A 33-Year-Old Pindi Boy Creates $30 Million Venture Capital Fund

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BE2C2 Report (Islamabad, Nov 24, 2018): Rabeel Warraich is Pakistan’s first professional venture capitalist backed by an impressive pack of credentials–earned overseas and recently at home in a very short span of time with lots of hard work.

He calls himself a workaholic with passion to chase dreams–something he acquired at Hasan Abdal cadet college in his teens.

Warraich’s story is not the kind we are used to reading about in Pakistan. A young man who grew up in a middle-class family – comfortable, but nowhere near wealthy – and went to good schools, did well academically and otherwise, went off to an elite higher education institution abroad, worked in high-paying professional jobs in London, and then returned to Pakistan as something the country has never seen before, but desperately needs: the founder of the nation’s first institutionalized venture capital firm.

That’s him. Quitting his $500,000+ job overseas, packing his bag and heading back home–he calls himself Pindi Boy.

As his partner, he enlisted the help of his friend Bernhard Klemen, who at the time was working for JPMorgan in Austria.

Before coming back in May 2017, Warraich, who graduated from MIT, had worked as an investment banker at Morgan Stanley and at the private equity direct investing arm of GIC, the $359 billion sovereign wealth fund of Singapore.

Along with his other friends and colleagues he started investing in Pakistani tech startups under the Sarmayacar brand name.

In December 2016, Rabeel and the consortium of friends – most of whom were Pakistanis working in finance in Europe and the United States – announced that they would be investing $200,000 in Patari, a music streaming service based out of Lahore. That was followed by a $250,000 investment in ProCheck, a company that works to ensure the integrity of the pharmaceutical supply chain, announced in April 2017. And in February 2018, they invested $225,000 in a company called PublishEx, which allows app developers and digital content publishers to collect payments online and through cellular networks.

Building upon the investing Warraich has already been doing alongside his friends and colleagues, he announced earlier this month Sarmayacar Ventures, as the new fund named.

Warraich caused a stir by announcing that he and his partner – Austrian national and former investment banker Dr Bernhard Klemen – had raised $30 million from high net-worth individuals (HNWIs) and family offices for a venture capital fund dedicated to investing in Pakistani tech and tech-enabled startups.

While some European family offices and high net-worth individuals (HNWIs) invested in the fund, the bulk came from Pakistani HNWIs based outside the country. One hedge fund manager in New York who invested in Sarmayacar told Warraich: “If I was 20 years younger, I wouldn’t be investing in this fund. I would pack up and move myself to do what you are doing.”

He also tapped some wealthier Pakistani families that wanted to invest in his fund, including one of the wealthiest families in Lahore, and another family in Karachi. He also turned down some investors whom he felt would not be amenable to his desire to keep everything transparent and above board.

By mid-2018, Warraich had enough commitments to close the fund at $30 million, which formally closed on October 29 of this year.

With the three investments made earlier, the Sarmayacar brand name had already become known among Pakistan’s startups as a serious consortium of investors. The new fund takes that lead in Pakistani tech investing to the next level.

The firm has a structure that is very common in the United States and Europe, but unprecedented in Pakistan.

The company has incorporated both the general partner that manages the fund (Warraich and Klemen) and the limited partnership that actually holds its investors’ funds in the Netherlands, owing to its flexible corporate structure, favorable tax treatments, and the fact that Pakistani lawyers and accountants are familiar with Dutch law because many multinational companies operate their Pakistani subsidiaries using holding companies in the Netherlands.

For Warraich, it’s a dream come true. “My family is somewhat unusual in that even me graduating from MIT still makes me the black sheep of the family,” says Warraich. “My sister has a postdoc in neurobiology from Stanford University and currently works at a biotech startup in Silicon Valley, and my brother is a philosopher and photojournalist. I stand out as the capitalist in the family.”

(The original article appeared in Profit)

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