defensively, and (perhaps most importantly) whether the conviction that seemed compelling over coffee eighteen months ago has survived contact with reality.
It also inverts the traditional due diligence timeline. In more mature ecosystems, the DD process typically begins when a deal enters the pipeline and ends with a commitment decision. In MENA, particularly at seed, the real diligence often starts years before anyone puts pen to paper, and the formal process is closer to a confirmation of something the investor already believes than a genuinely open-ended evaluation.
We absolutely have to like the founder, but the founder also has to like us. This is a relationship that could last ten years. And if you think about it, it's one of the longest relationships we would have in our lives. Excluding families and school friends, this is a very long relationship. So it needs to be two-way. We need to like the founder and the founder needs to like us.
The "liking" isn't a soft variable you bolt on at the end of an otherwise rigorous analytical process, it's the foundation that everything else is built on, because when things go wrong (and in venture, things always go wrong) the quality of the relationship between founder and investor will determine whether the conversation that follows is constructive or catastrophic.
The IC memo
Our memos typically have kind of like an elevator pitch to start with, which is basically why we think it's great and what the founder looks like, particularly at the early stage. And then in DD we build a thesis or investment rationale, which is why we think it. The second is where we can be helpful in respect of their mission. So what's our value-add. And then we look at the customer acquisition or go-to-market strategy, the product roadmap, founder profile and founder reference calls, the revenue model and traction and what the unit economics look like. Market sizing and competitor landscape. And then we go into returns profile, projections, what the potential size of outcome could be, how much do we think they need to raise to get to a successful outcome, and what are the key variables that drive that successful outcome.
In a market where the same eight or ten VCs are competing for the best deals (just as the same fifteen LPs are competing for the best funds, as we discussed at length in Edition Two), your ability to articulate specific, non-generic value-add to a founder is increasingly the thing that wins you the deal.
Founders talk to each other, and the VC whose IC memo says "we can introduce you to three specific potential customers in Saudi" is going to beat the one whose memo in the vaguest terms possible says "we provide strategic guidance and network access" every single time.
Khaled also offers a calibration principle that's worth internalising if you're building a DD process from scratch.
The earlier the company, the more the size of the problem, the TAM, and the founder profile and strength of the founder and team becomes the thing.
This is deceptively simple but genuinely important. As you move up the funding ladder, the weight of the DD shifts from qualitative (who is this person, how big is this problem) to quantitative (what do the unit economics look like, can this business sustain its margins at scale).
At seed, trying to do Series B-level financial modelling on a company with three months of revenue data isn't just pointless, it's actively misleading, because the numbers are not yet the signal. The founder and problem is the signal.
The full gamut
Michael Lints, whose Golden Gate Ventures platform gives him a comparative perspective across both SEA and MENA, describes what a more institutionalised DD process looks like, and it's useful as a benchmark for how the process evolves as fund sizes grow.
We do the full gamut. In terms of the due diligence, we of course run the founder DD, where we have a ref check on if they're a serial entrepreneur, their previous investors, etc. We spend quite a bit of time on the product as well and really try to understand their product choices. You're now a B2C company but you're looking to do more B2B revenue in the future, how are you going to get there? Within your team, who runs product? We want to have a conversation with them about product vision. Then the financial DD is relatively standard. And we do spend time on the financial forecast, there's so much we don't know at early stage that we just try to run through the forecast and really get a sense of do they understand themselves how this company is going to run at scale. And then we have a fairly extensive legal DD as well.
Understanding how a founder thinks about their product roadmap (not just what they're building today, but the sequence of decisions they plan to make over the next two to three years) is one of the best proxies available for strategic thinking, prioritisation ability, and, frankly, whether they know what they're doing.
We have a fairly extensive legal DD. We've noticed that that is unfortunately relatively important just for things of structuring, how's the company structured and where are they structured, legal frameworks, any subsidiaries we need to look at, even founder holdings, where do these holdings sit, are they part of the financing structure. This is mainly just to protect ourselves but also to protect our LPs with these investments.
"Unfortunately relatively important" is a wonderfully understated way of describing what several VCs over the years have told us off the record, which is that legal and structural DD in MENA is significantly more complex than in markets with standardised frameworks, and that getting it wrong (or skipping it under time pressure) is one of the fastest ways to create problems that will haunt the fund for years.
The combination of multiple jurisdictions (DIFC, ADGM, DIFC-registered holding companies with Saudi operating subsidiaries, Egyptian entities with IP held offshore), varying regulatory regimes, and the still-evolving legal infrastructure for venture structures means that what might be a routine legal check in Delaware becomes a multi-week exercise in MENA.
And if the legal structure turns out to be problematic after the investment is made, unwinding it is orders of magnitude more expensive than getting it right upfront.
Red flags and the airport test
For all the talk of frameworks and IC memos, the reality is that some of the most important due diligence in MENA happens at the level of pattern recognition and instinct, the kind of thing that experienced investors develop over hundreds of meetings and that no checklist can fully codify.
Our DD at seed stage, it's not as developed as folks at Series A or B. We're really just looking for signs that these founders are able to execute and they kind of know what they're doing and they're not full of crap. There's a recent story of a founder that is in the ecosystem right now. I think he's a con artist because he's done a lot of bad stuff. He pretended to be an investor to reach into the data room of another founder, then copy-pasted those slides into his own deck. He basically made up numbers. He put people on his deck as advisers who never even heard of him. So when we reached out to them, they're like, "Who the hell is that? And why did they put my photo on their deck?" So there's stuff like that. And as an early stage investor, you've got to do at least a little bit of basic research to make sure that it's not someone that's full of crap.
You don't get ahead by reading what everyone else reads.
Weekly deep dives, founder and VC playbooks, the Careem Mafia Database, the MENA Tech IPO Tracker, the Diaspora 50, and two years of archived analysis
