Amongst the many concerns of tech entrepreneurs, identifying sources of early stage capital is perhaps the most daunting. Young businesses need seed funding to hire talent, reach early customers, and start booking revenue. As the business grows, seed stage sourcing is eclipsed by the challenges of raising a Series A or B round. The QSTP Tech Ventures Fund provides an opportunity for tech founders and entrepreneurs to source seed-stage capital when they are first embarking on their journey. As the business matures and the value proposition becomes clear, QSTP can leverage the Tech Ventures Fund to participate in a Series A or B round. In essence, the Tech Ventures Fund seeks to lower one of the barriers to starting a tech company with a keen focus of building an innovation ecosystem in Qatar.
Tech Venture Fund
Provides an opportunity for tech founders and entrepreneurs to source seed-stage capital when they are first embarking on their journey.
Tools of the Trade
1. Convertible Note
- Simply put, this is short term debt which converts to equity.
- During seed funding, the debt converts to preferred stock at the closing of Series A.
- The issue of valuation is deferred until Series A where there is more data to conduct a proper valuation
- Issuing convertible notes is fast, simple, and relatively inexpensive
- Tech Venture Fund average ticket size: 100K-500K USD
2. Simple Agreement for Future Equity (SAFE)
- This has become a common mechanism of supplying capital in an un-priced round and is now perceived as a means of bypassing the convertible note
- This is not a debt tool and will not therefore accrue any interest.
- SAFEs eliminate a great deal of negotiation and, by derivative, legal fees.
- Tech Venture Fund average ticket size: 50K-500K USD
3. Series A/B Participation
- Series A is widely viewed as the first institutional outside money that is invested in a business.
- At this stage, the company is working to scale or determine distribution, investigate verticals, and refine the business model.
- QSTP will not lead on Series A/B but can be a source of follow-on capital after a lead institutional investor is firmly on board and has conducted a valuation.
- Tech Venture Fund average ticket size: 1M-3M USD
Supporting Qatar-based Startups
If a local tech-based business is in need of seed stage capital, QSTP can deploy a convertible note or SAFE. In the case of more mature businesses, the management team will have identified a large institutional partner to value and lead the round and QSTP can follow.
Supporting Regional and International Startups
QSTP can support non-local tech businesses in instances where the Qatar economy and ecosystem can add value to a transaction. Sometimes this means opening up a new a new market, other times it may mean access to human capital or intellectual property. These deals will be led by established VC firms who have access to deal flow and are generally at the Series A/B stage.
Eligible candidate for the QSTP Tech Venture Fund tend to be:
- Graduates of an accelerator that incorporate a startup and have 100% dedicated members
- Spin-outs from branch campuses or research institutes
- Established technology startup companies
- Incubated tech startups
- Technology-based startups which have identified a lead institutional investor